FedEx Ground, the ground-delivery arm of Memphis-based FedEx Corp., broke ground today on what will be its largest hub, an 800,000-square-foot facility on 260 acres in Northampton, Pa. The site is in the state's Lehigh Valley, a critical node for goods distribution to the densely populated U.S. Northeast.
The facility, which can be expanded to 1.1 million square feet, will be FedEx Ground's first in the Lehigh Valley, an area dotted by enormous distribution centers because of its proximity to major population points. It is scheduled to open in August 2018.
Woodbridge, N.J., in the state's north-central region, and Harrisburg, Pa., will be the two closest hubs to Northampton. Other Northeast hubs are in Hagerstown, Md., Hartford, Conn., and Syracuse, N.Y. The unit operates out of 560 hubs and local pick-up and delivery stations in the U.S.
FedEx Ground will head the project's development. The Rockefeller Group, a commercial real estate developer, will work with FedEx Ground to develop roadway improvements for accommodating increased vehicle traffic. The Rockefeller Group also plans to develop an industrial park on the land surrounding the hub.
The new hub will provide the region's shippers with later cut-off times, as their goods will not have to travel as far as they do today from their origins to the closest DC, according to Rob Martinez, president of Shipware LLC, a parcel consultancy. Transit times will also improve as a result, Martinez added.
According to FedEx Ground, since 2003 it has reduced transit times by at least one day to 70 percent of the country. FedEx Ground delivers 83 percent of its packages in three days or less, 63 percent in two days or less, and 25 percent the next business day, according to Perry Colosimo, a spokesman for the unit. Its daily package volumes have doubled over the past decade, Colosimo said.
FedEx Ground has boasted that it delivers parcels faster than the ground-delivery operation of UPS Inc., its chief rival. According to Shipware data, FedEx's transit times are at least one day faster than UPS' ground operation on about 27 percent of comparable ZIP code pairings. Atlanta-based UPS is faster on about 5 percent of pairings, with the two being equal on the remaining 68 percent, according to Shipware data.
FedEx plans to pour billions of dollars into facility development for the fast-growing unit as part of a companywide reorganization, announced in 2012, to focus more resources on FedEx Ground's growth. The unit, which transports more than 7.5 million packages daily, reported $16.6 billion in annual revenue in its 2016 fiscal year, about 30 percent of the more than $50 billion in FedEx's overall revenue last fiscal year.
In an e-mail, Martinez said FedEx Ground's hub expansion will enable it to boost shipment density and operate more efficiently and profitably. The new Lehigh Valley DC will "contribute to FedEx's recent dominance" in the domestic ground parcel sector, he said.