FedEx expected to handle about 26 million shipments on Cyber Monday, Nov. 30, anticipated to be the busiest day of a record holiday peak season.

It was the first of four expected daily volume spikes fueled by online shopping between Thanksgiving and Christmas.

The Memphis-based company is projected to handle more than 24 million shipments a day on Tuesday, Dec. 1, Dec. 7 and Dec. 14 and an overall 22% increase in shipping volume during peak season.

“I don’t know that those days will see individual records, as the volume has been spread out with seven-day (operations) and proactive efforts to encourage people to shop and ship early. The season though will be record breaking,” FedEx spokeswoman Bonny Harrison said.

The busiest days should fall short of more than 30 million shipments handled on a single day during the 2019 peak season, before FedEx had fully implemented a seven-day pickup and delivery operation.

Online surge

Monday’s traffic followed a surge of e-commerce on Black Friday, when online spending increased 22% from the previous year, according to Adobe Analytics.

Meanwhile, bricks-and-mortar retailers saw about half the usual traffic because of COVID-19 concerns.

Adobe projected online sales would set a new record of $10.8 billion on Cyber Monday, up more than 15% from last year.

The official beginning of the 2020 holiday shopping season capped months of preparation by FedEx, UPS, Amazon and the U.S. Postal Service for an uptick in online holiday shopping on top of a COVID-driven increase in e-commerce.

FedEx and UPS put holiday season surcharges and volume limits in force for higher-volume customers in an effort to spread out shipping demand over a longer period of time. Big-box retailers responded by starting holiday sales pushes as early as October.

FedEx’s daily volumes were already up about 30% – to nearly 19 million packages a day – since March because of the pandemic’s impact on online shopping.

New pressures

December brings two major sources of increased shipping demand: holiday peak season and initial distribution of COVID-19 vaccines.

Much of FedEx’s e-commerce business is handled by FedEx Ground, which started moving to a seven-day operation a year ago and gradually completed that addition over the course of 2020. Last peak season, FedEx Ground delivered on Sunday to about 60% of the U.S. population, but that’s up to 95% this year.

Sunday delivery, more efficient networks key FedEx peak plan

FedEx Ground president and chief executive Henry Maier has described Sunday delivery expansion as a key to handling surging e-commerce so far this year and in the peak season, without sacrificing speed and reliability.

In the past, FedEx registered sharp increases in volume on Cyber Monday and other Mondays during peak as e-commerce items bought over weekends were picked up on Mondays. The seven-day operation smooths out volume through the week and flattens the peaks.

The busiest day at the FedEx Express world hub at Memphis International Airport typically falls closer to Christmas as shoppers wait until the last minute to make purchases and then require time-definite, premium shipping services that move by air.

Vaccine distribution

FedEx is gearing up to play an integral role in shipment of COVID-19 vaccines in December, which will mean some of FedEx Express’s air freight capacity won’t be available for e-commerce.

Harrison said FedEx is prioritizing vaccines but “this is where our separate networks come into play – FedEx Express with time-definite and cold chain capabilities, which serves our health care customers and is ready to ship vaccines, as well as FedEx Ground, our ground network which predominantly handles e-commerce driving our holiday peak effort.”

FedEx ‘incredibly confident’ in vaccine delivery plan

“The distinction means that each will have the dedicated resources they need to deliver quickly and safely,” Harrison said. “When they are approved and ready for distribution, vaccine and related health care shipments will be our top priority for the Express network, with support provided by FedEx Logistics and Custom Critical teams.” 

Satish Jindel, a shipping industry consultant, said vaccine distribution will use air freight capacity that would have gone to e-commerce.

“If they experience delays in the latter part of December, the consumers can’t blame FedEx, UPS, the Post Office or the retailer. They will have to blame Washington, for giving priority to vaccine delivery, which is the right thing to do, but it will suck up the (air freight) capacity,” Jindel said.

The last week or so before Christmas could prove particularly challenging, he said.

“If we end up with some bad weather, some people’s Christmas will not be a merry one. It will be no one’s fault but their own, because they keep procrastinating,” Jindel said.

Filling a gap

Jindel is a former insider at Caliber/Roadway Package System, predecessor of FedEx Ground. He leads ShipMatrix, a parcel industry analytics service.

In November, Jindel launched a new enterprise, ShipMatrix 1st Class Parcel Service, to fill in gaps in capacity at FedEx and UPS.

The service aims to pick up overflow business from FedEx and UPS and provide customers with shipping capacity in the U.S. Postal Service’s First-Class Mail network.

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“The intent is we are not trying to compete with FedEx and UPS,” Jindel said. “We are trying to supplement them with capacity that they are not able to handle. With the way I have the ability to forecast ... I can tell you UPS, FedEx and the Post Office will continue to have capacity limitations to meet the demands consumers are going to generate.

“And with the vaccine coming, it’s going to suck up capacity. It will continue all the way into 2021 and beyond, and we want to be there as long as they are unable to meet the demand,” Jindel said.

Both FedEx and UPS will be involved in vaccine distribution as part of the U.S. government’s Operation Warp Speed.

Reliability strong

Despite the surge in e-commerce, Jindel said the big three U.S. carriers (FedEx, UPS, USPS) are doing an excellent job delivering on-time.

“All three carriers, despite the tremendous increase in their volume, third week of November, they all are at 96% (on-time), close to or higher, which is very impressive,” Jindel said.

Another shipping industry analyst, Lateshipment.com, projected average package delay rates of 14%-18% during the 2020 holiday season and said as many as 25%-30% of packages could face delivery delays in densely populated areas such as New York, Los Angeles and Chicago. It said packages moving by air will be less prone to delays.

FedEx ramps up for COVID-19 vaccine distribution

“FedEx will perform better when compared to UPS from an on-time delivery standpoint since FedEx handles lower parcel volumes and (has) greater separation between their Ground and Express networks,” Lateshipment.com said.

‘Thank you, Amazon’

For the second straight peak season, Amazon has told its third-party sellers not to use FedEx Ground for Amazon Prime shipments. The move came after FedEx Ground slowed down delivery timetables in certain lanes, while UPS sped up its delivery window.

UPS delivers a significant chunk of Amazon business, but FedEx weaned itself from Amazon delivery contracts last year.

“I don’t think FedEx cares because they’ve got more business than they can handle,” Jindel said. “So it’s good. ‘Thank you, Amazon, for helping me.’ ”

“UPS used to add a day in the peak in many lanes, and this year FedEx has added a day and UPS (has) actually speeded up, and that’s why Amazon is probably going to encourage them to use UPS because of that,” Jindel said.