Core Insights - Extra fees for parcel shipping significantly contributed to higher-than-expected rates in Q4 last year, with projections indicating further rate increases in 2026 [1] Group 1: Rate Increases - Ground parcel rates per package rose 34% above the 2018 baseline during the peak delivery season, driven by increased package volumes and accessorial charges, with average surcharges increasing 13% from Q3 to Q4 [2] - Ground parcel rates are expected to rise again this year due to general rate increases (GRI), which will include hikes in base rates and surcharges, as well as new rating logic for certain package dimensions [8] Group 2: Factors Influencing Charges - A significant increase in residential shipments led to higher residential delivery surcharges, with major carriers like FedEx and UPS introducing a "blanket" demand surcharge despite forecasts for muted demand growth [3] - The blanket surcharge policy marks a shift from previous demand charges that targeted specific delivery costs, such as volume surges and large packages [4] Group 3: Surcharges and Competition - Large parcel carriers are using surcharges to compensate for slower revenue growth and are deemphasizing less profitable segments like residential e-commerce delivery, which may drive retailers to seek cheaper alternative carriers [6] - Ground carriers raised fuel surcharges by about 1% even as diesel prices declined, with year-over-year fuel surcharges growing 26% while tracked diesel prices only increased by 4.7% [7]

Core Viewpoint - Radiant Logistics, Inc. (NYSE:RLGT) is recognized as an interesting logistics company, but there is a preference for FedEx as a more established player in the logistics sector [1] Company Overview - Radiant Logistics, Inc. provides technology-enabled global transport of goods through air, sea, and land across various industries [1] - The company offers services ranging from basic freight forwarding and customs clearance to complex supply chain management and distribution [1] Investment Perspective - While Radiant Logistics has potential as an investment, certain AI stocks are viewed as having greater upside potential and less downside risk [1] - There is a suggestion to explore undervalued AI stocks that may benefit from Trump-era tariffs and the trend of onshoring [1]

Core Insights - Expeditors International of Washington (EXPD) and FedEx Corporation (FDX) have both increased their dividends this year, highlighting their commitment to shareholder returns despite economic uncertainty [1][3] Dividend Performance - EXPD raised its semi-annual dividend by 5.5%, increasing the payout from $0.73 to $0.77 per share, with a payout ratio of 25% and a five-year dividend growth rate of 7.4% [3] - FDX increased its quarterly cash dividend to $1.45 per share from $1.38, resulting in an annualized dividend of $5.80 compared to $5.52 [3] Price Performance Comparison - Over the past year, EXPD has outperformed FDX in stock performance, attributed to better handling of market volatility and geopolitical challenges [5] - FDX's weaker performance is linked to revenue pressures from geopolitical uncertainty and inflation, leading to lower package shipment volumes [5] - EXPD's stock performance is supported by a recovering airfreight environment, with a 4% year-over-year increase in tonnage in the September quarter [6] E-commerce Impact - The demand for intermodal services has increased due to the growing importance of e-commerce, which continues to support growth for companies like Expeditors despite a moderation from pandemic peaks [7] Earnings Surprise History - EXPD has consistently exceeded earnings estimates in the past four quarters, with an average surprise of 13.9%, while FDX has beaten estimates in three of the last four quarters with a 5.7% average surprise [12] Valuation Comparison - EXPD trades at a forward sales multiple of 1.99X and has a Value Score of D, while FDX has a Value Score of A and trades at a lower forward sales multiple [11] Conclusion - EXPD's stronger share price performance and earnings track record suggest it is the more attractive investment option at present, with a Zacks Rank of 2 (Buy) compared to FDX's Zacks Rank of 3 (Hold) [14]

Market Overview - Investors should not overreact to uneventful unemployment data, as it allows for a focus on broader market trends and rallies beyond last year's winners [1] - Money is aggressively rotating into overlooked sectors, particularly data storage stocks, which have seen significant rallies while former market leaders struggle [2] Company Insights - Apple and Nvidia have not performed well despite strong underlying businesses, as they have become sources of funds for investors seeking new opportunities [3] - Upcoming earnings season is expected to start strong with JPMorgan Chase, although caution is advised regarding CEO Jamie Dimon's potential risk emphasis [6] - Delta Air Lines is anticipated to report strong results, with banks like Citigroup, Wells Fargo, Bank of America, Goldman Sachs, and Morgan Stanley also expected to perform well [7] Economic Indicators - The December consumer price index will be more significant than recent labor data, with signs of persistent inflation impacting consumer sentiment and presidential policies [5] - The JPMorgan Healthcare Conference is expected to generate merger-and-acquisition activity, with interviews of pharmaceutical executives planned [4] Sector Focus - Attention is on Taiwan Semiconductor Manufacturing Company, which may influence Nvidia's stock performance [8] - Transport stocks are also in focus, with expectations that a solid report from J.B. Hunt will support a bullish outlook on FedEx [9]

Upgrades - Wells Fargo upgraded Airbnb (ABNB) to Equal Weight from Underweight with a price target of $128, up from $118, citing two years of share underperformance and opportunities in hotel supply and sponsored listings, along with relative insulation from AI risk [2] - Barclays also upgraded Airbnb to Equal Weight from Underweight with a price target of $120, up from $107 [2] - Susquehanna upgraded American Airlines (AAL) to Positive from Neutral with a price target of $20, up from $14, noting a constructive fundamental backdrop for airlines into fiscal 2026 [2] - JPMorgan double upgraded Southwest (LUV) to Overweight from Underweight with a price target of $60, up from $36, highlighting a potential for a $5 earnings per share outlook for 2026 [2] - Berenberg upgraded CrowdStrike (CRWD) to Buy from Hold with an unchanged price target of $600, citing valuation following recent underperformance [2] - BofA upgraded FedEx (FDX) to Buy from Neutral with a price target of $365, expecting demand to be aided by infrastructure investments and $1.4 trillion in expected expenditures over the next three years [2]

Core Viewpoint - UPS has a promising long-term growth strategy but faces questions regarding its near-term capital allocation strategy [1] Group 1: Growth Strategy - Under CEO Carol Tomé, UPS is focusing on targeted end markets and deliveries rather than merely increasing delivery volume [2] - The strategy includes a plan to voluntarily reduce low- or negative-margin Amazon deliveries by 50% from early 2025 to mid-2026 [3] - UPS aims to grow in specific markets such as small and medium-sized businesses (SMBs), healthcare, and business-to-business e-commerce, while investing in technology to enhance productivity [5] Group 2: Financial Performance and Risks - UPS has missed its initial full-year guidance for three consecutive years due to weaker-than-expected U.S. delivery volumes [6] - The company is facing deteriorating trading conditions, with analysts suggesting it may not generate sufficient free cash flow to cover its nearly $5.5 billion dividend payout [7] - The impact of Trump tariffs on SMBs has not fully materialized, potentially affecting UPS's performance [7] Group 3: Market Position - Despite UPS's long-term strategy being sound, there are near-term risks associated with earnings and limited dividend coverage [8] - FedEx has outperformed UPS in stock price performance, indicating competitive pressures in the package delivery market [1]

Core Insights - FedEx's revenue is expected to benefit from strong growth in higher-value B2B customers, with a significant shift in sales mix towards B2B in recent years [1] Group 1: Company Performance - In the last quarter, nearly half of FedEx's revenue came from B2B customers, indicating a successful transition in its sales strategy [1]

Core Insights - FedEx's revenue is expected to benefit from strong growth in higher-value B2B customers, with a significant shift in sales mix towards B2B in recent years [1] Group 1: Company Performance - In the last quarter, nearly half of FedEx's revenue came from B2B customers, indicating a successful transition in its sales strategy [1]

Core Insights - FedEx is expanding its B2B shipping strategy, which has contributed to nearly half of its revenue growth in the recent quarter, particularly in the automotive and healthcare sectors [3][6] - The company is focusing on specific industries by deploying dedicated leadership teams and resources, including a new data center sales vertical to support existing and new customers [3] - FedEx is enhancing its capabilities in the healthcare sector by allowing shippers to set their own rules for package intervention and monitoring, and has launched a program to create custom standard operating procedures with pharmaceutical shippers [6] Industry Focus - The automotive vertical has seen incremental business growth, exemplified by FedEx's relationship with BMW Group, which values the carrier's global reliability and service for time-critical deliveries [6] - FedEx is also targeting the data center industry, which is experiencing rapid growth and demands precision in logistics, an area where FedEx claims to excel [4] - The company is working with U.S. e-commerce players, such as Wayfair, to improve customer experience by reducing tracking data outages and enhancing order visibility [4]

Core Viewpoint - The article provides an update on FedEx Corporation (FDX) following a previous downgrade to a hold rating due to less attractive risk-reward dynamics, emphasizing a fundamentals-based approach to value investing [1]. Group 1: Investment Philosophy - The company believes that low multiple stocks are not necessarily cheap and seeks firms that demonstrate long-term durability at affordable prices [1]. - There is a preference for companies with steady long-term growth, minimal cyclicality, and strong balance sheets [1]. - The article acknowledges the inherent risks in investing in successful companies, particularly the potential to overpay, highlighting the importance of valuation [1]. Group 2: Market Outlook - The company asserts that in certain situations, the potential for growth is so significant that immediate price considerations become less critical [1].