Holiday Cheer Boosts Shippers
Both shippers are expected to benefit from the growth of online retailing, which is outpacing traditional retail sales. Most Web sites rely on the two big shipping companies to get goods to customer doorsteps. What's more, early indications of retail sales in general are robust -- with the notable exception of Wal-Mart (WMT) -- which should also boost business, as some consumers send brick-and-mortar purchases via UPS and FedEx.
Online retail spending for the day after Thanksgiving, called "Black Friday" by retailers, jumped 41% from last year, according to comScore Networks, a Reston, Va., company that tracks Internet activity. That's well ahead of Friday's 11% increase for brick-and-mortar stores monitored by ShopperTrak of Chicago, even though experts viewed ShopperTrak's numbers as strong.
For the entire holiday shopping season -- November and December -- comScore predicts 23% to 26% year-over-year growth in cyber-sales -- a much quicker clip than the National Retail Federation's 4.5% forecast for the broader industry."As more retail transactions take place on the Web, those transactions benefit UPS and FedEx directly," said Mark Davis, an analyst at FTN Midwest Research, which is based in Cleveland. Last month, UPS said it expected to ship more than 340 million packages during the peak season between Thanksgiving and Christmas, greater than its 300 million forecast last year. The company also said it expected to hire 70,000 seasonal workers in the U.S. to handle extra holiday volume, up from 50,000 predicted last year. (UPS hasn't disclosed what last year's actual numbers were, though a spokesman said the company spends a lot of time developing its forecasts, so they tend to be accurate.) FedEx won't say how many packages it expects to deliver through the whole season, but the company predicts it will ship 7.7 million items on what it expects to be its peak day, Dec. 13, up from 7.5 million on Dec. 15, last year's busiest day. The company expects an even sharper increase in its FedEx Express unit, with 4.6 million packages forecast for the peak night of Dec. 20, up from 4 million on 2003's peak night of Dec. 22.
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