As investigators seek answers for why a double-trailer FedEx (FDX) Freight truck jumped a median and collided with a charter bus killing 10 people last week, expect closer scrutiny from federal regulators on whether existing transportation safety rules are tough enough to protect the public.
And if regulators decide that new rules are needed, investors in FDX and United Parcel Service (UPS) need to factor in the impact of those regulatory headwinds.
The National Transportation Safety Board (NTSB) and the Federal Motor Carrier Safety Administration (FMCSA) are investigating the April 10 crash in which a FDX Freight tractor hauling double trailers jumped a median on Interstate 5 in California, colliding with a Silverado Stages coach shuttling more than 40 students and chaperones on a visit to Humboldt State University. Five students, three chaperones and the drivers of both vehicles perished in the crash; 34 others were injured, many with severe burns.
Of course it’s beyond crass to reduce the tragic death of 10 people — five of them high school students on their way to visit a college — to a calculation of higher costs and lower stock prices. But the balance between cost and safety has always been a tenuous one for the transportation industry: Err too much on the side of safety, and transportation companies can’t stay in business; err too much on costs and people die.
As premier cargo companies, FDX and UPS stock are potentially vulnerable to public opinion – and regulatory action. Here are three reasons safety concerns could potentially stall FDX and UPS stock: