The Rise of Online Shopping Could Boost Shipping Companies

Brittney Barrett  |

Christmas, after months of retail warnings about its arrival, is finally approaching. On Monday, FedEx Corp. reported its busiest day of the day of the year after delivering 17 million packages nationwide, a sign that the shopping rush has really began.

Between Thanksgiving and Christmas, FedEx is expecting to ship roughly 260 million packages, a 12 percent rise from last year alone. No, it’s not because the economy is climbing back; it’s more the rise in online shopping, which currently accounts for an estimated 9 percent of total gifts. The shift is helping to boost the strength of companies like FedEx (FDX), UPS (UPS) and Boeing (BA), which supplies a good amount of the airplanes being used to meet shipping deadlines.

Surely the increased traffic this holiday season will help all the majority of the companies in the field. Shipping corporations are shaping up to be among the few bright spots in the equity market this quarter, with United Parcel Service Inc. also reaping the benefits of the uptick in online shopping. UPS is anticipating shipping as many as 25 million packages on Dec. 22, its biggest shopping day of the year.

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Just on Monday, shoppers spent in excess of $1.1 billion in sales, making it the third strongest spending day this holiday season. A year-over-year comparison of the day would find that spending on Monday was 19 percent higher than last year. While typically, Monday would have represented the peak date in online shopping but that  is all changing this year. Sites like (AMZN) and other leading online retailers are looking to extend the length of the online shopping season, which historically ends before high rush shipping costs enter the picture. This year though, many top retailers are eliminating such costs by offering free shipping or forgoing Christmas deadlines. The company announced earlier in the week that it will now offer its Super Saving Shipping until December 19. Such moves are likely to help blend the line that once separated online shoppers from last minutes ones. The decision could benefit not only the e-tailers, but the companies charged with moving the packages from the warehouse to under the tree.

The influx of orders and extended periods of high volume are not without complication though. Among shipping companies, FedEx especially has had to invest an increasing amount in technology to facilitate internal tracking of goods in order to best monitor the increased shipments.

The market research firm ComScore Inc., projects consumers will spend $37.6 billion online this holiday season, a 15 percent increase 2010 that has required significant adjustments.

The shifts this year will likely continue to multiply in the coming years as the rise of online shopping begin to dominate. Given that online shopping still accounts for only 10 percent of total purchases made, this segment of retail still has a ways to grow. As online shopping accounts for a greater amount of total items purchased overall, assessing the numbers coming out of top shipping companies will become more difficult.

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