Parcel shipping: FedEx preps for busiest day of the year on December 14
Jeff Berman, Group News Editor -- Logistics Management, 11/11/2009
Gearing up for the holiday season, FedEx announced yesterday that it expects to move more than 50 million packages through its global FedEx Express, FedEx Ground, and FedEx Freight networks, during the week of December 14, which it said is the company's busiest week of the year.
FedEx officials said that on December 14 the company expects to ship more than 13 million shipments, which would outpace the busiest day of 2008-December 15-which hit 12 million packages, roughly an eight percent difference. FedEx ships, on average, more than 7.5 million packages through its system on a daily basis.
A Wall Street Journal report noted that the nearly 8 percent year-over-year increase reflects an expected growth in online retailing, which matches up with a Morgan Stanley report released yesterday that indicates e-commerce will grow from a 4 percent market share today to 6 percent or more by 2012.
Jerry Hempstead, president of Hempstead Consulting, told LM that the primary beneficiary of e-commerce growth this year is likely to be FedEx, because a big chunk of business which DHL had [before DHL Express exited the U.S. market in January 2009] in the business-to-consumer sector was through its DHL@home offering, a relationship between DHL and the United States Postal Service, which was primarily for B2C shippers and provided secure and cost-effective shipping services, in which shipments were picked up by DHL and delivered directly to consignees by the local post office.
"When DHL@home went away, all those shippers went to FedEx SmartPost," said Hempstead. "And this past January, FedEx SmartPost picked up additional business due to issues between the USPS and Amazon, when the USPS said in an SEC filing that Amazon was not accounting for all of its transactions properly."
While these issues are likely to lead FedEx to its busiest holiday season ever, Hempstead pointed out it is driven by some extraordinary happenings.
The WSJ report said that UPS will be issuing a holiday forecast next week, coupled with a previous announcement that it will take on about 50,000 temporary staffers in the U.S. from Thanksgiving through the end of the year.
2010 rate hikes: A Reuters report published this week cited UPS CEO Scott Davis as saying his company will be rolling out 2010 shipping rate increases later this month.
Earlier this year, FedEx announced some of its 2010 rate hikes. FedEx said its FedEx Express subsidiary will increase 2010 shipping rates by an average of 5.9 percent for U.S. domestic and U.S. export services on January 4, 2010. But the actual rate increase will be 3.9 percent, as it will be offset 2 percent by adjusting the fuel price at which the fuel surcharge begins by two percentage points. This is one percentage point lower than the 6.9 percent increase for 2009 FedEx announced last year.
While volumes remain largely down for both UPS and FedEx, Davis told Reuters that UPS expects growth in the next year as the global economy gradually recovers.
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