Atlanta, Sept. 12 (Bloomberg) — United Parcel Service Inc. and FedEx Corp. said package deliveries were slowed as much as 48 hours after terrorist attacks shut down U.S. flights, while rail and port operations recovered with some delays because of heightened security.
Both companies said they aren’t honoring money-back guarantees if packages aren’t delivered on time, because the shutdown was beyond their control. The grounding of U.S. flights was ordered after terrorists hijacked planes yesterday and crashed them into the World Trade Center in New York and the Pentagon near Washington.
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The disruption probably won’t have a major financial impact on the $30 billion-a-year express package-delivery industry, said James Valentine, a Morgan Stanley Dean Witter analyst. Valentine said he doesn’t plan to change his earnings forecasts for either company now, though he might if oil prices rise above $30 a barrel for a sustained period in the wake of the attacks.
“The key variable is the direction of oil prices,” followed by the possibility that shipments might slow if the attacks delay a U.S. economic recovery, said Valentine, who has “outperform” ratings on United Parcel and FedEx.
The loss of business “will not be a lasting impact,” said Morgan Keegan analyst Arthur Hatfield, who doesn’t own the companies’ shares and rates both “market perform.” “The only real cost of the impact would be if they had upheld the service guarantee, but they suspended that.”
`As Normally as Possible’
FedEx, the largest overnight-delivery company, is “operating as normally as possible given the circumstances,” spokesman Greg Rossiter said. “We have secured additional trucking capacity to try and deliver our express shipments, many of which are likely to be delayed 24 to 48 hours.”
The Memphis, Tennessee-based company delivers about 3.3 million express packages on a normal day.
For United Parcel, the largest package-delivery company, “ground is moving, though limited in New York City, and air is still shut down,” said spokesman Dan McMackin.
The Atlanta-based company is ready to resume air operations once U.S. regulators allow airplanes to fly again, he said. Deliveries and pickups are taking place, and packages are being moved using the company’s ground network, McMackin said.
Rail Operations
Rail companies said they were operating on schedule today, with delays in the New York area.
CSX Corp., the third-biggest U.S. railroad, said service is back to normal after the company halted freight trains yesterday between Albany, New York, and Washington, including New York City, Philadelphia and Baltimore services.
Congestion in New York City’s Manhattan area was delaying trains, especially those expected to make connections with trucks, said Dan Murphy, a spokesman for the Richmond, Virginia-based company.
Union Pacific Corp., the largest U.S. railroad, said its service also has returned to normal. Security has been increased throughout its system, including limiting access to places such as train dispatching centers and adding more uniformed security agents, the Omaha, Nebraska-based company said.
Amtrak, the national passenger railroad, said service was operating normally. Amtrak had halted trains between Boston and Washington until yesterday evening.
