FedEx Expects 17 Million Deliveries On Busiest Day Of Holiday Season

NEW YORK — FedEx Corp. said Monday it expects to ship more packages this holiday season than ever before. The volume jump will be driven by cheaper packages it moves through a partnership with the U.S. Postal Service.

The world's second-largest package delivery company expects to handle 17 million packages on its busiest day, which this year is projected to fall on Dec. 12. That's 10 percent more than its busiest day last year.

Between Thanksgiving and Christmas, FedEx Corp. expects more than 260 million shipments, a 12 percent increase from 2010.

Investors cheered the optimistic forecast, a month after FedEx Corp. said shoppers were pulling back on spending. FedEx shares rose $2.12, or 2.7 percent, to $81.46 in afternoon trading.

The number of shipments FedEx handles at this time of year has climbed steadily through the recession as holiday shoppers skip stores and have gifts shipped after buying them online. The growth is also due in large part to its SmartPost service with the U.S. Postal Service. SmartPost parcels, mostly from online and catalog retailers, move through FedEx's network but are delivered by a postal worker.

SmartPost has been a huge growth driver for FedEx since the partnership was formed. Average daily volume in the segment grew 29 percent in FedEx's fiscal first quarter, which ended Aug. 31. Shipments are being boosted as online shopping grows, giving FedEx a bigger slice of the market.

Overall, holiday shopping is expected to be up from last year, but the rate of growth is not nearly as fast as previous years. Retail sales in the U.S. are expected to grow 2.8 percent in November and December to $465.6 billion, according to the National Retail Federation, far below 2010's 5.2 percent increase. The forecast is slightly higher than the average growth rate over the last decade of 2.6 percent. About 46.7 percent of shoppers are expected to buy online, compared with 43.9 percent last year.

FedEx, based in Memphis, Tenn., plans to add about 20,000 seasonal workers to handle the surge, up from 17,000 last year.

Last month FedEx said that while it's seeing signs that the economy is slowing down, it's not predicting a recession. Still, a pullback in consumer spending prompted the company to lower its earnings expectations for the fiscal year that ends in May.

FedEx's larger rival, Atlanta-based United Parcel Service Inc., hasn't yet released peak day predictions. In a note to clients on Monday, Dahlman Rose & Co. analyst Jason Seidl said he doesn't expect holiday shipment growth at UPS to be as a robust as FedEx, because it doesn't have a segment similar to SmartPost.

Seidl said he expects UPS to be more cautiously optimistic about its business and the economy in general when it reports third-quarter financial results Tuesday.

UPS shares rose 68 cents in afternoon trading to $70.74.

Comments

[reviewingthesituation]

08:44 AM on 11/05/2011

Good luck with FedEx.

I had to drive to my local FedEx center to pick up a package that had been "overnighted" three days earlier. When I had tried to track it online, they told me it had the wrong address. Not so. When I asked why my friends' GPS's and the USPS could find me but they could not, I was told that FedEx trucks do not have GPS devices. Wouldn't you think this would be an essential in their business? I even emailed them the Google maps site that contained a phoo of my house.(It's been here 25 years.)

The coup de gras, howeer, was when they explained that they had tried to reach me by phone but that I had not responded. (So the delay was MY fault.) I told them that the "overnight" package I was awaiting was a replacement cellphone for the one that had died and left me without a working number.

I guess I'm supposed to pay for a second line so FedEx can call me for directions to my house if my phone dies again and they can't find me.

[Fabini]

06:35 AM on 10/25/2011

Why do people and businesses ship through these private carriers instead of using the much more affordable Postal Service? The USPS is inexpensive and quick, use them.

[Tom95134]

10:21 PM on 10/24/2011

I wonder what the USPS delivers on the same day. USPS should be aggressively going after this small package delivery business. If you ship USPS it is usually less costly and delivery times are the same.

[zelduh]

02:27 PM on 10/24/2011

FedEx and UPS plan on taking over the services provided by the United States Postal Service - at 5 times the price; except in the rural areas, where residents will have to pay 15 times the price.

Please go to your local post office and sign the petition.

Read about it here: http://www.saveamericaspostalservice.org/

[RecreationalPilot]

12:41 PM on 10/24/2011

FedEx & UPS both aren't getting my extended families business.

If it comes down to saving the USPO and our ability to get daily home pickup & delivery without service fees or yearly contracts and the ability to get $0.42 letters mailed versus the overpriced offering the other two will entail... my money is on the USPO.

[zelduh]

02:25 PM on 10/24/2011

Agreed. And, right now, the postal workers need our help! Please go to your local post office and sign the petition.

See: http://www.saveamericaspostalservice.org/ for information.

[buffaloon]

12:32 PM on 10/24/2011

And if they are like my most recent Fed-Ex deliveries, they will be late, banged up and/or delivered to the wrong address. This is what you get from a non-union shop.

[RecreationalPilot]

12:43 PM on 10/24/2011

They drop off without signature anymore, unless you pay for it. What's the benefit for paying 2-3 times as much?

And they charge these rates when they don't have to make daily door-to-door deliveries and pickups. Imagine the costs they'd charge to provide those services?