FedEx leveraging peak season capacity crunch into more volume

Investment bank Stifel lauds FedEx policy of rewarding consistent shippers with more space during holiday season.    FedEx’s policy of providing peak-season capacity to customers that provide regular business throughout the year is a sound one, according to the investment bank Stifel.
   In an investor note derived from a recent visit with FedEx management, David Ross, managing director of Stifel’s Transportation & Logistics Research Group, noted that a significant portion of the U.S. express volume growth year-to-date comes from “e-tailers” that have been giving FedEx more regular business throughout the year to get access to more capacity during the December rush.
   “We believe this customer approach (the more non-peak volume one ships via FedEx, the more FedEx capacity is available to that shipper at peak) to be an excellent sales and management strategy on the part of the company,” Ross wrote.
   Ross noted that while FedEx is unlikely to be able to assess peak season surcharges this year, those surcharges “are appropriate to better match the customer price with the additional costs to carriers of providing peak capacity. If peak is worse this year than last, expect these surcharges next December.”
   Finally, Ross wrote that the current West Coast port congestion issues are more likely to drive incremental airfreight, not air express, benefiting forwarders instead of FedEx.
   “But [the congestion issues] are certainly a net positive for FedEx, the longer the issues linger and the worse the congestion gets at U.S. West Coast ports,” he wrote.