What happened

It was a disappointing year for FedEx (FDX 1.17%) investors as they watched their stock mark a slight decline while the S&P 500 index and UPS rose around 27% over the same period.

The performance reflects the company's difficulty in overcoming headwinds created by the COVID-19 pandemic. Of course, the pandemic is a double-edged sword for the package delivery companies. On the one hand, it's created a shift in consumer patterns and accelerated the transition to e-commerce related spending.

US E-Commerce Sales as Percent of Retail Sales Chart

Data by YCharts

On the other, it created many complex and unpredictable conditions, and unfortunately, FedEx suffered more than most from them. The low point in the transportation company's year came after its shocking first-quarter earnings report released in September.

In a nutshell, FedEx took a whopping $450 million hit in the quarter. The reason? Management boiled it down to "constrained labor markets." This refers to an inability to get staff into its hubs and incur third-party transportation costs, increased hiring costs, and extra costs rerouting volumes away from hubs running at low capacity. Specific issues include worker fear over the coronavirus and a lack of child care facilities if schools and day care centers are closed.

So what

Since the pandemic is ongoing, the fear that FedEx may face similar issues in the future is understandable. Moreover, FedEx and UPS are still yet to report on peak volume days over the Christmas and New Year period. Both companies have had issues over increased costs during peak periods in previous years.

As such, it's understandable if investors are a little cautious about the matter right now. That cautiousness wasn't helped by a FedEx company update on Jan. 7 that said: "The explosive surge of the COVID-19 Omicron variant has caused a temporary shortage of available crew members and operational staff in the FedEx Express air network. Additionally, severe winter weather across the country has placed a strain on operations."

Small packages on a keyboard.

Image source: Getty Images.

Now what

Based on Wall Street analyst consensus, FedEx trades on less than 13 times full-year 2022 earnings estimates. As tempting as that sounds, investors will want to see the company confirm it's on track for its full-year guidance when it next updates on operations over the winter. A clue will come when UPS reports at the start of February.