Along with retailers and online stores, America's major shipping companies experienced a healthy holiday season.
While the U.S. Postal Service has not announced final holiday numbers, the agency estimated that it would handle roughly 16.7 billion cards, letters and parcels this season — a 3 percent increase in total volume over the same period last year.
The United Parcel Service, Atlanta, estimated that it would deliver 295 million packages in the four weeks between Thanksgiving and Christmas. While final numbers will be released this week, the company is certain that it will meet expectations.
Last year, the company delivered 278 million packages for the period.
While 1998 numbers for UPS were not record breaking, said Malcolm Berkley, a UPS spokesman, the numbers were high and attributable to the online holiday shopping surge.
“E-commerce certainly had an impact on us and our volume this year,” he said, adding that on Dec. 22 UPS reached a milestone when 1 million people came to its Web site, www.ups.com, to make tracking requests.
UPS recently announced that rates for domestic air express services and ground deliveries will increase approximately 2.5 percent on Feb. 8. “This is the smallest increase in 11 years,” Berkley said. Last year, rates increased between 3.3 percent and 3.6 percent.
A Delivery Area Surcharge also will be added in February for Residential Ground deliveries to certain ZIP codes. The $1 surcharge reflects the higher costs of providing services to these less populated or less accessible areas, said the company. But U.S.-to-international services — including UPS Worldwide Express Plus, Worldwide Express, Worldwide Expedited and Standard to Canada — will not increase for the second year in a row, and residential deliveries will still to be $1 more than commercial ground rates.
Federal Express Corp., Memphis, TN, also saw an increase in volume shipments in 1998. According to spokeswoman Carla Boyd, the company delivered 4.5 million packages on its busiest day of the year, Dec. 21. This is an increase over 1997's busiest day — Dec. 22 — when FedEx delivered just over 4 million packages. The company would not release additional numbers.
The net pretax cost of contingency plans related to pilot negotiations during the season is expected to cost the FDX Corp. between $110 million to $120 million. While these costs did not materially affect the second quarter, FedEx is expecting them to adversely affect earnings during the second half of FY99. However, shares of FDX Corp. jumped to a new high late last month — from $6.38 to $90.88 on the New York Stock Exchange.
Analysts said shares have soared because of a better-than-expected earnings report and the tentative contract that was reached recently with the Federal Express Pilots Association, Memphis.
Meanwhile, the union announced details of its contract, which is being distributed to the pilots today. Pilots will have 30 days to vote on the proposed contract.
“We were trying to get 20 percent over four years,” said FPA spokesman Bob Clement. “We got 17 over 5. But we also have an additional, separate retirement account — which is 6 percent — so the actual increase for the pilots, over the life of the contract, will be a 23 percent increase.”
The five year contract is important to direct marketers that use FedEx's services, said Clement, because it basically prevents a labor strike for that period. The contract also puts into effect some scheduling and work rule changes that the pilots asked for.
Pilots and FedEx management “will be able to review each individual line for each individual aircraft, so we have the opportunity to see whether those schedules are arduous enough to the point that they will affect quality of life,” he said.
