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FedEx, UPS Navigate Tight Capacity as Storm Impacts Deliveries

Fedex and UPS navigate the East Coast’s first major winter storm, looking to keep vaccines and packages moving.

Fedex  (FDX) - Get FedEx Corporation Report and United Parcel Service  (UPS) - Get United Parcel Service, Inc. Class B Report were both navigating the East Coast’s first major winter storm of the year Thursday, looking to move critical vaccines and an unusually high volume of pre-Christmas packages.

Both FedEx and UPS continued to operate at full capacity on Thursday as the nor’easter that moved over Pennsylvania, New York and other northeastern states on Wednesday dumped more than a foot of snow as well as sleet and freezing rain from North Carolina all the way up to Maine.

A spokeswoman for FedEx said a team of 15 meteorologists was monitoring conditions and nearly 200 logistics specialists would continue to coordinate the movement of truck and flight shipments. UPS also said a team of weather experts was monitoring events and releasing forecasts to guide its fleet through the  inclement weather. 

How the two companies manage one of the biggest logistical strains in modern history will be part of what analysts and investors will be examining when the companies report their quarterly earnings.

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FedEx is expected to post quarterly revenue of $19.43 billion, up 12% from a year ago, and adjusted earnings per share of $4.01, according to analysts polled by FactSet. FedEx will release earnings after the closing bell on Thursday. UPS's next report isn't due until February.

Still, with both companies’ logistics capacity near their respective peaks, analysts and in investors are watching closely for how unforeseen events like weather or an additional surge in deliveries - packages, vaccines, or anything else - could impact operations.

“Vaccine distribution and peak are near-term focuses for FedEx,” said analysts at Cowen, adding that the next catalyst for the stock is “the current distribution of Covid-19 vaccine and its potential to displace lower-margin packages, creating another favorable tailwind to pricing.”

Morgan Stanley took a more cautious tact, noting that while parcel companies are benefiting from pandemic-driven tailwinds, “a majority of the 2020 tailwinds are likely to be transitory as the world returns to a new normal post-pandemic.”

Shares of FedEx were up 0.06% at $289 in trading on Thursday, while shares of UPS were up 0.67% at $171.28.