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FedEx Sees Online Shoppers Powering Holiday Record

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NEW YORK (AP) — FedEx  (NYSE: FDX  ) expects to ship 280 million packages between Thanksgiving and Christmas, up 13 percent from a year ago, thanks to consumers' growing fondness for shopping online.

FedEx moves a bulk of its cheaper, lighter-weight shipments from online and catalog retailers through its SmartPost service, a partnership with the U.S. Postal Service.

The forecast, released Monday, comes against a background of lackluster growth in the global economy.

The Memphis, Tenn., shipper expects Dec. 10 to be its busiest day with 19 million shipments, up 10 percent from 2011. FedEx said holiday shipments will be driven by sales of personal electronics, apparel, luxury goods, and items from large Internet retailers.

Larger rival UPS (NYSE: UPS  ) , which is based in Atlanta, hasn't yet released its holiday forecast.

The National Retail Federation expects holiday sales to increase 4.1 percent. That would be the smallest increase since 2009 when sales were up just 0.3 percent. But the forecast still is higher than the 3.5 percent average over the last 10 years. Research firm eMarketer forecasts online holiday sales will grow 16.8 percent, excluding travel purchases.

FedEx and UPS can get double the benefit when consumers choose to shop online: They ship the gift to the receiver, and they also ship the unwanted presents that are later returned.

FedEx SmartPost has been a huge driver of growth for the company since it was formed. Average daily package volume grew 18 percent in the fiscal first quarter ended in August, more than three times the growth rate of FedEx's overall ground shipments in the U.S. The ground segment, which moves mostly non-priority shipments by truck, has held up despite slower growth around the globe as consumers and businesses opt for slower methods of shipping to save money.

FedEx plans to hire 20,000 seasonal workers to help handle the surge — the same as last year.

Overall, FedEx has warned that the global economy is stalling and expects conditions to get worse next year. It's making big cuts in the segments that have been the hardest hit, including its Express unit that moves top-priority shipments by air.

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10/24/2016 10:03 AM
FDX $171.79 Up +1.59 +0.93%
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