September 12, 2018

FedEx Ground to add year-round Saturday service, matching UPS

Sixth weekly service day to extend beyond peak season, FedEx Ground parent says.

By DC Velocity Staff

FedEx Corp. said today it will expand the U.S. operations of its ground delivery unit, "FedEx Ground," to six days a week all year round, thus matching the frequency capabilities of UPS Inc., its chief rival, which launched Saturday service in 2017.

The FedEx unit operates six and sometimes seven days a week during the peak holiday season, but has always stuck to a Monday through Friday delivery schedule for the rest of the year. It did not specify in its announcement when during the post-peak period it would begin the expanded service. A spokeswoman for the Memphis-based parent company did not return an e-mail request for that information.

"The rise in demand for e-commerce goes beyond peak. It's a year-round phenomenon and we are ready to meet that demand," said Raj Subramaniam, FedEx's executive vice president, chief marketing and communications officer, in a statement today.

FedEx Ground has opened 15 domestic hubs since 2005. During the last five years, it has opened nine hubs and 58 automated stations while adding nearly 36 million square feet of capacity. The growth of e-commerce and truck-focused regional deliveries has resulted in FedEx Ground receiving a larger share of the parent's capital expenditures since 2013. In turn, the parent's CapEx strategy has de-emphasized the "FedEx Express" air and international unit, which is still the enterprise's core business but which is not growing as fast as its ground operations.

E-commerce, and the business-to-consumer (B2C) delivery demand it generates, accounts for about 20 percent of FedEx Ground's traffic, according to Shipware, LLC, a consultancy. B2C traffic for FedEx Ground spikes to as high as 50 percent of overall volume during the peak period, said Rob Martinez, Shipware's founder and CEO. By contrast, e-commerce accounts for as much as 95 percent of the business at FedEx's "Home Delivery" operation, Martinez estimated. The Home Delivery unit operates on a Tuesday through Saturday schedule to capture the weekend home delivery market.

UPS' launch of Saturday ground deliveries was a significant development because, unlike FedEx, UPS does not segregate commercial and residential routes. As a result, UPS' addition of a sixth delivery day benefitted B2C shippers wanting deliveries six days a week, according to Martinez.

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