Fedex predicts record holiday shipping volume
Fedex is a bellwether stock in the US because it handles so much cargo that it can be seen as a proxy for business activity. The company announced today that it expects record holiday shipping, albeit in its least-profitable residential service area. Nevertheless, this is a good sign for an economy in which recession looms and in which container imports declined in the third quarter due to high inventory levels.
The press release states:
FedEx Corp. (NYSE: FDX) expects to move more than 17 million shipments – almost double its daily average volume – through its global networks on December 12, the projected busiest day in company history. The 10 percent year-over-year increase will be driven by FedEx SmartPost, a residential shipping service designed for online and catalog retailers, as well as expected increased volume at FedEx Ground and FedEx Home Delivery.
Between Thanksgiving and Christmas, FedEx forecasts more than 260 million shipments to move through its worldwide shipping networks. This is a 12 percent increase for the holiday season over last year when 232 million shipments were processed.
“As e-commerce continues to grow and demand increases with more customers shopping and conducting their business online, FedEx SmartPost is poised to handle the increase in shipments,” said Frederick W. Smith, chairman, president and CEO of FedEx Corp. “More than 290,000 FedEx team members also stand ready to deliver the holidays and enable commerce around the globe.”
Wall Street Journal video below
Separately, the Wall Street Journal also reports that:
Despite another quarter of robust corporate profits, an ominous impulse is stirring at many big companies—restructuring.
In a sign that executives see a rockier road ahead, many manufacturers are setting aside money to fund moves aimed at cutting costs and streamlining operations. Those steps could include job cuts and factory closures, as businesses seek to pare expenses ahead of what is widely expected to be slow revenue growth in 2012.
"The consumer is dead, construction is dead, so if the industrial sector pulls back, then we don’t have too much else to lean on," said Jeff Sprague, managing partner at independent research firm Vertical Research Partners. "At the margin it certainly is worrisome. It could feed on itself."
Mr. Sprague cautioned against drawing too broad a conclusion from corporate cost-cutting plans, because big companies pride themselves on not being caught flat-footed. They also are continuing to spend on research and capital investments. "It’s a bit of a warning shot," he said.
Putting these bits of information together says that Q3 GDP growth will be decent (+2.0%) and Q4 growth will be weak but not recessionary. After that, it is anyone’s guess. However, at a minimum, payroll taxes and other government support are set to expire while Europe will remain weak. The US economy will certainly be at stall speed and I would expect a greater than even likelihood this means recession.