FedEx, UPS calling for another hectic holiday shipping season

Once again, transportation and logistics titans UPS and FedEx are calling for an incredibly busy holiday shopping season in the form of increased volumes, driven largely by e-commerce.

Following its third quarter earnings announcement earlier today, Atlanta-based UPS said that it expects to pick up more than 34 million packages on Monday, December 16, which will represent its single busiest day of the year.

With 26 shopping days between Thanksgiving and Christmas, which is six less days than in 2012, UPS said the 2013 holiday shopping season will be the most “compressed” one since 2002, with peak season daily volume expected to rise 8 percent this year.

Along with the peak activity day of December 16, UPS cited some other days as key drivers for holiday activity, including: Cyber Monday, December 2, with pick-up volume topping 32 million for a 10 percent annual gain and Tuesday, December 17 predicted to be the peak delivery day with more than 29 million packages.

What’s more, UPS noted there will be five delivery days in this year’s peak season in which it will top 2012’s peak day, and to handle the expected volume increases the company will hire more than 55,000 U.S.-based seasonal staffers to serve as drivers, helpers, package sorters, loaders, and unloaders.

“The holiday peak season is always an exciting time for UPS, and this year will be no different,” said Alan Gershenhorn, UPS chief sales and marketing officer, on the company’s earnings call today. “Consumers around the world count on us to deliver their holiday gifts on time and in perfect condition. At UPS, some of our retailers are cautious in their holiday outlook, however, they go into the season with more flexible supply chain options than ever before, as they are focused on managing inventory levels and providing the right customer experience to provide growth. This includes working with UPS on omnichannel strategies to help to create better touch points for consumers, improve utilization of brick and mortar square footage, and ship inventory directly from stores all enhancing the overall customer experience.”

Retail shippers, Gershenhorn explained, frequently discuss with UPS the importance of having a flexible supply chain so they can respond quickly to market changes. And he observed that peak season does not end at Christmas, as the growth in e-commerce has created a “third peak” at UPS that starts after holidays and extends into the middle of January.

This third peak is when consumers are taking advantage of gift cards and retailer year-end closeouts, as well as returning gifts received during the holidays.  

The UPS executive cited how the National Retail Federation recently called for 2013 holiday retail sales to increase by 3.9 percent, with online—or e-commerce sales—expected to rise by 13-to-15 percent.

FedEx forecast: Memphis-based FedEx expects Cyber Monday December 2 to be the busiest day in its entire history, calling for more than 22 million shipments to be delivered globally, representing an 11 percent annual gain, due in large part to online retailers leveraging the company’s FedEx Ground and FedEx Smart Post (its “last mile” delivery service partnership with the United States Postal Service, which is primarily spurred by e-commerce) networks.

And during the week of December 1-7, the company’s busiest week of the year, FedEx said it expects more than 85 million shipments to move through its global networks, marking a 13 percent gain over the same period last year.

“Our workforce of more than 300,000 team members worldwide is ready to deliver the holidays once again this year,” said Frederick W. Smith, chairman, president and CEO of FedEx Corp. “FedEx’s vast global network coupled with our broad suite of shipping solutions enable us to meet our customers’ every need during this busy time of the year.”

Like UPS, FedEx also expects to add tens of thousands of seasonal staffers to be prepared to the holiday shipment surge. Company officials said that e-commerce activity is happening globally at a rate of three-to-four times the rate of traditional retail buying in brick and mortar stores.

In its holiday shopping season forecast issued on October 3, the NRF said it expects holiday sales to increase 3.9 percent to $602.1 million compared to the actual 3.5 percent growth in 2012, adding that this tops the 10-year average holiday sales growth of 3.3 percent. Holiday sales—as defined by the NRF—are sales in the months of November and December.

Even with an increase forecasted, there are more than a few things to be watchful and mindful of heading into the holiday shopping season, according to the NRF, including:
-the recent federal government shutdown;
- concerns over the debt ceiling and government funding; and
-income growth and policies and actions related to foreign affairs

IHS Global Insight managing director, Transportation Advisory Services Chuck Clowdis told LM he agreed with NRF’s forecast but noted his firm’s outlook for holiday retail sales is closer to 3 percent.

“The consumer is feeling a bit better about spending as we enter this Holiday Season,” he said. “While employment is slowly growing pent-up demand is softening to the point I feel a 3 percent increase may even be a bit conservative. There are concerns but this is the sixth Holiday Season of the downturn and even a modest improvement should equate to more confidence and spending.”