Shares in U.S. listed parcel carriers FedEx (FDX) and United Parcel Service (UPS) failed to deliver today after logistic rival DHL slashed thousands of jobs and warned of lower than expected growth.
Fears Over Parcels Growth
Logistics giant DHL said it was cutting 8,000 jobs as part of a $1billion cost-saving drive. The job cuts, which will fall in the group’s German Post & Parcel division, represent more than 1% of its total workforce. As reported by Reuters the DHL cuts will occur through “attrition” – so people naturally leaving the workforce through retirement or resignation – rather than a compulsory redundancy round.
Despite enjoying bumper growth during the pandemic and from the surge in global e-commerce demand in recent years, the pace of increase in the parcels logistics sector is likely to slow this year. That’s because, say analysts, of softer customer demand, easing supply-chain disruptions, and global economic uncertainty. There are also fears over the impact of the current tariffs trade war.
Indeed, Parash Jain, HSBC’s global head of transport and logistics research, told Reuters that growth in global container trade and air freight is expected to halve in 2025. Federal Express stock was flat and United Parcel Service off 0.5% in pre-market trading.
DHL Blames Higher Wage Costs
DHL blamed a recent wage agreement with the Verdi labor union in Germany, which includes a 5% wage hike and more holidays, as the reason behind its job cuts. It estimates that the new deal will cost it about $400 million. The job news came as DHL reported 2024 earnings of around $6.4 billion, just beating analyst expectations of $6.3 billion. For 2025, it expects an operating profit of over $6.5 billion, missing expectations of $6.8 billion. However, its forecast does not take into account potential disruption from tariffs.
Is FDX a Good Stock to Buy Now?
On TipRanks, FDX has a Moderate Buy consensus based on 13 Buy, 6 Hold and 1 Sell rating. Its highest price target is $365. FDX stock’s consensus price target is $320.89 implying an 28.15% upside.
