* Sees holiday package deliveries up 12 pct from 2010
* Economy slowly mending, online sales keep growing
* Sees record 17 mln packages moving on Dec. 12
* To add about 20,000 seasonal workers
* Shares up 3.5 percent
By Lynn Adler
Oct 24 FedEx Corp expects a 12 percent
jump in holiday shipments this year and will add about 20,000
workers to handle the record volume driven by online shopping.
The surge is driven by a combination of gradual economic
improvement and ever-increasing Internet sales, analysts said.
"This is slightly better than we anticipated," and suggests
some restocking by retailers as well as more online shopping by
consumers, said Dahlman Rose & Co. analyst Jason Seidl.
"The economy right now is not as bad as some people had
feared, though I wouldn't say it's going great guns, and this
is also an indication that a lot of retailers kept inventories
low and the consumer is not totally in the dumps," he added.
FedEx shares were up 3.5 percent on Monday after the
company detailed its holiday expectations.
Retailers and manufacturers have been keeping inventories
lean because of low consumer confidence. Demand that develops
closer to the holidays this year now will most likely be
delivered by FedEx and United Parcel Service , which
offer fast shipment options.
FedEx said it will add about 20,000 seasonal workers to
help handle the volume surge, up from 17,000 last year.
"Peak season" shipping, in which goods are moved here from
Asia in the fall for the holidays, was dulled this year because
companies are not keeping excess goods on their shelves due to
the sour mood of the consumer.
U.S. gross domestic product grew at an annual rate of 1.3
percent in the second quarter, underscoring the tepid pace of
FedEx's forecast "is a combination of maybe the economy is
a little better than we thought, and that this really speaks to
the growth of on-line shopping," said BB&T Capital Markets
analyst Kevin Sterling.
"Inventories are extremely lean, so any pulse of demand has
got to come by airfreight, and that's right in the wheelhouse
for FedEx and UPS," said Sterling, based in Richmond,
And e-commerce is showing no signs of abating, which plays
into the hands of FedEx and UPS, the two largest package
delivery companies, which move goods faster than ship or rail.
"The buzzword this year is M-commerce, or mobile commerce,"
in which convenience-seeking consumers order products via their
mobile phones, further boosting online sales, Sterling added.
FedEx said it delivers 61 percent of its packages in two
days or less, for example.
FedEx expects to deliver more than 260 million packages
globally between Thanksgiving and Christmas, up 12 percent from
a year earlier.
Apparel, consumer electronics, luxury goods, books and
other items from big Internet retailers will account for a
large portion of holiday volume, the company said on Monday.
POST OFFICE BENEFITS
FedEx expects to move more than 17 million packages on Dec.
12, the projected busiest day in company history, more than
double its average daily deliveries.
That would top last year's record 15.6 million shipments on
Dec. 13. As recently as 2005, the Memphis, Tennessee-based
company's peak shipping day was below 10 million packages.
In its forecast, FedEx cited a National Retail Federation
estimate that holiday sales in November and December will rise
2.8 percent from 2010 to $465.6 billion, surpassing the average
increase of 2.6 percent over the last 10 years. It also noted
various forecasts for rising Internet sales this year.
One beneficiary will be the beleaguered U.S. Postal
Service, which partners with FedEx for FedEx SmartPost
With SmartPost, FedEx delivers to post offices, which in
turn make final delivery to residential customers.
"As e-commerce continues to grow and demand increases with
more customers shopping and conducting their business online,
FedEx SmartPost is poised to handle the increase in shipments,"
FedEx Chief Executive Frederick Smith said in a statement.
FedEx shares were up 3.5 percent in midday trading at