U.S. Postal Service Predicts Record Holiday -- FedEx and UPS Will Shine

Retail

Published: November 7, 2013 6:35 am

Last Updated: November 8, 2013 12:34 pm

The U.S. Postal Service (USPS) expects to ship 15 billion pieces of mail and packages between Thanksgiving and New Year’s Eve. USPS management claims this will be a record. The number represents a surge of 12% from last year. Although it will not be nearly enough to lift the USPS out of its dismal financial shape, it is a sign that shipping activity across the industry will be strong. That is particularly good news for United Parcel Service Inc. (NYSE: UPS) and FedEx Corp. (NYSE: FDX), which expect a good year, and the USPS forecast supports that.

In October, FedEx reported that it expects shipping activity to rise 13% to 280 million. FedEx usually is not used for traditional mail delivery, so it makes sense that its figure is less than the one from the USPS.

While UPS did not disclose its total holiday forecast, the company expects peak season daily volume to increase by 8% this year. That is not a fair comparison with the USPS number since the public corporation forecast figures only run from Thanksgiving to Christmas.

It is presumed that Amazon.com Inc. (NASDAQ: AMZN) will be the only major winner of the trend toward online shopping. That is to some great extent true. Although Wal-Mart Stores Inc. (NYSE: WMT) and its smaller rivals expect a sharp improvement in Internet sales, these sales represent less than 5% of their totals, in most cases. And Walmart is in the best position among bricks-and-mortar companies. Research firm comScore reported that among the top 50 websites in the United States based on traffic, Walmart sat in 25th place in September, with 38.6 million unique visitors. That is well behind Amazon’s 110.9 million, but no other traditional retailer makes the list at all.

The numbers from UPS, FedEx and the USPS imply that each will be a winner in holiday season sales. The figures also imply that the retailers with the largest online presence will post good results as well. What is much less certain is whether the tier of retailers below Walmart will do well. As shopping habits move online, these companies need a great year. There is not much data to prove that Internet sales will make a big enough difference to alter the fortunes of most of the country’s retailers, which have to make their money store by store.

Correction: An earlier version of this article stated that UPS would increase holiday shipments by 9.8% compared to last year. In fact, the company expects peak season daily volume to increase by 8% this year.

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