Shipping heavyweight FedEx reports fiscal 2024 third-quarter earnings and revenue Thursday. Wall Street projects a slight revenue decline, even as the shipping outlook appears more positive with the popularity of China e-commerce company Temu and others taking off in the U.S.
Analysts expect FedEx EPS to grow about 1% to $3.44 with sales declining 1% to $21.97 billion in the fiscal third quarter with Wall Street looking to FDX earnings performance and outlook to provide on-the-ground readings of economic activity.
The earnings report from FedEx Thursday follows Hapag-Lloyd Chief Executive Rolf Habben Jansen telling CNBC recently that he has an improved view on trade for the rest of 2024. Germany-based Hapag-Lloyd is the world's fifth-largest ocean carrier.
Jansen is more optimistic on shipping demand throughout the year. U.S. shippers, including retailers, are planning for an earlier peak shipping season, around June, in 2024, according to CNBC.
Oceangoing shipping stocks, for their part, have been doing well so far this year. Navios Maritime Partners surged more than 20% so far in March. Capital Product Partners has gained 27% in 2024. Golden Ocean Group has advanced 33% this year with Genco Shipping & Trading and Euroseas jumping 22% and 15%, respectively.
Temu, China E-Commerce Drives Shipping
Meanwhile, PDD Holdings' Temu and other Chinese e-commerce companies are spending heavily to crack the U.S. market, driving a fresh round of shipping and package delivery demand.
PDD Holdings posted better-than-expected Q4 earnings and revenue early Wednesday.
In 2022, PDD Holdings launched Temu in the U.S. and has aired Super Bowl commercials to help drive market share. Temu was the most downloaded free app on iPhones in the U.S. in 2023, according to Apple.
Temu along with fellow Chinese e-commerce company Shein together send almost 600,000 packages to the U.S. every day, according to a June 2023 U.S. Congress report. However, parcel shipping tracking firms peg Temu's average daily number at closer to one million packages in the U.S. For comparison, Amazon ships on average more than 20 million U.S. packages daily.
The growth in global shipments by Chinese e-commerce companies is squeezing out space for other industries on air freighters as firms search for alternative logistics options due to disruptions in the Red Sea, according to reports.
Temu partners with FedEx, UPS and the U.S. Postal Service for deliveries in the U.S., according to the company's website.
FedEx Outlook And Stock Performance
FDX stock advanced 1.3% to 260.02 during market action Wednesday. FedEx stock is up around 4% in March, working to climb the right side of a three-month consolidation, according to MarketSurge analysis.
On Dec. 20, 2023, FedEx forecast full 2024 earnings of $17-$18.50 per share along with "low-single-digit percentage decline" in revenue, down compared to its prior prediction of approximately flat revenue growth.
Meanwhile, UPS holds its "analyst day" on March 26. The package delivery giant at the end of January announced plans to reduce its workforce by 12,000 along with worse-than-expected fourth-quarter revenue and 2024 guidance well below analyst expectations. UPS stock gained 1% to 154.77 Wednesday.
Both FedEx and UPS have lost ground to Amazon.com in parcel deliveries in recent years. In 2022, Amazon delivered more packages in the U.S. than UPS. Amazon previously beat out in FedEx in 2020. The Wall Street Journal reported late in 2023 that the e-commerce giant is likely to widen delivery gap.
The U.S. Postal Service remains the largest parcel delivery service by volume.
FedEx stock has a 53 Composite Rating out of a best-possible 99. FDX shares also have a 49 Relative Strength Rating and an 88 EPS Rating.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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