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Investing.com -- FedEx (NYSE:FDX) stock tumbled 3.5% today after rival United Parcel Service Inc. (NYSE:UPS) released a revenue forecast that fell short of market expectations, signaling weaker demand in the parcel delivery sector.
UPS, which is often seen as a bellwether for global economic activity due to its vast logistics network, projected 2025 revenue to be $89 billion, which is significantly below the average analyst projection of $94.9 billion. This announcement came alongside UPS’s report of 2024 revenue at $91.1 billion and sent its shares down by as much as 14% in premarket trading. The decline in FedEx shares reflects investor concerns that the challenges faced by UPS may also affect FedEx’s business.
The courier industry has been experiencing a persistent demand trough, with package volumes decreasing from the highs seen during the pandemic. In particular, UPS noted a reduction in demand for its parcel services and a shift by some customers to more economical shipping options. UPS also announced an agreement to reduce Amazon.com Inc (NASDAQ:AMZN). package volumes by more than 50% by the second half of 2026, a move that surprised analysts and indicated a strategic shift in the company’s approach to managing its largest customer.
Despite the lower revenue forecast, UPS reported a fourth-quarter adjusted earnings beat, with earnings of $2.75 per share compared to the predicted $2.53. This was attributed to a surge in demand and higher prices during the holiday shipping season. However, the overall tone of UPS’s announcement was cautious, with the company outlining plans to reconfigure its U.S. network and implement efficiency initiatives aimed at saving about $1 billion.
The impact on FedEx highlights the interconnected nature of the logistics industry, where the performance and strategies of one major player can influence the market perception of others. FedEx investors will likely keep a close watch on how the company navigates similar challenges in the coming months.
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