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FedEx to Place Coronavirus-Induced Surcharge on Global Shipments

Zacks Equity Research

In a bid to tackle the limited air cargo capacity due to the coronavirus pandemic, FedEx Corporation FDX has decided to temporarily impose surcharges on international shipments (parcel as well as freight) beginning Apr 6, 2020. Notably, the surcharges are levied by FedEx’s main revenue generating unit, FedEx Express, which includes the TNT Express operations.

Management at FedEx stated that with global supply-chain disruption in the wake of the coronavirus spread, it decided to enforce surcharges of 45 cents per pound on international shipments to/from China and also between countries in the Asia Pacific region.

International shipments elsewhere will attract surcharge in the 5-10 cents a pound range. Surcharges apart, the minimum charge per shipment is applicable as well. Notably, last month, this Zacks Rank #4 (Sell) package delivery company suspended its earnings outlook for fiscal 2020 (ending May 2020) due to the coronavirus-led uncertainty.

With coronavirus wreaking havoc all over, shares of FedEx have declined 21.9% compared with its industry’s 17.6% fall since the beginning of February.

With the pandemic showing no signs of subsiding as of now, we fear that more pain is in store for companies like FedEx and United Parcel Service UPS as shipment of goods gets hampered.

Stocks to Consider

Investors interested in the Zacks Transportation sector may consider better-ranked stocks like GATX Corporation GATX and Spirit Airlines SAVE. While GATX sports a Zacks Rank #1 (Strong Buy), Spirit Airlines carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term (three to five years) earnings per share growth rate for GATX and Spirit is pegged at 15% and 12.5%, respectively.

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United Parcel Service, Inc. (UPS) : Free Stock Analysis Report
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