Published October 22, 2012
FedEx Corp (FDX) said on Monday it plans to hire 20,000 seasonal workers, the same as last year, to handle holiday shipping volume that it expects will be up more than 13%.
An ongoing increase in e-commerce and last-minute orders amid a slow-growing economy will mean more deliveries for companies like FedEx that can handle fast shipments.
FedEx, which is closely watched as an indicator of consumer demand and economic health, anticipates handling more than 280 million shipments during the holiday season between Thanksgiving and Christmas.
The company said the impact of an increase in holiday shipments was included in its fiscal 2013 earnings outlook.
For the second time this year, FedEx cut its forecast for global growth in 2013, citing slower growth in China, recession in some European economies and high energy prices.
FedEx can add the same number of seasonal workers as last year because it has been hiring staff throughout 2012, especially at the Ground and SmartPost divisions that will handle the bulk of the holiday volume, said T. Michael Glenn, executive vice president of market development and corporate communications.
Dec. 10 is expected to be its busiest day ever with some 19 million shipments - a 10% increase from last year. E-commerce will drive the shipping volume on so-called ``Green Monday,'' which falls on the second Monday of December and kicks off the heaviest online shipping week of the year.
As more shoppers buy their holiday gifts on the Internet or via mobile phone, it means higher shipping volume for FedEx and United Parcel Service - both of which have delivery contracts with most of the biggest Internet retailers. Delivery volumes for FedEx's busiest day of the year have consistently grown, and will be nearly double the 9.8 million shipments it handled in 2005.
U.S. retail sales are expected to rise 4.1% this holiday season, though a slower pace than in prior years, according to the National Retail Federation. Online holiday sales, excluding travel, are expected to increase 16.8% from last year to as much as $54.5 billion, FedEx said, citing eMarketer data.
"We always see a significant push for last-minute orders, and a lot of it has to do with procrastination, which for FedEx is a good thing during the holiday season,'' Glenn said in an interview. Global economic weakening and concerns about expiring tax cuts in the United States could keep many consumers on the hunt for discounts and waiting until the last minute to order holiday gifts. Retailers are keeping inventory fairly lean, so a jump in orders beyond expectations could boost demand for the quick deliveries that FedEx and United Parcel Service provide.
"Clearly businesses are waiting to see what happens with the election, the fiscal cliff and the election's impact on other policy decisions that may affect energy prices,'' Glenn said. FedEx said 82% of its ground deliveries are shipped in three business days or less, 61% are delivered in 2 business days or less, and 24% are delivered the next business day.
Large chain stores including Toys R us [TOY.UL}, Kohl's Corp , Wal-Mart Stores Inc and Macy's Inc have announced plans to add more holiday workers this year, based on the view that consumers will spend modestly more than last year as the economy mends gradually.
"There are a lot of high-tech products out there and people are saving money in other places to spend on these goods,'' Glenn said. ``We certainly are expecting a strong peak season for FedEx.'' UPS, the largest package delivery company, could give insight into its seasonal hiring plans when it reports quarterly results on Tuesday. UPS added about 55,000 workers for the holidays last year, 10% more than it hired in 2010.