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UNITED PARCEL SERVICE

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Despite New Safeguards, Fentanyl Trafficking Is Still a Problem

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08/23/2019 | 04:13pm EDT

By Kelsey Gee and Arian Campo-Flores

President Trump's tweet Friday ordering delivery companies to block shipments of fentanyl from China put a spotlight on long-running efforts to combat trafficking of the deadly synthetic opioid.

Up to 50 times as powerful as heroin, fentanyl has fueled an epidemic of drug-overdose deaths in the U.S. for years. It is sometimes mixed with other drugs such as heroin or pressed into counterfeit prescription pills and sold to sometimes unsuspecting users.

The vast majority of fentanyl arriving in the U.S. comes from foreign sources, mainly from China, according to drug-enforcement officials. While much of it is routed through Mexico, U.S. buyers also purchase fentanyl online from labs in China and have it shipped to them. They have relied on the U.S. Postal Service as well as United Parcel Service Inc. and FedEx Corp., according to authorities.

On Wednesday, the U.S. Treasury Department sanctioned three Chinese nationals and a pharmaceutical company for running an alleged narcotics trafficking operation that, according to officials, has contributed to the U.S. opioid crisis. Officials cited the use of express mail and the Postal Service.

In response to Mr. Trump's tweet, American carriers said they have already implemented safeguards to spot and thwart international drug shipments sent by mail to the U.S.

"FedEx already has extensive security measures in place to prevent the use of our networks for illegal purposes," company spokeswoman Jenny Robertson said Friday. "We follow the laws and regulations everywhere we do business and have a long history of close cooperation with authorities."

Ms. Robertson said FedEx has encouraged federal postal inspectors to enforce a law that requires international senders of mail to the U.S. to give U.S. Customs and Border Protection inspectors basic information about a package's intended recipient, contents and the shipper's name and address.

The U.S. Postal Service has said the measure, known as the Synthetics Trafficking and Overdose Prevention, or STOP, Act, which was signed into law last year, has added significant costs as inspectors increase scrutiny of deliveries. A Postal Service spokesman said that the agency is working aggressively to implement the new shipping requirements but that it has limited control over whether foreign senders comply with U.S. law. He declined to comment on the president's tweet.

In July, Chief Postal Inspector Gary R. Barksdale testified to Congress that the agency's staff had seized 185 synthetic opioid parcels so far in 2019, of which 153 were shipments from domestic senders.

As of May, he said the Postal Service received advanced electronic data on 60% of the international shipments arriving in the U.S. mail system, up from 26% in October 2017. The STOP law required the agency to collect shipment information on 70% of inbound deliveries from foreign shippers by the end of last year and on all international packages by the end of 2020.

For China specifically, the agency was now collecting information on 85% of deliveries.

Glenn Zaccara, a UPS spokesman, said that the company doesn't disclose its screening processes out of confidentiality and security concerns but that it works closely with Customs and Border Protection agents and other law-enforcement agencies to monitor for illicit substances.

"UPS takes a multilayered approach to security and compliance to identify and prevent delivery of illegal fentanyl and other illicit substances as well as any other attempts of noncompliant shipments," Mr. Zaccara said.

Representatives for Amazon.com Inc. didn't respond to requests for comment.

Write to Kelsey Gee at kelsey.gee@wsj.com and Arian Campo-Flores at arian.campo-flores@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
AMAZON.COM -1.50% 1794.16 Delayed Quote.19.45%
FEDEX CORPORATION -2.41% 148.78 Delayed Quote.-7.78%
UNITED PARCEL SERVICE 1.33% 120.7 Delayed Quote.23.76%
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Financials (USD)
Sales 2019 74 410 M
EBIT 2019 8 219 M
Net income 2019 6 419 M
Debt 2019 18 656 M
Yield 2019 3,13%
P/E ratio 2019 16,3x
P/E ratio 2020 14,8x
EV / Sales2019 1,64x
EV / Sales2020 1,57x
Capitalization 104 B
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Mean consensus OUTPERFORM
Number of Analysts 28
Average target price 123,52  $
Last Close Price 120,70  $
Spread / Highest target 16,0%
Spread / Average Target 2,34%
Spread / Lowest Target -29,6%
EPS Revisions
Managers
NameTitle
David P. Abney Chairman & Chief Executive Officer
James Jay Barber Chief Operating Officer & Senior Vice President
Richard N. Peretz Chief Financial Officer, Treasurer & Senior VP
Juan R. Perez Chief Information & Engineering Officer, Senior VP
Carol B. Tomé Independent Director
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