Executive Briefings

Online Sales Are Huge Holiday Gift to Package Delivery Companies

With sales rising to a record $35.3bn in November and December - a 15-percent increase from a year ago, according to the research service comScore - online retailers are celebrating.

There is another less obvious beneficiary of the e-commerce boom: the two major package delivery companies, United Parcel Service and FedEx. And even now, thanks to wrong sizes, awkward gifts and ill-considered purchases, the companies are riding a holiday wave.

FedEx said it expected heavy return shipments throughout January.

"It doesn't slow down much after the holidays, despite what some people may think," said Ken Burkeen, director of retail and consumer goods for UPS.

Good news for shipping is usually good news for the economy as a whole, economists say. FedEx, for example, hired 20,000 holiday workers to deal with extra e-commerce purchases, an 18-percent leap from 2010, while UPS hired 55,000 workers, an increase of 10 percent.

"There's a trend of buying more things online, and the way that's ultimately delivered is via UPS, FedEx or the Postal Service," said David G. Ross, an analyst at Stifel Nicolaus. "They're all winning."

However, shipping and logistics businesses that don't deal heavily with e-commerce have been experiencing sluggish growth as the recovery drags.

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With sales rising to a record $35.3bn in November and December - a 15-percent increase from a year ago, according to the research service comScore - online retailers are celebrating.

There is another less obvious beneficiary of the e-commerce boom: the two major package delivery companies, United Parcel Service and FedEx. And even now, thanks to wrong sizes, awkward gifts and ill-considered purchases, the companies are riding a holiday wave.

FedEx said it expected heavy return shipments throughout January.

"It doesn't slow down much after the holidays, despite what some people may think," said Ken Burkeen, director of retail and consumer goods for UPS.

Good news for shipping is usually good news for the economy as a whole, economists say. FedEx, for example, hired 20,000 holiday workers to deal with extra e-commerce purchases, an 18-percent leap from 2010, while UPS hired 55,000 workers, an increase of 10 percent.

"There's a trend of buying more things online, and the way that's ultimately delivered is via UPS, FedEx or the Postal Service," said David G. Ross, an analyst at Stifel Nicolaus. "They're all winning."

However, shipping and logistics businesses that don't deal heavily with e-commerce have been experiencing sluggish growth as the recovery drags.

Read Full Article