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As UPS, FedEx prepare for first ‘post-pandemic’ holiday season

by SuperiorInvest

Which consumer will emerge in America’s first “post-pandemic” holiday season?

By some measures, e-commerce volumes are softening and consumers are pulling back on inflation as the holiday shopping season gets under way. And the predictions are mixed. Ship Matrix said this year’s holiday shipping season will be defined by “huge overcapacity” for logistics giants such as UPS, FedEx and Amazon. But Wednesday’s National Retail Federation forecast predicts record sales for the first holiday shopping weekend, which begins with Black Friday, expecting eight million more shoppers this year (166 million) than last year and the highest since 2017.

Some retailers are witnessing resilient growth in consumer sales, even in the face of inflation and recession risks. Best Buy reported third-quarter results that beat Wall Street expectations and said it expects holiday spending to look more like historical holiday seasons, with customer shopping activity concentrated in the week of Black Friday, Cyber ​​Monday and the two weeks leading up to Dec. 25.

But the consumer picture is far from uniform. Target’s sales fell in half in the third quarter and many retailers are struggling with a challenging environment while dealing with inventory issues, even as those high inventory levels appear to be easing. Abercrombie & Fitch said this week it was “cautiously optimistic” about holiday sales, but many retailers still expect to offer plenty of promotions to entice shoppers to spend more, or as the CEO of American Eagle Outfitters said this week on earnings call,” highly promotional holiday season.”

More shoppers are returning to in-person retail for the first time since the start of Covid, and e-commerce volumes are likely to come under pressure. Ship Matrix’s forecast of 90 million parcels per day represents no year-on-year increase. This means that the increased capacity built into the logistics network, from UPS to FedEx, Amazon and the US Postal Service, could be up to 20% unused.

As the holiday shopping picture changes, executives at FedEx Ground and UPS say they are prepared for a holiday surge and adjust operations as demand trends become clearer. With package volumes expected to peak later this December, UPS is hiring 100,000 seasonal workers. FedEx recently told CNBC that it is ready for the holidays even after significant cost-cutting it implemented this fall, which the company attributed to a significant drop in global consumer demand, even with fewer seasonal workers to be hired this year. At the UPS Smart Hub outside Atlanta, the logistics company is already experiencing holiday levels.

Watch the video above to learn more about how the logistics giants are preparing to make their last streak of on-time deliveries this holiday season, thanks to reports from CNBC’s Frank Holland.

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