How Sandy will affect shipping business
So far, companies in the sector expect to shrug off any disruptions in time for the holidays.
We won't know exact numbers for some time, but it's pretty certain superstorm Sandy will rank as one of the most damaging and disruptive storms to hit the United States.
Sandy arrived just as the shipping industry is gearing up for the all-important holiday season. Major freight rail and trucking operations are still dealing with regional closures and delays as the East Coast recovers from the storm. And a top official with the National Retail Federation tells The Wall Street Journal that Sandy’s impact on retailers could be significant.
The retail industry reportedly makes up to 40% of its yearly revenue during the November and December holiday shopping season. One analyst estimates that non-restaurant retailers might lose about $25 billion in sales this week due to the hurricane -- and is reducing his holiday sales forecast.
But several of the big shipping companies seem almost nonchalant when it comes to concerns about Sandy’s impact on their upcoming holiday crunch. FedEx (FDX) says it plans to resume pickup and delivery service in many of the storm-affected areas as soon as possible.
"It is important to remember that FedEx has nearly 40 years of experience handling these situations and we have contingency plans in place to quickly resume operations after the storm has passed," says FedEx spokeswoman Shea Leordeanu.
UPS (UPS) meanwhile, is already looking past Sandy. The company expects to deliver 527 million packages this holiday season, well over last year’s record of 480 million. And it’s already in the process of hiring 55,000 seasonal employees across the country -- to work as loaders, package sorters and driver assistants.
Using the seasonal workers that have already been hired, "we can ramp up and get them to help with sorting, pre-loading -- to expedite volume that has been held up by the storm," says Susan Rosenberg, UPS public relations director. She notes the company’s integrated air network has kept air shipment disruptions to a minimum -- by diverting aircraft and shipments normally bound for Newark, Philadelphia and other cities in the hurricane zone to the UPS international air hub in Louisville, Kentucky. And ground transport such as rail can also be diverted to hubs such as Chicago.
Consumer shopping patterns are also helping the shipping companies avoid seasonal and weather-related disruptions. "It's more than just a steady rise for peak season." Rosenberg says. "You have spurts of activity around online commerce, a spurt around Black Friday and Cyber Monday, then more of a compression in the two weeks before Christmas. It's the consequence of growing accessibility, technology and online shopping."
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The retailer's revenue slumped 8.9% to $838.8 million, badly trailing the Street's view of $941 million.
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