FedEx, UPS see no bounce from Post Office's move
NEW YORK (AP) — The U.S. Postal Service's announcement that it plans to end Saturday mail deliveries apparently had little effect on shares of private-sector competitors FedEx and UPS.
In Wednesday afternoon trading, shares of FedEx Corp. were up 68 cents — barely more than the cost of a first-class stamp — to $105.75, while United Parcel Service Inc. was down 16 cents to $80.64.
Citigroup called the end of Saturday service a "baby step" toward fixing the Postal Service's financial problems, and one that would have little impact on competitors.
Citi analyst Christian Wetherbee said closing some branch post offices would mean more to FedEx and UPS, because it could save them money on products that involve Postal Service delivery.
FedEx offers SmartPost and UPS has SurePost. Both companies use those services to ship light parcels to post offices near recipients' homes or offices. The Postal Service then delivers them. It's usually slower than regular ground service, but cheaper. Some big shippers use it to send parcels to consumers.
Wetherbee figures if there are fewer rural post offices, FedEx and UPS will be able to consolidate their SmartPost and SurePost shipments to fewer locations and save money.
Meanwhile, FedEx is waiting to hear from the Postal Service about its expiring contract for air-shipping express and priority mail, which generates about $1.3 billion in annual revenues for FedEx. Wetherbee expects FedEx will hang on to most or all of the business but is likely to see a rate cut because of the post office's financial situation.
Citigroup has "Buy" ratings on FedEx and UPS shares.