Are UPS and FedEx Flying Too Light? - Motley Fool
UPS (NYSE: UPS) has a plane problem. The company said last week that "overcapacity in the global air freight market" has been a surprising drag on the business this year, and earnings will come in lower than expected as a result.
UPS is dealing with a major shift in demand for overseas shipping. Customers are fleeing from super-quick international delivery services, making that business a much less-profitable one. FedEx (NYSE: FDX) , for example, has seen shippers increasingly choose its "economy" international service, which arrives in two to five days, over its "priority" option that's delivered in one to three days. That shift has taken a whack at earnings. FedEx's express segment profits were down 66% last quarter, dragging operating income lower by 28% companywide.
UPS (NYSE: UPS) has a plane problem. The company said last week that "overcapacity in the global air freight market" has been a surprising drag on the business this year, and earnings will come in lower than expected as a result.
UPS is dealing with a major shift in demand for overseas shipping. Customers are fleeing from super-quick international delivery services, making that business a much less-profitable one. FedEx (NYSE: FDX) , for example, has seen shippers increasingly choose its "economy" international service, which arrives in two to five days, over its "priority" option that's delivered in one to three days. That shift has taken a whack at earnings. FedEx's express segment profits were down 66% last quarter, dragging operating income lower by 28% companywide.
