FedEx Predicts Increase In Holiday Deliveries
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MEMPHIS, Tenn. (CBSMiami/AP) — FedEx expects another record holiday season delivery rush this year.
The company forecast Wednesday that deliveries between Thanksgiving and Christmas Eve will rise 8.8 percent over last year, to 290 million shipments. That's a more subdued forecast than a year ago, when FedEx predicted 13 percent growth for the season.
Volume is expected to surge on each of the first three Mondays in December.
FedEx Corp. said the peak day is likely to be Dec. 15, when it expects to handle 22.6 million shipments around the world.
FedEx and rival United Parcel Service Inc. struggled last year with severe winter weather in early December, a shorter holiday season, and a surge in late orders that was partly due to retailers promising free delivery even for shipments close to Christmas Day.
FedEx plans to add 50,000 seasonal workers to help carry the load this year. UPS has said it will add up to 95,000 people, and Amazon said it will hire 80,000, a 14 percent jump over last year.
The delivery companies and Internet retailers are benefiting from the trend toward online shopping and are banking on a strengthening economy and optimism about consumer spending. They are boosting hiring to meet consumers' expectations that easy shopping on their computers and mobile devices can be paired with quick delivery of the goods.
FedEx expects to invest $1.2 billion in its ground-shipping network in its current fiscal year, with most of that going to increase capacity and automation. The company said that the improvements have sped up ground delivery by a day or more in more than two-thirds of the U.S.
UPS has also invested to boost shipping capacity during the holidays, said the company's chief commercial officer, Alan Gershenhorn. He said that UPS had improved it forecasting and package tracking. UPS has not issued its forecast for holiday deliveries. The company reports third-quarter financial results on Friday.
Memphis-based FedEx said that its holiday-shipping forecast is included in its outlook for the fiscal year ending next May. The company said last month that it expects full-year earnings of $8.50 to $9 per share, assuming moderate economic growth. Analysts expect $8.99 per share, according to a survey by FactSet.
Helane Becker, an analyst with Cowen and Co., said FedEx's share of the delivery business would increase at UPS' expense because of the problems that UPS had last year. Some UPS customers didn't get packages delivered until after Christmas.
Becker said that based on the holiday forecast, better-than-expected earnings in the June-through-September quarter, and a program of buying back shares, FedEx should raise its forecast for earnings through next May.
FedEx shares rose 55 cents to $160.43 in midday trading. Through Tuesday's close, they were up 11 percent in 2014.
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