FedEx Ground route owners need to prepare for a substantial increase in package volume within their territory
For consumers, SmartPost is the cheapest way to ship small packages (averaging a shoebox size or less). Individuals can drop these SmartPost packages off with the United States Postal Service (USPS) and it will arrive at its final destination within 30 days.
USPS offers this cheaper service by consolidating many packages together into a single pouch that USPS then transfers to FedEx Ground. FedEx Ground uses linehaul trailers to move these SmartPost pouches from city to city.
Currently, USPS completes the last mile delivery of these SmartPost packages. However, USPS and FedEx Ground are modifying the agreement so that FedEx Ground will roll out SmartPost last mile delivery across the United States.
The bottom line?
Most FedEx Ground territories are going to see a significant volume increase—we predict a jump of 25-100% in most markets!
FedEx Ground ran SmartPost pilots in ten zip codes this past year and contractors in those zip codes reported extraordinary material changes to their business as a result.
It is important to note that FedEx Ground pays contractors a reduced rate for SmartPost boxes; this is how USPS and FedEx Ground keep the shipping cost low for consumers. The hope, however, is that SmartPost packages create density. If your team already delivers other FedEx Ground packages in an area, the SmartPost boxes add revenue to that area.
Possible Concerns about SmartPost
There are, of course, concerns about the new services. FedEx Ground wants to roll this out strategically to prevent contractors from being deluged with the volume without appropriate staffing or scheduling in place. Further, some contractors worry the volume of SmartPost will be high enough to require SmartPost-only routes without the benefit of density.
Much about the SmartPost rollout and impact is unknown. Can FedEx Ground trickle SmartPost into the existing network without overwhelming the system? How will contractors experiencing a 100% increase in volume restructure their staff and fleet? When will SmartPost hit a particular market?
FedEx Ground has not yet provided volume projects for each territory. Contractors and potential contractors will need to think through each operational aspect of their business as this changes comes into their market.
SmartPOst Upsides for FedEx Ground Contractors
SmartPost is fantastic news for potential investors. As you look at available businesses (prior to the SmartPost rollout), you know going in that the business is going to expand dramatically in the future.
The valuation of these business will go up!
We know FedEx Ground will begin a more extensive rollout of SmartPost in 12-18 months.
If you want to prepare your current business or look at new listings with this new information in mind, we recommend working with our team to understand the impact of SmartPost.