The transportation market in 2025 shows significant promise, fueled by rising cargo volumes, booming e-commerce, competitive freight rates, and geopolitical factors. Additionally, regional strengths in Asia-Pacific and the Middle East are driving demand.

Considering this, investing in fundamentally strong transportation stocks like United Parcel Service, Inc. (UPS), FedEx Corporation (FDX), and Radiant Logistics, Inc. (RLGT) could be a wise move.

The transportation and shipping industry is vital globally, driven by globalization, e-commerce, and trade agreements. IATA forecasts a 5.8% rise in air cargo volumes to 72.50 million tonnes, with revenues reaching $157 billion, surpassing pre-pandemic levels. Moreover, competitive freight rates, further support industry growth.

Meanwhile, the industry also thrives through the integration of advanced technologies, enhancing operational efficiency and reliability. In the U.S., over 125 global agreements improve market access and facilitate seamless cargo transport. Consequently, the U.S. air freight market is projected to grow from $56.22 billion in 2024 to $70.21 billion by 2029, with a CAGR of 4.55%.

Furthermore, the adoption of Sustainable Aviation Fuel (SAF) by key players supports sustainability trends, while rising international trade and shifting geopolitical factors drive growth opportunities in the transportation sector. Hence, let’s take a closer look at the fundamentals of the three Air Freight & Shipping Services picks, starting with number three.

Stock #3: United Parcel Service, Inc. (UPS)

UPS is a package delivery company that provides transportation and delivery, distribution, contract logistics, ocean freight, airfreight, customs brokerage, and insurance services. It operates through two segments: U.S. Domestic Package and International Package.

In terms of the trailing-12-month Return on Total Capital, UPS’ 12.04% is 69.8% higher than the 7.09% industry average. Its 8.30% trailing-12-month Return on Total Assets is 59.2% higher than the 5.21% industry average. Furthermore, its 1.31x trailing-12-month asset turnover ratio is 67.6% higher than the 0.78x industry average.

For the fiscal third quarter ended September 30, 2024, UPS’ revenues increased 5.6% year-over-year to $22.20 billion. Similarly, its adjusted operating profit grew 22.8% from the year-ago value to $1.98 billion. The company’s adjusted net income and adjusted EPS were $1.50 billion and $1.76, up 11.7% and 12.1% over the prior-year quarter, respectively.

Analysts expect UPS’ EPS and revenue for the quarter ended December 31, 2024, to increase 2% and 1.6% year-over-year to $2.52 and $25.32 billion, respectively. It surpassed the Street EPS estimates in three of the trailing four quarters. The stock has declined 7.4% over the past month.

UPS’ positive outlook is reflected in its POWR Ratings. It has an overall rating of B, translating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It has a B grade for Growth and Quality. It is ranked #4 out of 15 stocks in the Air Freight & Shipping Services industry. Click here to see UPS’ Value, Momentum, Stability, and Sentiment ratings.

Stock #2: FedEx Corporation (FDX)

Headquartered in Memphis, Tennessee, FDX provides transportation, e-commerce, and business services in the United States and internationally. It operates through FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services segments.

On October 30, 2024, FDX announced the opening of a new, fully automated, state-of-the-art sorting facility at its Memphis World Hub, enhancing sorting efficiency and processing capacity ahead of the holiday season.

In terms of the trailing-12-month Return on Common Equity margin, FDX’s 14.59% is 6.9% higher than the 13.64% industry average. Likewise, its 4.77% trailing-12-month Capex/Sales is 65.8% higher than the 2.88% industry average. Its 1.01x trailing-12-month asset turnover ratio is 29% higher than the 0.78x industry average.

FDX’s revenue for the fiscal second quarter ended November 30, 2024, was $21.97 billion. Its adjusted total operating income was $1.38 billion. Additionally, the company’s adjusted net income was $990 million, and adjusted EPS was $4.05, up 1.5% compared to the prior-year quarter.

Street expects FDX’s EPS and revenue for the quarter ending February 28, 2025, to increase 23.1% and 0.9% year-over-year to $4.75 and $21.94 billion, respectively. It surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has gained 8.8% over the past year.

FDX’s POWR Ratings reflect solid prospects. It has an overall rating of B, which translates to a Buy in our proprietary rating system.

It is ranked #2 in the same industry. It has a B grade for Quality. To see FDX’s Growth, Value, Momentum, Stability, and Sentiment ratings, click here.

Stock #1: Radiant Logistics, Inc. (RLGT)

RLGT operates as a third-party logistics company, providing technology-enabled global transportation and value-added logistics solutions primarily in the United States and Canada. The company offers domestic and international air and ocean freight forwarding services, as well as freight brokerage services, including truckload and intermodal services.

On December 3, 2024, RLGT announced the acquisition of TCB Transportation, enhancing its intermodal capabilities and integrating TCB’s door-to-door container services into its network to drive growth and customer value.

On October 2, 2024, RLGT announced the acquisition of Focus Logistics, strengthening its freight forwarding services and integrating operations under the Radiant brand, with a leadership transition in Detroit.

In terms of the trailing-12-month asset turnover ratio, RLGT’s 2.11x is 170.4% higher than the 0.78x industry average.

In the fiscal first quarter ended September 30, 2024, RLGT’s net sales were reported at $203.57 million. Its income from operations grew 3.9% from the year-ago value to $3.80 million. Also, the company’s net income attributable to RLGT was $3.38 million, or $0.07 per share, up 28.8% and 40%, respectively, compared to the prior-year quarter.

For the quarter ended December 31, 2024, RLGT’s revenue is expected to increase 9.7% year-over-year to $220.60 million. Its EPS for fiscal 2026 is expected to rise 35.1% year-over-year to $0.52. RLGT’s stock has gained 26.6% over the past nine months.

RLGT’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, translating to a Buy in our proprietary rating system.

It has a B grade for Growth and Sentiment. It is ranked first in the Air Freight & Shipping Services industry. To see RLGT’s Value, Momentum, Stability, and Sentiment ratings, click here.

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UPS shares rose $0.06 (+0.05%) in after-hours trading Friday. Year-to-date, UPS has declined -1.83%, versus a 1.00% rise in the benchmark S&P 500 index during the same period.

About the Author: Abhishek Bhuyan

Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments. More...

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