FedEx forecasting record holiday season
10-30-2006, 11:45 AM
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FedEx forecasting record holiday season
FedEx forecasts record holiday shipping season
By JANE ROBERTS
Scripps Howard News Service Monday, October 30, 2006
[oas:casperstartribune.net/news/business:Middle1]
While retailers expect holiday spending will be up 5 percent, FedEx Corp. expects it will ship 9.8 million packages, 10 percent more, on Dec. 18, making it easily the busiest day in company history.
The numbers, analysts say, prove that FedEx is stealing market share from UPS, the post office, DHL and others.
On the larger front, it is also in line to pick up a windfall if now-nervous retailers start placing last-minute orders they will only be able to receive through expedited transportation companies.
"Retailers in particular and the market in general have been very careful about purchasing inventory this year," said Ted Scherck, president of Atlanta-based The Colography Group. "As a result, inventories are lean, both in warehouses and stores, and in the pipeline."
If retailers need items at the last minute, they may be shipping directly to the consumer from the production facility, certainly one of FedEx's fortes.
Most of that business is likely to go by FedEx Ground, which predicts a 12.5 percent increase in package volume on its busiest day.
Over several years, the division has honed its Home Delivery and SmartPost options, which means it can offer low-cost shipping for inexpensive items through its partnership with the post office, or it can deliver right to a consumer's doorstep with its Home Delivery vehicles, for a heftier price.
Both are targeted to the holidays. But the difference in price means that Memphis, Tenn.-based FedEx captures two different markets.
That, plus the package business it gets through its FedEx Kinko's stores, allows the ground division to expect "a very healthy increase in light of what other companies are doing," said Satish Jindel, head of SJ Consulting in Philadelphia.
Last year, FedEx as a whole handled a record-breaking 8.9 million packages on its busiest day, nearly 1 million fewer than it is gearing up to handle now.
The difference this year points to a generally upbeat economy, despite the war in Iraq and misgivings about the nation's direction in general.
The National Retail Federation expects shoppers will spend $457.4 billion this year, up 5 percent from last year. Included is an 18 percent increase in online spending, according to Jupiter Research, which expects e-tailing to be worth $32 billion this season.
Free shipping could improve the odds. Early studies suggest 36 percent of e-tailers will offer the perk this year, compared to 25 percent last year.
More than 65 percent of the people surveyed by Forrester Research for its online holiday report said they were more likely to shop at Web sites that offer free shipping.
With Christmas on a Monday this year, customers will have to pay a premium for Saturday delivery, which will help boost company profits.
By JANE ROBERTS
Scripps Howard News Service Monday, October 30, 2006
[oas:casperstartribune.net/news/business:Middle1]
While retailers expect holiday spending will be up 5 percent, FedEx Corp. expects it will ship 9.8 million packages, 10 percent more, on Dec. 18, making it easily the busiest day in company history.
The numbers, analysts say, prove that FedEx is stealing market share from UPS, the post office, DHL and others.
On the larger front, it is also in line to pick up a windfall if now-nervous retailers start placing last-minute orders they will only be able to receive through expedited transportation companies.
"Retailers in particular and the market in general have been very careful about purchasing inventory this year," said Ted Scherck, president of Atlanta-based The Colography Group. "As a result, inventories are lean, both in warehouses and stores, and in the pipeline."
If retailers need items at the last minute, they may be shipping directly to the consumer from the production facility, certainly one of FedEx's fortes.
Most of that business is likely to go by FedEx Ground, which predicts a 12.5 percent increase in package volume on its busiest day.
Over several years, the division has honed its Home Delivery and SmartPost options, which means it can offer low-cost shipping for inexpensive items through its partnership with the post office, or it can deliver right to a consumer's doorstep with its Home Delivery vehicles, for a heftier price.
Both are targeted to the holidays. But the difference in price means that Memphis, Tenn.-based FedEx captures two different markets.
That, plus the package business it gets through its FedEx Kinko's stores, allows the ground division to expect "a very healthy increase in light of what other companies are doing," said Satish Jindel, head of SJ Consulting in Philadelphia.
Last year, FedEx as a whole handled a record-breaking 8.9 million packages on its busiest day, nearly 1 million fewer than it is gearing up to handle now.
The difference this year points to a generally upbeat economy, despite the war in Iraq and misgivings about the nation's direction in general.
The National Retail Federation expects shoppers will spend $457.4 billion this year, up 5 percent from last year. Included is an 18 percent increase in online spending, according to Jupiter Research, which expects e-tailing to be worth $32 billion this season.
Free shipping could improve the odds. Early studies suggest 36 percent of e-tailers will offer the perk this year, compared to 25 percent last year.
More than 65 percent of the people surveyed by Forrester Research for its online holiday report said they were more likely to shop at Web sites that offer free shipping.
With Christmas on a Monday this year, customers will have to pay a premium for Saturday delivery, which will help boost company profits.
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