Online sales ease crunch for U.S. package giants
The U.S. economy is being threatened by everything from the housing credit crunch to high gasoline prices, but John Nikolich has yet to see it.
Indeed, neither company seems to expect much beyond modest package volume growth.
Officials at UPS said in October that its growth this peak season would be slower than in the previous four years. FedEx last week cut its forecast for the company’s current quarter that ended Nov. 30, citing fuel costs and weak freight volumes in its trucking unit.
But the saving grace for this year’s peak season? While in-store retail sales will see slight growth, online sales are expected to rise at a far higher pace.
Although consulting firm TNS Retail Forward has projected the credit crunch will slow overall retail sales growth in November and December to 3.3 percent — the lowest since 2002 — bringing the total to some USD 471 billion.
Though still a small portion of that total, as in previous years online sales should grow much faster than in-store sales. TNS predicts they will jump 18.5 percent to nearly USD 42 billion.
“We do expect to see a rising percentage of package volumes coming from the e-commerce channel,” UPS spokesman Norman Black said. “This is a trend we’ve seen for some time and we don’t expect that to change. People like shopping online.”
In a press release on Oct. 29, FedEx CEO Fred Smith noted that despite slowing overall U.S. economic growth “e-commerce will continue to drive holiday spending” this year.
“Online sales should be a core component of the growth they (UPS and FedEx) are predicting,” S&P’s Corridore said.
