We updated from an earlier version to reflect new information and projections.
Prepare for a substantial increase in package volume
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 recently modified their agreement so that FedEx Ground will roll out SmartPost last mile delivery across the United States.
The bottom line?
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.
The New E-Commerce Package Stop
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. Concurrently, FedEx Ground will reduce its pay rate for Home Delivery packages by about 40%.
However, new SmartPost volume combined with current Home Delivery volume will create serious density. If your team already delivers other FedEx Ground packages in an area, the SmartPost boxes add revenue to that area. FedEx Ground predicts overall revenue to increase as a result.
In the coming year, SmartPost and Home Delivery package pay will become known as an e-commerce package stop.
There are, of course, concerns about the SmartPost rollout. Can FedEx Ground integrate SmartPost into the existing network without overwhelming the system? How will contractors experiencing a 100% increase in volume restructure their staff and fleet?
It is important to understand that FedEx Ground will work hard to get this right. SmartPost is an integral part of their plan for the future.
SmartPost will rollout alongside the large package network and seven day operations. This is intentional and the three massive changes are intended to function together.
The large package network will pull bulky, incompatible packages off of many trucks and create space for the e-commerce package volume. And the seventh day of operations will allow contractors to spread out their increased volume.
Seven day operations will become a reality for contractors in 40 major metropolitan markets on November 3, 2019. The rest of the country will begin seven day operations some time after peak season.
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!
If you want to prepare your current business or look at new listings with this new strategic information in mind, we recommend working with our team to understand the impact of SmartPost.