FexEd, the world's second-largest package delivery company expects to handle...

FexEd, the world's second-largest package delivery company expects to handle 17 million packages on its busiest day, which this year is projected to fall on Dec. 12. That's 10 percent more than its busiest day last year. (June 18, 2008) Credit: Getty Images

FedEx Corp. said Monday it expects to ship more packages this holiday season than ever before. The volume jump will be driven by cheaper packages it moves through a partnership with the U.S. Postal Service.

The world's second-largest package delivery company expects to handle 17 million packages on its busiest day, which this year is projected to fall on Dec. 12. That's 10 percent more than its busiest day last year.

Between Thanksgiving and Christmas, FedEx Corp. expects more than 260 million shipments, a 12 percent increase from 2010.

Investors cheered the optimistic forecast a month after FedEx Corp. said shoppers were pulling back on spending. FedEx shares closed up $2.18, or 2.75 percent, to $81.52.

The number of shipments FedEx handles at this time of year has climbed through the recession as shoppers skip stores and have gifts shipped after buying them online. The growth is also due in large part to its SmartPost service with the U.S. Postal Service. SmartPost parcels, mostly from online and catalog retailers, move through FedEx's network but are delivered by a postal worker.

SmartPost has been a huge growth driver for FedEx since the partnership was formed. Average daily volume in the segment grew 29 percent in FedEx's fiscal first quarter, which ended Aug. 31. Shipments are being boosted as online shopping grows, giving FedEx a bigger slice of the market.

Overall, holiday shopping is expected to be up from last year, but the rate of growth is not nearly as fast as in previous years. U.S. retail sales are expected to grow 2.8 percent in November and December to $465.6 billion, according to the National Retail Federation, far below 2010's 5.2 percent increase. The forecast is slightly higher than the average growth rate over the last decade of 2.6 percent. About 46.7 percent of shoppers are expected to buy online, compared with 43.9 percent last year.

FedEx, based in Memphis, Tenn., plans to add 20,000 seasonal workers to handle the surge, up from 17,000 last year.

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