FedEx predicts 12 percent increase in holiday shipments

With online shopping growing, FedEx is bracing for record volumes this holiday season.

The delivery company predicted Monday that shipments from Black Friday - the day after Thanksgiving - through Christmas Eve would rise 12.4 percent over last year to 317 million pieces. Online purchases and an extra day to the 2015 season will drive the gain, FedEx said.

The company said that to handle the crush, it is hiring more than 55,000 seasonal workers, and investing in automation and expansion.

Rival United Parcel Service Inc. will release its holiday forecast on Tuesday, said spokesman Steve Gaut. He said that the same trends would affect UPS.

Delivery companies have profited from the shift in shopping from stores to online. Even still, the FedEx forecast is bullish. The National Retail Federation, for example, predicted that online sales in November and December would rise by between 6 percent and 8 percent over late 2014.

And FedEx's outlook outstrips the federation's overall prediction for expansion in U.S. holiday-season spending. The group expects consumer purchases to rise 3.7 percent to $630.5 billion in November and December.

Planning for holiday demand can be treacherous for the delivery giants. After being caught off guard by a late surge in shipping and bad weather during 2013, they greatly increased their seasonal work forces last year. The heavy spending pulled down earnings at UPS, although FedEx profit rose.

FedEx and UPS now talk to retailers throughout the year to plan for the spike in holiday shipping. Much of the surge is driven by retailers that promise free shipping even in the last days of the gift-sending season.

"We need to make sure that if they are looking at moves like that, they need to understand what our capacity is," said FedEx senior vice president Patrick Fitzgerald. "We do limit some delivery commitment to customers where necessary. That's not very common."

UPS will hire as many as 95,000 workers, about the same number as last year.

Volume spikes this year are expected on three Mondays - the one after Thanksgiving, known as Cyber Monday, and the first two in December, FedEx said.

FedEx will expand sorting operations in its ground delivery network to seven days a week during the peak season, and will extend work at its FedEx Express airline hubs as needed, the company said.

Free-shipping promotions aren't likely to disappear. Nearly half of shoppers surveyed by the retail federation said free shipping is an important factor in their buying.

The first big test for the delivery companies will come on Cyber Monday, when FedEx expects to handle at least 20 million packages or double the daily average during the holiday season.

FedEx gets a break, however, Fitzgerald said. More online shoppers now get started early, spreading those orders and shipments over the Thanksgiving weekend instead of waiting for Monday.

In New York Stock Exchange trading, FedEx shares closed down 1.65 cents to $157.87 a share.