FedEx to Begin Delivering Seven Days a Week

(Bloomberg) -- FedEx Corp., under pressure to handle surging volume from online commerce, plans to deliver seven days a week in the U.S. year-round and boost its ability to handle larger packages.

• The Ground unit will move to seven-day deliveries by January 2020, following a September announcement beginning six-day service. The courier already had delivered on seven days during the holiday season, the Memphis, Tennessee-based company said in a statement Thursday.

Key Insights

• Earnings have been pressured as e-commerce boosts residential delivery, which is less cost-effective than dropping off multiple packages at businesses. Operating profit margin in FedEx’s Ground unit was 11% for the quarter ending Feb. 28, down from as high as 16.5% four years earlier.
• Increased efficiency will enable the Ground operation to handle more of the 2 million daily SmartPost packages that are handed to the U.S. Postal Service for final delivery to homes, FedEx said Thursday.
• The courier’s attempts to stanch profit bleeding from e-commerce include a partnership with Walgreen Co. that lets consumers pick up packages at the drug-store chain. The courier also is testing robots for package delivery within three miles of retailers including Walmart Inc., Lowe’s Cos. and AutoZone Inc.
• The company is building separate facilities, including one unveiled in March in Savannah, Georgia, and modifying existing Ground hubs to handle oversize items, said Chief Operating Officer Raj Subramaniam.
• FedEx will look at “rationalizing” large package pricing to spur volume above the 10% such items represent now, he said. Surcharges for big packages now can reach several hundreds of dollars.

Market Reaction

• The shares fell 1% to $157.90 at 1:53 p.m. in New York. FedEx declined 1.1% this year through Wednesday, while the S&P 500 advanced 11%.

Get More

• Additional coverage
• Company statement

To contact the reporter on this story: Thomas Black in Dallas at tblack@bloomberg.net

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Tony Robinson, Molly Schuetz

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