CNBC's Frank Holland reports on the latest news from FedEx and why it is under pressure.

FedEx reported a projected $600 million negative impact due to the grounding of its MD-11 planes and ongoing weakness in its freight division, leading to a decline in share price. However, analysts from JP Morgan and Citi raised their price targets, highlighting FedEx's increased pricing power, higher fuel surcharges, and improved European operations.

CEO Raj Subramanian discussed how shifting U.S. tariffs are changing trade flows, resulting in increased intra-Asia and Asia-to-Europe traffic. Despite a 2% drop in freight revenue and a 4% decline in average daily shipments, FedEx is gaining market share, particularly in B2B and B2C segments, as customers move from competitors like UPS.

FedEx under pressure

Our Frank Holland is back with us on FedEx. Hey Frank. Hey Leslie. Looking at FedEx shares are lower right now. It seems to be from the company guiding for a 600 million dollar negative impact from the grouting of his MD-11 planes and some weakness in its freight division. That seems again be what's weighing on the stock. But investors and analysts are seeing things very differently. Today JP Morgan, Citi and others raising their price targets and giving a lot of praise to the quarter. I'm gonna dig in on the JP Morgan note. They cited FedEx's increased pricing power but also a couple under the radar factors including higher fuel surcharges that began on Cyber Monday and upside from improving operations in Europe which have traditionally been a weak spot for FedEx. CEO Raj Subramanian also touched on how U.S. tariffs are changing trade flows and how FedEx is looking to capitalize on China to U.S. volumes decreasing as China itself sees a 1 trillion dollar trade surplus. Meaning that there's more traffic going to other parts of the world. So our intra-Asia traffic is up or Asia to Europe which is primarily B2B actually is up. And Latin America inbound is up. You know Asia to Middle East and India is up. India outbound is up. So those patterns are changing. All right the freight segment was a weak spot with revenue falling 2% and average daily shipments falling by 4%. But had a Citi analyst Ari Rose on Worldwide Exchange earlier. He sees the administration's crackdown on non-U.S. truck drivers and also what they see is illegitimate trucking schools as a big tailwind for rates that FedEx could benefit from. Back over to you. Yeah the labor side is definitely a puzzle to figure out. I do wonder the the difference Frank in year-to-date performance between FedEx and UPS. Is that about the fleets or is it another different kind of union or growth strategy? Why the difference? Well part of the difference seems to be the fact that FedEx is actually gaining market share. They really cited that about half of their revenue growth was from B2B gains. They've also seen a lot of strength in B2C. So we've just seen a lot of different customers switch over to FedEx. Now some of that could have been due to the labor issue that UPS had with the Teamsters. A lot of customers may have been worried and just kind of stuck with FedEx. Also FedEx previously and this is unwinding now it had an advantage over other companies. They could combine e-commerce and freight along with trucking. Less than truckload trucking as a combined company. Now they're spitting off the freight division and they're also separating those two parts of the business. But you would imagine a lot of customers are just in that FedEx ecosystem and even though they're not getting that discount due to combining the rates staying both with the trucking company and the e-commerce service. All right Frank thank you so much. Glad we got you back. Our Frank Holland on FedEx there for us.

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