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.”

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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.

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5 Comments
  1. Dave Holden says

    Pretty much alone in the blogs I read Robert Wenzel seems to have been calling a Fed induced fake boom for a while now

    http://www.economicpolicyjournal.com/2011/10/housing-starts-soar-15-confusing.html

  2. fresno dan says

    That is very interesting.
    However, I am wondering if that is actually a contrary indicator. How many people have decided that internet shopping is cheaper, and will have the added benefit of limiting impulse buying, as well as the more prosaic saving of gasoline costs? Not to mention that demographics will eventually mean a lotta mall rats will reach the point that staying in their easy charis and ordering from the internet and catalogs seems like a better and better idea.
    And of course, how much is just the secular trend of ever more internet shopping?

    1. David Lazarus says

      I do all my shopping online apart from the local groceries. By doing it that way you avoid vehicle wear and tear and gasoline costs. It would not surprise me that many buyers look at the free delivery charges and with the ability to compare prices much more closely, get cash back on purchases and avoid impulse purchases it can work out better overall. Though what this will mean longer term is a drop in value in commercial real estate as online shopping replaces mall shopping.

      1. fresno dan says

        Yup, all very good points.
        And selection is much better on the innertubes. I like to actually try on clothes, but other than that…
        I used to like to go to our big bookstore, Borders, to browse, but besides being out of business now, it seems like their business strategy was to stock “popular” books diminishing the chance for a random find. And the truth is, you get do plenty of random browsing on Amazon.

  3. Randy Pickard says

    I’m an online merchant who mostly sells to independent brick and mortar retailers. Although this is obviously just anecdotal, I am stunned by the pick-up in my sales the last few weeks. On a macro basis, I am a doom and gloomer, but at least at my site, sales to my retail customer base right now are brisk. Also, keep in mind the online sales still only account for about 15% of sales of applicable products. Brick and mortet still accounts for the lions share of sales.

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