FedEx Ditches Post Office And Expands To Seven-Day Residential Delivery

Source: FedEx

FedEx Corp announced a major service change to better serve the fast growing eCommerce market.

While FedEx Ground has been delivering seven days per week during the holiday peak season, beginning in January 2020, this service will continue year-round for most of the US population.

This makes FedEx the first major US carrier to offer seven-day a week ground residential delivery to any shipper. UPS is rumored to be considering the same and language in its recent union work contract seems to substantiate the possibility.

READ MORE: UPS Eyeing Sunday Delivery Service?

The company is also rapidly integrating FedEx SmartPost package volume into FedEx Ground standard operations and increasing large package capabilities.

FedEx SmartPost relies on the United States Post Office to deliver packages to their final destination while FedEx handled the pickup and transportation of the parcels.

Increasing Utilization Of Existing Assets

“We have made significant investments in capacity, technology and automation at FedEx Ground over the past 20 years. These investments have allowed us to gain ground market share for 19 of the last 20 years, and we are now ideally positioned to extend that growth as the average daily volume for small parcels in the U.S. is expected to double by 2026.”

“Expanding our operations to include Sunday residential deliveries further increases our ability to meet the demands of e-commerce shippers and online shoppers.”

Raj Subramaniam, president and chief operating officer, FedEx Corp

Besides delivering every day of the week, FedEx Ground is making changes to enhance its efficiency in last-mile deliveries.

Nearly two million FedEx SmartPost packages that were previously given to the US Postal Service for delivery to homes every day will be increasingly integrated into FedEx Ground operations and delivered by the same service providers currently handling FedEx Ground residential packages.

Since 2016, state-of-the-art technology has enabled the movement of a FedEx SmartPost package into the FedEx Ground network when another package is destined to the same or nearby address.

This has resulted in the integration of approximately 20 percent of FedEx SmartPost packages to date.

Starting this fall, the integration of these packages will be significantly accelerated, and the vast majority of FedEx SmartPost package volume is expected to be integrated into FedEx Ground operations for final delivery by the end of 2020.

What About SmartPost Pricing?

One advantage of FedEx SmartPost is that shipments to residential addresses did not incur a residential delivery fee.

FedEx did not address pricing in their announcement, so this begs the question if FedEx will offer a “discounted” ground residential delivery option in 2020.

With FedEx SmartPost shippers save on the residential surcharge, but also do not receive a guaranteed delivery date and in most cases shipments would take about 1 to 2 business days longer.

While fast delivery is crucial for many shippers, there is a market for discounted ground shipments for non-critical residential deliveries. Even Amazon offers a “slow” option in exchange for receiving an order credit toward a future purchase.

Improving Capabilities For Large Items

Online shopping has quickly evolved to include oversized and heavy items such as TVs, furniture, rugs, mattresses and auto parts.

These large packages now comprise over 10 percent of FedEx Ground’s volume, and they expect the growth to continue.

The company is making significant operational changes to ensure safe and reliable handling of these large items. These changes include designing new facilities, adding equipment to existing facilities and making other operational adjustments.

READ MORE: FedEx Unveils Autonomous Delivery Robot

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