![]() “The question is, how much more of the remaining Express company does FedEx fold into the Ground company, over time?” “The dual operating company model was not efficient nor viable over the long-term,” Maciuba said, referring to Express and Ground's separate operations. FedEx Express has struggled in the face of a global economic slowdown, while FedEx Ground has dealt with tightened profit margins as it adapts to the online shopping boom. Satish Jindel, president of shipping consultancy ShipMatrix, wrote for shipping and trade site JOC.com in June that FedEx Ground “can easily absorb” FedEx Express’ volume, including for deferred services.įEDEX NEWS: President, COO Raj Subramaniam elected to board of directors Move follows analyst calls for changeĪnalysts have prodded FedEx in the past about integrating parts of Express into Ground to make the business more efficient. ![]() deferred shipments dropped 3% from fiscal 2018 to 2019. The growth in deferred services has tightened margins at the struggling FedEx Express, however. Deferred volume made up about 1.1 million of that amount, up 16% from the year before. deferred package revenue, 13% higher than the year before.įedEx Ground’s average daily volume was 8.95 million packages in fiscal 2019, compared to FedEx Express’ 2.9 million domestically. deferred services grew in fiscal 2019 due to e-commerce, FedEx said in July’s annual financial report. They accounted for 31% of Express’ domestic package revenue in the 2019 fiscal year, with the remaining revenue coming from overnight shipments.īusiness for U.S. The company is working with employees to understand what the volume shift means for their responsibilities, he said.įEDEX IN 2020: Questions about Warren Buffett, Walmart, Amazon, Fred Smith retirement and more Day-definite a large part of Expressĭay-definite deliveries include FedEx Express’ deferred shipments, or two- and three-day deliveries, Fitzgerald said.įitzgerald said how much volume will move to Ground because of the program can’t be quantified yet, but deferred shipments are currently a large piece of FedEx Express’ business. “It’s really about getting the right product in the right network at the right cost to serve,” he said.įitzgerald said the move isn’t expected to have any effect on total employment. Moving Express’ “day definite” packages to the Ground network makes sense as it’s already suited for that, Fitzgerald said. Having Ground’s lower-cost contractor model handling the deliveries will also help FedEx realize savings, said Dean Maciuba, director of consulting services at Logistics Trends & Insights LLC.įedEx Express’ network focuses on delivering packages by a certain time, while FedEx Ground’s network is about delivering packages by a certain day. The initiative will eliminate overlap between the two networks, like FedEx Express and Ground vehicles delivering in the same neighborhood at the same time, said Patrick Fitzgerald, senior vice president for integrated marketing and communications at FedEx. ![]() Watch Video: Here are the top FedEx executives to know “This allows FedEx Express to continue to do what it does best - delivering business-to-business and premium business-to-consumer time-sensitive packages," FedEx President Raj Subramaniam said in a statement. "… This change leverages the strengths and investments in the FedEx Ground network, making it the network of choice for residential packages fueled by e-commerce." The packages will have a special code on their labels and be sorted via FedEx Express before being transferred to FedEx Ground stations for delivery. The logistics giant said the move will lower costs and increase efficiencies for the growing number of residential deliveries it sees in its networks. The program will start in Greensboro, North Carolina, and other markets will be added through the rest of 2020. FedEx Express will begin contracting with FedEx Ground for certain shipments, beginning a link between the two companies FedEx has kept separate.įedEx announced Friday that Memphis-based Express will begin contracting with Pittsburgh-based Ground “for the transport and delivery of select day-definite, residential Express shipments” starting in March.įedEx Ground will deliver the Express packages if they are home deliveries Ground can meet the original delivery date of, the company said.
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