E-Commerce to Drive 90% of Parcel Growth by 2026: FedEx CMO

FedEx estimates it took a $470 million hit in fiscal Q2 ended Nov, 30 due to added costs from ongoing labor shortages, said President-Chief Operating Officer Raj Subramaniam on a Thursday investor call. FedEx Ground bore $285 million of those added costs, he said. The added costs were roughly on par with those in fiscal Q1 ended Aug. 31, when Subramaniam told investors that FedEx Ground was forced to reroute more than 600,000 packages a day because some of its hubs had only 65% of the staffing required to handle their normal volume (see 2109220023). The company is "essentially staffed up" for peak holiday demand, he said Thursday. FedEx is encouraged by its recent “hiring momentum,” and is focused on retaining recent hires “after the peak season concludes,” he said. The company exceeded 111,000 job applications in the week ended Dec. 10, “the highest level in FedEx history,” he said. FedEx is forecasting that the U.S. domestic parcel market will exceed 134 million packages a day by calendar 2026, “a remarkable 70% growth from 2020,” said Brie Carere, chief marketing and communications officer. “E-commerce is expected to drive 90% of the parcel market growth,” she said.