FedEx Forecasts Another ‘Record Peak Holiday’ for E-Commerce Shipments

September 22, 2016 by Paul Gluckman|E-Commerce

FedEx is “deep into planning” for what it expects will be “another record peak holiday shipping season” for e-commerce packages, CEO Frederick Smith said on a Tuesday earnings call. “The rapid growth of e-commerce has driven significant shifts in demand over the last several years,” Smith said. “Last year, we experienced 15 percent growth in peak season volume and delivered more than 325 million packages.” Beyond the sheer volume growth, holiday promotions and buying patterns “have increasingly shifted, which has resulted in heavy demand for package delivery on Mondays during the peak,” he said. “The intensity for demand on Monday has accelerated in recent years, as more and more retail locations have started serving as fulfillment centers for e-commerce orders. We expect each of the four Mondays during the upcoming peak period to be among the busiest in our company's history.” FedEx also sees increased demand for shipping larger and heavier packages, he said. “As e-commerce grows, there is demand for online ordering and delivery of everything from large-screen TVs to mattresses and trampolines,” most of which are handled through FedEx Ground, he said. This prompted FedEx to re-engineer its supply-chain strategies for peak holiday demand, including dedicating entire temporary facilities for the sorting of oversized packages, he said. It “goes without saying” that larger packages “create some operational challenges for us,” said FedEx Ground CEO Henry Maier in Q&A. "They take up more space in line haul and delivery vehicles in addition to being more difficult to handle.” FedEx will dedicate temporary facilities to oversized packages for peak holiday demand, “essentially separate buildings designed to handle just these type packages” that don’t fit on standard sorting equipment, he said. “We’ve strategically located these facilities in parts of the country where our experience and history has shown that shippers reside and ship these type packages.”