On the Money

FedEx's 'Matrix' sorts millions of packages with thousands of workers as holiday season ramps up

Shipping surge

They call it "The Matrix."

No, we're not talking about Morpheus asking Neo to choose between a red and blue pill. The name refers to the massive sorting facility at the heart of FedEx's high-tech headquarters in Memphis Tennessee.

It's just one part of the 880 acre "world hub," with 42 miles of conveyor belts sorting more than 2 million packages each day. That huge number spikes during the holiday season, with approximately 160 cargo-carrying FedEx planes arriving and departing from the Memphis airport each night.

Overall the company predicts it will handle 355 million packages between Thanksgiving and Christmas, that's 10 percent more than last year thanks in large part to the rise of e-commerce.

"The planning process started literally as soon as we were done [last year] and now we're heading into our Super Bowl — that's what this is," Memphis Hub Senior Manager Walter Kirkeminde told CNBC in an interview. To handle the surge, 55,000 seasonal workers will be added to the workforce to meet the delivery demand.

FedEx has made other investments as well, including 30 new planes and $2 billion dollars of capital into the ground segment. Will all of it be enough to keep up with the demand and keep costs under control?

The challenge has kept the competition fierce between FedEx and competitor UPS. So far FedEx still has the upper hand in terms of market share, but the "brown" company is putting up a good fight.

During the most recent quarter, "UPS's volumes were up 5 percent. That's very strong in the current economic conditions. But FedEx's were up 10 percent," said Donald Broughton of Avondale Partners.

Workers prepare to offload an incoming FedEx plane in Newark, New Jersey.
Getty Images

Yet there is one major wildcard that can have a serious impact: The weather.

To help minimize Mother Nature's impact, FedEx has a staff of 15 meteorologists watching over weather patterns. If they notice stormy weather making its way to one of its hubs, the company can divert some of the packages to other locations and reduce disruptions.

Right now the FedEx weather forecasters are predicting mild weather for a record breaking season, which will be a big help in making all of Santa's deliveries on time.

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