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The parcel delivery industry is changing in a way that puts FedEx and UPS at a disadvantage. Residential delivery, the fastest growing segment, is proving to be less efficient (and less profitable) than the B2B models that these companies specialized in. Meanwhile, they are losing business to Amazon’s formidable logistics network. And although FedEx and UPS are laying the foundations to get a share of the delivery-by-drone business, they are not alone in that increasingly crowded race. The way their respective stocks have performed reflects how good of a job each company has done adapting to disruptive market forces. UPS is faring much better than FedEx due to some transformative changes it has made to its operations. Both, however, ought to be concerned about their longer-term prospects.

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