FedEx Corp. (NYSE:FDX) said that parts of its last-mile service for heavy goods deliveries, FedEx Freight Direct, have been expanded to now cover 90% of the U.S. market.
FedEx said the expansion applies to FedEx Direct’s Standard and Premium delivery offerings. Under the Standard service, goods are carried into the first ground-level room of the destination residence or business. The Premium service calls for the product to be placed in the room of the end customer’s choice and may require a two-person delivery team depending on the product’s physical profile. The Premium service also offers optional packaging removal at the customer’s consent when the goods are delivered.
FedEx Direct offers two Basic last-mile delivery services. Both deliver goods to the destination’s ground-level area — front or back door — or to the garage. However, one of the Basic services is by appointment, FedEx said. The other Basic service, which doesn’t require an appointment, also doesn’t require a customer’s signature.
FedEx Direct is operated by the parent’s less-than-truckload (LTL) unit, FedEx Freight. The product launched less than two years ago. It was last expanded in October 2019, when the coverage area grew to 80% of the U.S. market.
The service doesn’t accept pre-built furniture, and unlike other last-mile providers, it will not perform installations of the new product or haul-aways of old goods. Its maximum package limit is 300 pounds.
The expansion is part of the company’s plans to prepare for more so-called large-format items to be ordered during the upcoming holiday period. FedEx is building five “large-package” facilities and expanding three more. The facilities will be dedicated to handling big, bulky items ill-suited for the company’s processing operations because they cannot fit through conveyor systems built for small parcels.
FedEx had made no secret of its earlier struggles to efficiently manage the increase in big and bulky traffic through its traditional infrastructure. FedEx and its chief rival, UPS Inc. (NYSE:UPS), have been imposing additional handling and other special surcharges on big and bulky deliveries to offset their higher costs of fulfilling and delivering the items.
FedEx Freight is also expected to handle more deliveries of non-conveyable items initially routed to FedEx Ground, the parent’s ground-parcel unit. In the first three-and-a-half months of its 2021 fiscal year, which began June 1, FedEx Freight has delivered more than 750,000 non-conveyable shipments for FedEx Ground. Before May, the Freight unit had never delivered a Ground package.
The collaboration between the business units is part of a gradual blurring of the operational siloes that have characterized FedEx since its founding nearly 50 years ago. In February, FedEx’s Express unit, which handles time-sensitive shipments that typically include an air movement, began tendering certain less time-sensitive traffic to FedEx Ground for line haul and delivery to U.S. residences. The eligible shipments have day-definite delivery windows, however.
The moves are part of FedEx’s efforts to boost delivery density and reduce its cost to serve.
Demand for heavy-goods deliveries has increased in recent years as retailers have opened up more of the stock-keeping units (SKU) to e-commerce transactions. Heavy-goods orders are believed to have spiked during the early stages of the coronavirus pandemic when many retail stores had closed and consumers wanted items like exercise equipment and other big and bulky products to spruce up homes that had suddenly become their workplaces and where they were spending most of their time.