FedEx: confidence will continue to shape the backdrop of the remainder of this peak season

How is this Peak different to last year?

The cost-of-living crisis is being felt by consumers and businesses alike as consumers cut back on spending this season. Research shows that three in four consumers planned to cut back this peak season, with only one in four intending to spend at normal levels.

But, despite economic headwinds, volumes have been robust for FedEx. In November we saw roughly the same volumes in our European network this Peak as we did in 2020 during the pandemic, but the balance has shifted towards more B2C. Ecommerce continues to drive growth in the market.

We have also seen that businesses are looking at FedEx to provide reliable service at a variety of price points. And, this Peak, we’ve seen a shift towards services that prioritise cost over speed. For us this means customers who have urgent shipments will still opt for air transport, but those who can make the time tradeoff are shifting shipments over to our road network.

How hard is it for the sector to predict volumes?

At FedEx, we begin preparing for peak season months in advance. Preparations really ramp up in the summer to ensure we’re prepared for the busy Christmas months. This planning involves working closely with our customers to understand their needs and what they expect to see, so that we can support them through the busiest and, often, most important time of the year.

We also see that end-of-year peak season no longer consists of just one peak, but three. Starting with Singles Day on 11 November, the busy period continues into Black Friday, and finally Christmas. So planning covers a longer period than it once did, and operations are flexed to account for this.

What are your predictions?

Our main predictions are that consumer confidence will continue to shape the backdrop of the remainder of this peak season, but e-commerce, particularly cross-border, will continue to drive growth in the market.

Looking ahead to next year and beyond, global cross-border e-commerce sales is expected to grow by 26% by 2030. And we continue to encourage small and mid-sized businesses to build the capabilities and the confidence to think cross-border as this provides opportunities to build their customer base.

How does FedEx manage this uncertainty whilst being prepared?

Planning for peak starts early for us – we start talking with customers as early as possible to understand what they need and the growth they expect, so that we can plan our operations accordingly.

The FedEx network is also built to meet varying peak volumes. And we’re investing to ensure that we have both the capacity and technology in place to provide an efficient service when volumes rise.

For example, in our transatlantic air network, we secured (up to) more than half a million weekly pounds of additional capacity during Peak, on top of the weekly six million pounds we already have available. In addition, throughout this year, we made significant investments in our intra-European road network which increased capacity and offers businesses reliable service at a lower price point.  In the UK, in late November we launched a new import facility, which can sort through double the number of parcels in one hour than the previous sorter.

How is FedEx meeting the consumer need for cheaper delivery?

Having one of the largest and fastest road networks in Europe for parcels and freight means we can offer a range of cost options, so that our customers and the consumer have a variety of options to choose from. 

Our own data tells us that this year we’re seeing a growth in demand for economy services and expect a rise in intra-European economy parcel volumes of nearly 10% this peak season versus last year.