SAN FRANCISCO, July 9, 2021 (PPI Pulp & Paper Week) -FedEx recently told analysts that it expects ongoing double-digit growth for the US package delivery business.
FedEx Exec VP Brie Carere forecast that US package volume overall growing at 15%/yr on average in the four years from 2022 through 2026. Carere forecast an increase from 107 million packages a day in 2022 to 172 million per day in 2026.
"In the United States, the flourishing US domestic parcel market will continue to provide opportunity," Carere told analysts on June 24.
"The US domestic parcel market is expected to surpass 107 million packages a day in calendar year 2022, with e-commerce contributing 88% of the total US market growth," she said.
"Excluding Amazon volume, the US domestic parcel market is expected to be 72 million packages a day in calendar year 2022 [or two-thirds of total US volume]," she added.
Her comments were made as the company near the end of June reported its fiscal fourth-quarter results, for the calendar year period of March through May 2021.
Only for its overnight box volume, which is an indicator of last-mile e-commerce growth, FedEx reported a daily average of 1.44 million daily package deliveries in the quarter, which was up 28% on a year-over-year basis.
The company reported that FedEx Ground increased revenue in the quarter, on a year-over-year basis, by 27%.
Total FedEx revenue in the quarter increased 30% to $22.6 billion, a $5 billion increase year-over-year. Its ground transport business revenue by itself was $8.1 billion.
FedEx reported its overall business margin increased to 8% from 2.7% in the prior year behind a 280% increase in operating income to $1.8 billion from $280 million, year-over-year.
The revenue increase was primarily from "strong growth" in business-to-business shipments and a 14% rise in revenue per package, the company said. FedEx’s package-delivery business hit its highest gear ever in calendar fourth quarter last year because of US holidays shipments.
"To handle future ground volumes, we are significantly increasing capacity to deliver both great service and improve financial results," said FedEx CEO Frederick Smith in a call with analysts. "This summer, we are intently focused on improving network and delivery operations prior to the volume surge in the fall."
FedEx running seven days a week.COO Raj Subramaniam told analysts that FedEx Ground trucks were running seven days a week, and that "weekend residential delivery coverage now reaches 98% of the US population on Saturdays and 95% on Sundays." He said this effort, against the likes of Amazon Prime, UPS, the US Postal Service, and other third-party last-mile deliverers, requires FedEx to work "very closely with customers to leverage the full flexibility of weekend operations, so they can meet the demands of e-commerce every day of the week. This is evident in the growth we saw in Ground Sunday deliveries with 56% more packages delivered on Sunday in Q4 than last year."
AFedExpackage is a mixture of different substrates. The company could not break down forP&PWthis week what percentage is in corrugated. But FedEx did tell of using the following for its packaging:corrugated boxes, corrugated specialty boxes, mailers, tubes, and freight boxes, along with bubble-pack, plastic air pillows, chipboard, polyethylene Tyvek envelopes, and reusable packaging. Similar to the 3.4% sequential growth in US corrugated box shipments in 2020 vs 2019, FedEx reported that its fiscal year 2020 packaging in metric tonnes increased 3.2%, when compared with fiscal 2019, to 58,964 tonnes (or 64,860 short tons). The company said its recycled content for packaging was an average of 42% in fiscal 2020.