FedEx forecasts record holiday season shipping numbers
Could record-breaking holiday season shipping numbers prove that there has been some sort of recovery in the supply chain and the world economy?
Most experts say no, despite the fact that FedEx plans on shipping 260 million packages between Thanksgiving and Christmas this year. The logistics company, known for its creative supply chain management solutions, is projecting to ship 17 million packages on Dec. 12, the busiest anticipated shipping day of 2011.
Overall, the 260 million packages FedEx plans to ship this holiday season are a 12 percent increase from 2010. The problem with that growth is that most of that increased package volume would be created by the logistics company’s least-profitable, eCommerce-related residential delivery service.
FEDEX 2010 HOLIDAY SEASON SHIPPING
FedEx SmartPost handles the bulk of the company’s low-weight residential shipping, which offers low profit margins because the lightweight packages don’t arrive to destinations on time-definite schedules.
CEO Fred Smith reportedly said earlier in October that he only expects retail sales to be up 2.5 to 3 percent this holiday season.
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FedEx and other shipping companies have taken full advantage of the online shopping boom, which has helped the Memphis, Tenn.-based shipping leader increase its volume. To deal with the shipping increases, FedEx plans to hire 20,000 seasonal workers, which is about 3,000 more than they hired last year.
As expected, the company didn’t change its overall financial outlook after announcing the increase holiday shipments. In September, FedEx cut its profit outlook over fears of a global double-dip recession.