In September, FedEx Ground announced its US operations will expand to a 6-days-per-week plan to accommodate the booming e-commerce market.
In a press release about the change, FedEx Ground noted,
“FedEx anticipated early on that the growth of e-commerce would significantly increase demand throughout our network, and we underwent a transformation by opening new facilities and investing in highly-advanced technology and innovations that have resulted in the most automated network in the industry”
The change will take effect after the 2018 holiday season.
The good news for contractors is that the demand for FedEx Ground services is high! Business Wire noted that 10 years ago FedEx Ground had a record-breaking day when they had 12 million shipments in a single day. As of 2018, 14 million shipments in a single day is just an average day for the fast growing corporation. There’s a lot to love about the growth in the FedEx Ground business.
However, the move to a 6-day-per-week schedule will influence the ebb and flow of the work week for FedEx Ground contractors. We predict that this additional day will change the way you schedule your team and may shift the volume per day that you are accustomed to seeing.
What Contractors Can Expect
Most FedEx Ground contractors currently hold both Home Delivery (which run Tuesday through Saturday) and Ground routes (which run Monday through Friday). In the new plan, all routes will run Monday through Saturday. If you are already a contractor with overlapping routes (your routes include both Home Delivery and Ground) then you are already operating a 6-days-per-week business. However, you likely have only half your staff available on Mondays and Saturdays.
If you currently operate a business without overlap, you will feel the change more acutely on your current “off” day of Monday or Saturday. But, you were likely already looking ahead to additional staff as FedEx Ground will require overlap by Summer 2020.
Contractors are likely to feel the most impact from this change on Mondays. While businesses are not likely to increase their weekend shipments, residential customers are likely to purchase more items with a Monday delivery.
We advise contractors to start looking for part-time team members for Saturdays and Mondays to accommodate this new schedule, and its corresponding labor requirements.
Tuesdays and Wednesdays are traditionally heavy delivery days for FedEx Ground contractors and we may see volume shift from those days to Mondays. Reducing the historical Sunday/Monday backlog may eliminate the need for as many overflow drivers on Tuesdays/Wednesdays.
Presently, we do not expect a significant change required to contractors’ fleets. However, if this new schedule correlates with an overall uptick in volume (and we’re hopeful!) we’ll be singing a different tune.
Concurrent with the 6-days-per-week announcement, FedEx Ground’s VP, Rajesh Subramaniam, took care to dismiss this plan as a response to Amazon’s new delivery operation.
In his statement he noted,
“While there has been significant media interest in what Amazon is doing to expand their in-source delivery capability, this should not be confused as competition with FedEx…The global infrastructure, the technology, the capabilities, knowledge that's needed to compete in our business is quite extraordinary, and we have built that up over 40-plus years.”
You can read more of our own analysis of the new Amazon routes on our blog. The bottom line: we still strongly believe FedEx Ground routes are a better business opportunity for most investors.
Rather than resulting from Amazon-based pressure, the move to a 6-days-per-week schedule is the result of years of infrastructure planning based on overall FedEx Ground growth. While e-commerce purchases historically peaked near holidays, the year-round demand and growth necessitated new FedEx structures.
If you need help understanding how the FedEx Ground move to 6-days-per-week will impact your business, reach out to our Route Consultant team.