What?
On May 30th, 2019 FedEx Ground announced that starting January 2020, it will begin year round 7 day delivery operations. Historically, FedEx Ground and its ISP/IC partners provided 7 day operations during the busy peak Holiday season.
Updated: FedEx Ground has updated the start of 7 day operations for select markets. Initially planned for January 2020, FedEx has moved up the full time start date to November 3rd.
Why ?
As consumers continue to do more of their shopping online, FedEx and other shipping providers need to adjust to 1) customer delivery time expectations (faster) and 2) handling of the increased package volumes with existing asset base (terminals and trucks). By running 7 day operations this helps accomplish both goals.
Impact
This is a positive sign as the industry continues to see significant long-term package volume growth as consumer buying habits structurally change from offline to online. This is a natural progression for the industry that in some ways has become the defacto retail industry. Initially, brick and mortar stores used to be open only 5 days a week. To cater to the growing contingent of dual income families, stores began operating on Saturdays and then eventually Sunday to cater to changing consumer needs. This industry arc is no different for the parcel delivery space. What was initially a 5 day a week industry has transitioned to 6 day and soon to be 7 day operation.
Inevitably there will be some operators who will not appreciate the extra day of operations. For operators with scale, flexible labor and/or technology, this could be a potential boon as it will allow extra route owners to make more money with the same level of assets as before. Trucks sitting on Sunday don’t make operators any money. Trucks running on Sunday can.
SmartPost Integration
What is SmartPost?
SmartPost is a program between FedEx and USPS where Fedex can redirect some of it own ground volume to USPS for residential delivery, thereby bypassing FedEx’s own contractor network.
Why is FedEx Integrating SmartPost Back Into FedEx?
In order to drive higher route density and increase volumes with the announcement of 7 days, FedEx has announced that it will reincorporate roughly 2 million SmartPost packages back into the Ground network by 2020
Impact
This is low hanging fruit for FedEx and route owners in terms of package volume growth. These packages already exist, are typically smaller and generally quick to deliver (residential).