The coronavirus pandemic has been a game-changer for package delivery companies, as it has led to an unprecedented surge in ecommerce, collapsed fuel prices, and the grounding of most commercial jets around the world. Together, these conditions, have created a goldilocks moment for FedEx, UPS and other parcel expeditors.

Related Stocks: FedEx Corporation (FDX), United Parcel Service (UPS)

Back in December, MRP wrote the following:

“The parcel delivery industry is changing in a way that puts FedEx and UPS at a disadvantage. Residential delivery, the fastest growing segment, is proving to be less efficient (and less profitable) than the B2B models that these companies specialized in. Meanwhile, they are losing business to Amazon’s formidable logistics network… Both ought to be concerned about their longer-term prospects.”

Then the coronavirus pandemic came along and completely reversed the fortunes of the parcel delivery industry.

Massive Demand Surge

To say that we are in a starkly different competitive environment than the one FedEx and UPS were operating in at that beginning of the year would be an understatement. At the time, both were fighting for business to fill their networks and had difficulty squeezing higher prices out of their customers. Today, they are barely able to keep up with demand amid a surge of online deliveries that’s pushing their networks to capacity.

FedEx and UPS have both seen huge spikes in package volume since the COVID-19 pandemic began. Although business shipments plunged, home deliveries soared enough to make up the shortfall. FedEx Express and FedEx Ground’s combined average daily package volume during the second quarter was 16.5 million, up 10% from a year earlier. UPS delivered an average of 24.4 million packages daily in Q2, up 21% from the same period last year. These numbers are just for the U.S. market.

Activity doesn’t appear to be slowing down in the second half of the year. CNBC reports that July package volumes exceeded the average monthly volume in the first three months of the outbreak. UPS saw volume grow…

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