FedEx Express, an affiliate of
), announced that it will continue with the air cargo delivery
contract with the U.S. Postal Service. The agreement, which was
supposed to expire on Sep 2013, has been renewed for the next
seven years. The new contract comes into effect from Oct 2013.
Per the renewed deal, estimated at $10.5 billion, FedEx Express
will continue to render transportation of Express Mail and
Priority Mail within the U.S. airports. FedEx Express aims to
provide the same high-quality services that it has been offering
over the last 12 years to the Postal Department through the new
agreement. Interestingly, the revised contract calls for enhanced
operations, more capacity flexibility and improved activities.
Memphis, Tennessee based FedEx is the leader in global express
delivery services and intends to spread its operations across the
U.S., Canada and Mexico and capitalize on potential business
opportunities in NAFTA (North American Free Trade agreement)
markets. The company is boosting its international business by
heavy investments to boost existing routes and make strategic
FedEx also launched a new business tool to aid e-commerce
customers in their shipping process. The new system, fedex.com
Integration Manager is a Web-based tool that connects with
). The seamless connection allows enterprises running multiple
online stores to simplify their selling and shipment process.
In the coming days, we expect FedEx to register strong earnings
momentum and growth through long-term expansion opportunities. In
Nov 2012, the company increased its shipping rates by 4.9% for
FedEx Ground and FedEx Home Delivery shipments.
However, FedEx currently retains a Zacks Rank #4 (Sell),
reflecting a number of risk factors. We expect the company's
expansion in Europe to remain affected by economic volatilities
resulting in weak business from the continent coupled with low
Asian demand. Further, increased investment, competitive threats
and unionized workforce could limit the upside potential of the
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