FedEx Corp. on Monday projected a 13 percent gain in shipments during the peak holiday season between Thanksgiving in the U.S. and Christmas, driven by less-expensive services that are popular with online retailers.
Deliveries in the period could top 280 million, the company said. The peak season will be especially important to FedEx this year after the operator of the world’s largest cargo airline said a shift to less expensive second- and third-day shipping rather than express is here to stay.
Cheaper offerings such as SmartPost, where the U.S. Postal Service makes the final delivery, and ground delivery will lead holiday gains, said Mike Glenn, executive vice president of market development. Online merchants use those low-cost services and then promote free or discounted shipping to entice consumers to spend more.
“SmartPost fits in the sweet spot of e-commerce,” Glenn said. “E-tailers like it a lot because it fits well with their free shipping promotions because it’s a low-cost service.”
FedEx predicted a peak of 19 million shipments on Dec. 10, which would be a 10 percent gain from last year’s most active day and the busiest in the Memphis, Tenn.-based company’s history.
The projected gains are included in FedEx’s annual profit forecast, which the company lowered Sept. 18 to no more than $6.60 a share from a previous range of $6.90 to $7.40.
The National Retail Federation forecasts holiday sales, a signal of economic health, will increase 4.1 percent this year to $586.1 billion as consumers “remain conservative.”
FedEx shares have gained about 10 percent this year.
FedEx plans to hire 20,000 seasonal workers, the same as last year, to limit costs as it revamps its Express unit to boost profits by $1.7 billion over three years. The overhaul includes job reductions and getting rid of fuel-guzzling planes.
United Parcel Service Inc., the world’s largest package delivery firm, hasn’t provided a holiday forecast.
Last year, FedEx forecast it would handle 260 million shipments over the peak season, and the actual volume processed during that period was 247 million.