FedEx Tiptoes Into $9 Billion Online Market for Bulky Deliveries
(Bloomberg) -- FedEx Corp. is testing full-service residential delivery of bulky products, a $9 billion market that couriers had left to more traditional trucking companies because large items don’t fit well in their sorting operations.
The service would be offered through FedEx’s freight business, which is a less-than-truckload operation geared more toward industrial shipments. Under a pilot project, FedEx is carrying items such as washing machines and sectional sofas into a customer’s home and assembling them, FedEx said in an email.
“FedEx Freight is in the beginning stages of piloting a new service, FedEx Freight Direct, that will move larger, bulkier items to customers’ homes and businesses, and even offer light assembly for an additional fee,” Bonny Harrison, a FedEx spokeswoman, said in an email. “Demand for these types of delivery services has grown in recent years and we expect that trend to continue.”
The pilot started in the last few months, Harrison said. She didn’t have a date for concluding the test. FedEx’s traditional freight operations can deliver bulky items but don’t bring them into a home.
E-commerce purchases of appliances, furniture, exercise equipment and other large items is spurring growth of the residential deliveries of big and bulky items. The operations often require two people on the truck and the industry calls “white glove” service because the goods are taken into the home and set up. The customer often rates the service in a survey.
Large trucking companies including XPO Logistics Inc., J.B. Hunt Transport Services Inc. and Ryder Systems Inc. have made acquisitions to offer nationwide delivery service for bulky items because it’s one of the areas they’re able to tap into the fast-growing e-commerce sales. The service is growing at about a 10 percent clip, according to Satish Jindel, founder of SJ Consulting Group.
In a meeting last week with analysts, FedEx said it held a pilot program in six markets, said one of the analysts, Bascome Majors, with Susquehanna International Group.
FedEx fell less than 1 percent to $170 ahead of regular trading in New York. The shares have tumbled 7.6 percent since Dec. 18, when the company issued a gloomy profit forecast and said “bad political choices” from the U.S. to China were weighing on the economy. A Standard & Poor’s index of industrial companies climbed 3 percent during the same period.
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