Zacks Industry Outlook United Parcel Service and FedEx

For Immediate ReleaseChicago, IL – November 11, 2025 – Today, Zacks Equity Research Equity areUnited Parcel Service UPS and FedEx Corp. FDX.Industry: Air Freight & CargoLink: https://www.zacks.com/commentary/2788223/2-air-freight-cargo-stocks-to-watch-from-a-challenging-industryThe Zacks Transportation—Air Freight and Cargo industry continues to face ongoing supply-chain disruptions, a challenging macroeconomic backdrop marked by a softer-than-expected demand environment that has led to weaker package volumes.However, despite these headwinds, the industry still shows promising potential, particularly for companies focusing on growth opportunities and operational efficiency improvements. Ongoing cost-control measures aimed at bolstering profitability are also noteworthy. Notably, United Parcel Service and FedEx Corp.  are effectively capitalizing on these favorable trends.About the IndustryThe companies belonging to the Zacks Transportation - Air Freight and Cargo industry provide air delivery and freight services. Most players in the space are involved in offering specialized transportation and logistics services. Some participants offer a range of supply-chain solutions, such as freight forwarding, customs brokerage, fulfillment, returns, financial transactions and repairs.The well-being of the companies in this industrial cohort is directly proportional to the health of the economy. Players like UPS transport millions of packages each day across the globe. Apart from operating a ground fleet of multiple vehicles, some of these companies maintain an air fleet. While some players focus on providing air transportation services for passengers and cargo, others deliver services to entities that outsource air-cargo lifting requirements.4 Key Trends to Watch in the Transportation-Air Freight & Cargo IndustryDemand Slowdown: A Grave Concern: Due to the decline in shipping demand, particularly in Asia and Europe, volumes are being hurt. Lackluster volumes are hurting the results of key industry players. Geopolitical uncertainty and still high inflation continue to hurt consumer sentiment and growth expectations. Below-par freight rates are also hurting the industry’s prospects. Highlighting the weak freight demand, the Cass Freight Shipments Index declined 5.4% year over year in September. This measure has deteriorated year over year each of the past seven months, which confirms the overall declining trend.Rising Cost Pressures Erode Margins: The industry is grappling with persistent cost inflation, ranging from labor shortages to increased expenses for equipment and services. Maintenance costs are climbing at a time when commodity prices remain volatile, squeezing profitability for producers. Unless inflationary pressures ease, margins of the industry players could narrow further, leaving less flexibility for shareholder distributions or reinvestment.Tariff Turmoil: A Key Headwind: The current administration is focused on protectionism that restricts international trade to help domestic industries. The U.S. administration’s tariff policies are reshaping the transportation service industry by increasing costs, disrupting supply chains and influencing consumer behavior. The tariff turmoil is hurting global trade. Tariff-induced economic uncertainties and trade tensions may create uncertainty for investors interested in the industry.Fed Rate Cuts May Signal Some Relief: In October, the U.S. Federal Reserve cut interest rates for the second time in the current year. The 25-basis-point rate cut signals a shift toward monetary easing. Following the second cut, rates are at their lowest level in three years. This is good news for industry players as lower interest rates bring down borrowing costs, boosting economic growth.Zacks Industry Rank Indicates Bearish TrendsThe Zacks Air Freight and Cargo industry, housed within the broader Zacks Transportation sector, currently carries a Zacks Industry Rank #187. This rank places it in the bottom 23% of 244 Zacks industries.The group’s Zacks Industry Rank, the average of the Zacks Rank of all member stocks, indicates murky near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential. The industry's earnings estimate for 2025 has decreased 2.3% since September 2025.Before we present a few stocks from the industry that investors can retain in their portfolios, let us take a look at the industry’s recent stock market performance and the valuation picture.Industry Lags S&P 500 and SectorThe Zacks Air Freight and Cargo industry has underperformed the Zacks S&P 500 composite as well as the broader Transportation sector over the past year.The industry has decreased 20.4% over this period compared with the S&P 500’s growth of 14.2% and the broader sector’s depreciation of 13.9%.Industry's Current ValuationOn the basis of the trailing 12-month enterprise value-to-EBITDA (EV/EBITDA), a commonly used multiple for valuing Transportation-Air Freight and Cargo stocks, the industry is currently trading at 8.72X compared with the S&P 500’s 18.24X. It is also lower than the sector’s trailing 12-month EV/EBITDA of 10.03X.Over the past five years, the industry has traded as high as 14.09X, as low as 7.4X and at the median of 10.23X.2 Transportation-Air Freight and Cargo Stocks to Keep a Tab OnThe aforementioned stocks presently carry a Zacks Rank #3 (Hold) each.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks hereUPS is based in Atlanta. We are appreciative of the company's efforts to reward its shareholders through dividends and buybacks. Robust free cash flow generation by UPS is a major positive and leads to an uptick in shareholder-friendly activities.Cost-cutting efforts are supporting its bottom line. Impressive e-commerce demand and expansion efforts should serve UPS well in the coming year. Its earnings beat the Zacks Consensus Estimate in three of the last four quarters and missed once, the average beat being 11.2%.FedEx: FDX’s efforts to reward its shareholders even in these uncertain times are praiseworthy. Apart from paying dividends, FDX is active on the buyback front. FedEx's liquidity position is also solid. The company’s efforts to cut costs are driving its bottom line.FDX’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters (missing in the other one), with the average beat being 2%.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comPast performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.See "2nd Wave" AI stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report United Parcel Service, Inc. (UPS): Free Stock Analysis Report FedEx Corporation (FDX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks