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05/30/2019

FedEx fires salvo at Amazon in delivery wars

FedEx is responding to increasing delivery pressure from Amazon with new capabilities and services.

Beginning in January 2020, FedEx will offer ground delivery seven days per week for the majority of the U.S. population. FedEx already delivers via ground seven days per week during the holiday peak season.

In addition to delivering every day of the week, FedEx is also making changes designed to enhance its efficiency in last-mile ground deliveries. Nearly 2 million FedEx SmartPost packages that were previously given to the U.S. 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, FedEx has been moving SmartPost packages into its ground network when another package is destined to the same or nearby address. This has resulted in the integration of approximately 20% of FedEx SmartPost packages to date. Starting this fall, FedEx will accelerate the integration of these packages, and expects the vast majority of FedEx SmartPost package volume to be integrated into FedEx ground operations for final delivery by the end of 2020.

Furthermore, in response to the increase of oversized and heavy items, such as TVs and furniture, in online shopping, FedEx says it is making “significant operational changes” to ensure safe and reliable handling. These changes include designing new facilities and adding equipment to existing facilities.

According to FedEx, large and oversized packages comprise more than 10% of its ground shipment volume, with growth expected to continue. In addition, FedEx expects the average daily volume for small parcels in the U.S. to double by 2026.

“These transformational steps demonstrate how the size, scope and technology of the FedEx network enable us to be nimble and responsive to the changing needs of e-commerce,” said Raj Subramaniam, president and CEO, FedEx Corp. “Each one advances the company’s commitment to continued superior service and increased efficiency in handling all e-commerce packages – small and large – within one ground network, seven days a week, year-round.”

FedEx is extending its ground delivery service and bringing more deliveries in-house as Amazon is ramping up its own proprietary delivery capabilities. According to a recent report from TJI Research, a new service known as “Amazon Shipping” is bypassing Amazon fulfillment centers entirely. Select Amazon sellers can directly print Amazon shipping labels from their dashboards, with Amazon then picking up packages every weekday and delivering them to domestic consumers seven days a week.

In addition, according to Business Insider, Amazon is using fabric tents to store and sort packages which drivers then load and take to their delivery destinations. The tents, which are not meant to serve as permanent delivery stations, can be put up within weeks, enabling Amazon to rapidly introduce its own delivery service in new markets.