FedEx Stock Gains as Possible Port Strike Could Bolster Air Freight

Key Takeaways

• FedEx shares advanced on Monday as analysts said a likely labor action by dockworkers could lift demand for air freight.
• Members of the International Longshoremen’s Association are reportedly planning to go on strike beginning at midnight, disrupting operations at key ports.
• Analysts also believe freight-forwarding companies stand to benefit, while there could be negative consequences for carmakers and retailers that depend on the ports.

Shares of package delivery giant FedEx (FDX) advanced to start the trading week amid predictions that demand for air freight could increase if dockworkers at ports on the U.S. East Coast and Gulf Coast begin a labor stoppage.

Following months of stalled negotiations over a new labor contract, members of the International Longshoremen’s Association are reportedly planning a walkout beginning Tuesday. The expected labor action by the 47,000-member union would disrupt activities at some of the country's biggest ports and cause rippling impacts throughout the economy.

According to reports, analysts at investment banking firm Stifel said companies with air freight capacity—including FedEx and logistics rival United Parcel Service (UPS)—are positioned to benefit from a potential dockworker strike as shippers turn to the skies to sidestep the affected port facilities.

FedEx shares rose 2.3% on Monday, marking one the S&P 500's top daily performances, while UPS shares advanced 1.6%.

FedEx Recently Slashed Outlook

The potential boost in the air freight business should come as welcome news to FedEx, whose shares plunged earlier this month when the company missed quarterly sales and profit estimates and slashed its full-year guidance.

Stifel analysts also mentioned a few other potential beneficiaries of the looming port strike, including freight forwarders like Expeditors International (EXPD) and C.H. Robinson (CHRW). Shares of both companies added 1.9% on the day.

Carmakers, Retailers Face Negative Impacts

Meanwhile, Baird focused on the possible consequences for other sectors. Baird analysts believe that any impact of the dock strike on shares of railroad operators is likely to be short-lived but cautioned of more extended impacts for companies like carmakers and retailers that depend on the ports to receive key parts and merchandise.

Do you have a news tip for Investopedia reporters? Please email us at tips@investopedia.com