Some beaten-up logistics stocks offer investors an opportunity heading into peak shipping season.
United Parcel Service announced Wednesday that it will hire 100,000 additional workers for the seasonal rush. That's a typical number for the shipper. UPS has roughly 460,000 employees, down from more than half a million a few years ago before the post-Covid freight recession resulted in cost-cutting.
Peak shipping season runs from late October to mid-January, around the holidays. For UPS, that means fourth-quarter sales typically account for about 27% or 28% of annual revenue.
"We expect UPS's outlook for peak season to be positive, supported by peak surcharges and moderately lower peak volumes year over year given the Amazon glide-down," wrote Citi analyst Ariel Rosa. UPS started reducing Amazon volumes in 2025, citing weaker-than-average profitability. Volume losses have been a revenue headwind for a while, but the impact has lessened over time.
Rosa calls both UPS and FedEx top picks right now: "We view Parcels (UPS/FDX) as attractive with underappreciated pricing upside into 4Q peak."
He also likes truck broker C.H. Robinson Worldwide and less-than-truckload shippers Saia and TFI International. "The sell-off in C.H. Robinson following its RXO acquisition announcement should be seen as a buying opportunity," wrote Rosa. Earlier this week, C.H. Robinson announced plans to buy RXO, which sent shares down 11% on Monday. It was an overreaction, according to Citi. "C.H. Robinson also benefits from supportive conditions for ocean/airfreight, which should flow through in 3Q to its Global Forwarding segment," he added.
Less-than-truckload $(LTL)$ shippers mainly serve industrial customers that don't need a full truck and are shipping over relatively short distances.
Rosa also upgraded LTL XPO to Buy from Hold on Wednesday and raised his price target to $224 from $220. That's only a $4 bump, but coming into Wednesday trading, XPO stock has dropped more than 20% from a summer 52-week high north of $232.
Higher diesel prices have weighed on shipping costs and investor sentiment.
The stocks' declines, however, are one reason Rosa feels better about his picks heading into year-end.
XPO stock was flat in early trading after the upgrade, at $184.51, while the S&P 500 and Dow Jones Industrial Average were down 0.6% and 0.9%, respectively.
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