Avalanche of E-Commerce Expected to Boost FedEx Shipping Volume This Holiday Season
FedEx expects about 10% growth in holiday season shipping volume amid an avalanche of e-commerce.
That's below rival UPS Inc.'s 14% estimate and a comparable increase last year at FedEx, but FedEx officials say they're more focused on service than peak season numbers.
For the first time since at least 2009, FedEx isn't giving specific numbers for overall seasonal volume and busiest day between Thanksgiving and Christmas.
FedEx ranks No. 2 and UPS No. 1 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.
But officials are confident it will be record breaking, said Patrick Fitzgerald, a senior vice president at the Memphis-based company.
"We're expecting volume approximately 10% higher than last year, which was also a record," Fitzgerald said.
As to the peak day, "What we're saying now is, 'We're ready for it, whatever day that it is.' And to be honest, from a business perspective, it's not as significant, because whatever the busiest day is, it's likely there will be two or three others that are very close to it. We will have multiple days that we expect to be records," Fitzgerald said.
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UPS has projected peak season volume of more than 700 million packages, and industry tracker ShipMatrix has projected a similar 14% increase for FedEx.
FedEx has said it expects the four Mondays before Christmas to be among the company's busiest ever as the holidays accelerate a trend toward weekend online shopping pouring more packages into the pipeline.
The National Retail Federation has predicted online sales will be up 7% to 10% this year.
ShipMatrix President Satish Jindel predicted Cyber Monday, following Thanksgiving, will be FedEx's busiest day for pickups and the Monday before Christmas will have the most deliveries. "The volume they're projected to hit is 370 million between Black Friday and Christmas, compared to 325 million actual last year," Jindel said. Last year FedEx handily beat its pre-peak growth estimate of 12.4%.
Jindel, a former insider at FedEx Ground, speculated that forecasts are more relevant to financial media than key stakeholders. "There are so many analysts, so many people who are trying to get them to talk about this. From their point of view, it's not relevant to the investors, it's not relevant to the shippers."
FedEx's capital investments should help the company win more business, including perhaps "some volume coming to them from Amazon that they might not have seen before," Jindel said.
Since last peak season FedEx has invested about $2 billion in the FedEx Ground network, adding four major distribution hubs and 19 fully automated stations, Fitzgerald said. That adds up to more than 12 million square feet of new sorting space at FedEx Ground, which carries the bulk of peak volume. The automated stations allow FedEx to speed deliveries in targeted geographic areas.
FedEx Ground also will operate six temporary annexes to handle oversized items such as big-screen TVs, home gyms, trampolines, mattresses and bicycles. The annexes are in Rialto, California; Metuchen, New Jersey; Chicago; Sugarland and Fort Worth, Texas; and Atlanta.
"Picture entire buildings for sortation that are dedicated to those items, so we can maintain speed and reliability for the large items. If those large items go to the traditional sortation they could affect the standard (packages)," Fitzgerald said.
FedEx Express has added 30 new, more efficient planes, plus enhanced vision systems on 270 aircraft to improve response to weather events. More than 50,000 people are being hired for peak season company-wide, including about 2,500 in the Memphis area.
Fitzgerald, FedEx senior vice president of integrated marketing and communications, said FedEx has been working to alert shippers about Christmas week scheduling because Christmas falls on a Sunday.
FedEx Express will deliver on Christmas Eve, but FedEx Ground won't.
However, consumers can choose to have packages routed to FedEx Office locations for pickup as late as Christmas Eve.
Fitzgerald said officials are confident the holiday season plan will be crisply executed.
"The engineers plan all these things. When these days are happening it's all about the package handlers and couriers and drivers and helpers and pilots and all of the people who are delivering to make these records happen and to flex our network in a way that is truly astounding to witness, and ultimately still be able to provide service that our customers have come to expect," Fitzgerald said.
