‘Record Peak Season’ Looms Again for Holiday Shipments, Says FedEx Executive

With preparations underway at FedEx for holiday shipping season, “the expectation is for another record peak season with multiple days that will set records for package pickup and delivery,” said Rajesh Subramaniam, chief marketing and communications officer, on a Tuesday earnings call. FedEx continues to work directly with a “relatively small number of large customers that drive the majority of the surge and demand to ensure that we have appropriate pricing related to volume expectations and capacity needs,” said Subramaniam. “We are focused on ensuring that we are compensated for the investments we make to deliver outstanding service during peak.” FedEx continues to weigh whether to impose surcharges for peak holiday demand, but hasn't “made a final decision in this regard,” he said. It continues to see growing demand “for large, heavy package delivery as a growing array of items are now being sold online,” he said. Large items like furniture, mattresses, sports and exercise equipment and big-screen TVs “are increasingly moving to the FedEx Ground network for residential delivery,” he said. “This trend has accelerated over the past 12 months, and we have made adjustments to facilities and investments in sortation technology that enable outstanding service for these larger packages. We're continuing to analyze pricing and surcharges for oversized packages to ensure that we have appropriate pricing for the service provided.” That demand for delivery of large packages continues to grow is “just the nature of e-commerce," said FedEx Ground CEO Henry Maier in Q&A. “We are making investments in material handling and lifting technologies to address that. We review hub designs over the normal course of business that account for package size. So that would divert packages, for instance, that we would have to handle manually today to a more automated mode.”