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http://www.businessweek.com/articles/2013-12-18/online-shopping-boosts-fedexs-shipping-volume-to-new-high-but-company-falls-short-of-expectations

Transportation

Online Shopping Boosts FedEx's Shipping Volume to New High


FedEx (FDX) is delivering more parcels than ever, according to a financial update this morning, with the more than 22 million packages handled on Monday making it the busiest single day in company history. It bested its previous high tally from a week earlier, which topped another record set the week before that.

The good news is that people are shopping online with mad zest. The brightest spot on the FedEx report came from its ground-shipping unit, which is linked closely to e-commerce traffic. Sales in the department surged 10 percent, while average daily package volume increased 8 percent. Analysts had expected a little more from FedEx. Although total sales ticked up 3 percent, to $11.4 billion, and profit surged 14 percent, to $500 million, the company missed estimates on both fronts.

Still, there was scant evidence that the shipping giant is struggling with cautious consumers. FedEx said it missed targets, in part, because it was building capacity and repairing some of its vehicle fleet in advance of the holiday rush. It has also been fine-tuning a new program that lets Web shoppers schedule FedEx deliveries.

“Even though there’s a tremendous amount of talk about e-commerce, we’re still in very much the early stage development of this channel,” FedEx’s Michael Glenn, an executive vice president, said on the call this morning. “We sit right in the sweet spot of it.”

While FedEx reaps the shipping upside from a U.S. online-shopping habit fueled in large part by Amazon (AMZN), it doesn’t appear much concerned about the retailer’s plan to eventually deploy a fleet of package-delivering drones. “We have a drone expert on staff,” Chief Executive Officer Fred Smith said on the Wednesday morning conference call. “It’s Rob Carter, our [chief information officer], who actually owns a drone. And he reported that it can operate about eight minutes and carry four Budweiser (BUD) beers at his farm.”

Smith said suggestions that Amazon CEO Jeff Bezos’s bots could replace the size and scale of FedEx and United Parcel Service (UPS) are “almost amusing.”

Kyle-stock-190
Stock is an associate editor for Businessweek.com. Twitter: @kylestock

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