Shippers Report Mixed Holiday Volume

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United Parcel Service and FedEx Corp. reported softening volumes this holiday season as a result of a slowing across the U.S. economy, but the U.S. Postal Service said its package volume exceeded expectations this year.


Jim Cochrane, USPS associate vice president of marketing, expedited/package services, said, "While our parcel volume was flat this year -- coming in at about 3 percent [versus the projected 5 percent], the Priority and Express Mail packages are seeing at least an 8 percent increase over last year, which is beyond our expectations."


As a result, Cochrane said, "package volume increased more than 5 percent over last year."


UPS, Atlanta, said it expects to deliver its projected 325 million packages between Thanksgiving and Christmas -- including an estimated 19 million shipments on Dec. 19, its peak delivery day, and 4.5 million air express deliveries on Dec. 21, its peak air day.


UPS, however, said domestic levels for package volume during the two-week period that ended Dec. 8 were flat compared with 1999 due to slowing customer shipments. This follows a slowing in domestic volume increases in October and November to 4 percent, compared with the 5.5 percent growth reported for the first nine months of the year.


Earlier this year, UPS said it expected a slight slowdown in the rate of fourth-quarter growth because of one fewer shipping day this holiday season, a softening economy and comparisons with strong results posted a year ago.


The unusual slowing in holiday shipments has compounded the situation, UPS said, although its integrated network allows the company to adjust to changing economic conditions. The company now expects earnings-per-share growth of 7 percent to 10 percent for the fourth quarter.


Norman Black, a spokesman for UPS, said, "The fact that the total volume for the first two weeks [of December] showed no growth does not mean that there hasn't been a huge surge in our volume, just like there is every year. It's just that the surge during the first two weeks didn't exceed the surge from last year."


FedEx, Memphis, TN, also said it is experiencing a softening in volumes, and domestic growth rates at FedEx Express and FedEx Ground are expected to be flat to slightly down for December. In addition, the company did not meet its volume expectations on its busiest days this season.


Jesse Bunn, a spokesman for FedEx, said, "While we were expecting to move about 6.5 million packages through the system on both of our busiest nights -- Dec. 18 and 19 -- we actually moved only 6 million packages on Dec. 18 and a little over 6 million on Dec. 19."


Cochrane said one reason the USPS is achieving better results in its expedited packages while other shippers are not is that "while we are a big online player like UPS and FedEx, what we bring to the table that they don't is that we have the consumer market. What maybe hasn't materialized is that big surge of e-commerce that was expected, but we are plenty busy because of the retail parcels that we have. The volume that walks up to our countertops is really helping us achieve our goals this year."


In addition, the USPS said the agency's fixed price for packages -- rather than prices offered by major shippers that fluctuate with market conditions such as volume or higher fuel costs -- makes it a more attractive alternative.


This season's boost is welcome news for the agency, which incurred its first money-losing year this year since 1994. In fiscal 2000, the postal service lost $199 million, in large part because of fuel price increases and the public's increasing shift away from traditional letters.


However, despite the UPS and FedEx slowdowns, both shippers expect to achieve their performance targets.
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