FedEx aims to boost service, profit more from online shopping
30/05/2019 22:47
LOS ANGELES, May 30 (Reuters) - FedEx Corp FDX.N said on
Thursday it will begin offering Sunday residential delivery and
handoff fewer e-commerce packages to the U.S. Postal Service, as
it works to bolster service and wring more profits out of the
online shopping boom.
FedEx said it will offer year-round, seven-day U.S. ground
delivery starting in January 2020. It now offers Sunday home
delivery in the United States only during the peak holiday
season.
Memphis-based FedEx and rivals ranging from United Parcel
Service Inc UPS.N to Amazon.com Inc AMZN.O are seeking to
reduce the cost of delivering packages the so-called "last mile"
to online shoppers' doorsteps by increasing the number of
packages they drop of at each stop.
"We're going to be the premium, low-cost delivery provider"
for the last mile, said Raj Subramaniam, FedEx's president and
chief operating officer.
FedEx aims to do that by shifting the delivery of nearly 2
million FedEx SmartPost packages from U.S. Post Office (USPS)
mail carriers to the service providers who handle FedEx Ground
residential package deliveries.
FedEx since 2016 has used technology that allows it to put a
FedEx SmartPost package into the FedEx Ground network when
another package is destined for the same or nearby address.
It is accelerating that matching effort 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.
"We believe this makes sense for (FedEx) as costs at the
USPS are rising and FedEx continues to focus on improving
margins and efficiency in its networks," Cowen & Co analyst
Helane Becker wrote in a client note.
Shares in FedEx closed down 1% at $158.01 on Thursday.
(Reporting by Lisa Baertlein in Los Angeles; Editing by Tom
Brown)
((lisa.baertlein@thomsonreuters.com; +1 213 955 6742; Reuters
Messaging: lisa.baertlein.thomsonreuters.com@reuters.net))