FedEx will soon expand its delivery service to meet peak holiday season demand and the growth of e-commerce orders. And, at the beginning of 2019, its six-day delivery schedule will become permanent.
It’s a move that has been a long time coming, the company said in its Sept. 12 announcement with forward-looking statements. At present, the company moves about 14 million shipments per day. A decade ago, the company’s highest-volume day ever was just 12 million shipments.
It’s also been a long time in the making. FedEx’s Executive Vice President, Raj Subramaniam said in the company’s announcement that FedEx has been “opening new facilities and investing in highly-advanced technology and innovations” for years now to grow the company’s capacity, so that it can handle a sixth delivery day.
This likely means FedEx will have to do some serious hiring. The company currently has 425,000 employees, and plans to hire 55,000 to meet six- and seven-day delivery service schedules during the holiday season.
The company hasn’t said how much its workforce will need to grow to add the sixth day year-round, but some growth seems certain.
“The rise in demand for e-commerce goes beyond peak. It’s a year-round phenomenon and we are ready to meet that demand,” said Subramaniam in his Sept. 12 statement. “FedEx Ground has operated six- and seven-day operations during the holidays for several years as e-commerce has grown, and thanks to strategic investments in our network, we are now well-positioned to operate six days a week in the U.S. all year to best serve the rapidly growing demand.”
What Will FedEx Six-Day Delivery Look Like?
If FedEx does its job correctly, the company says, six-day delivery year-round will look and feel a lot like what five-day delivery does now—for shippers, at least.
FedEx has been investing for more than a decade in capital improvements that expand its capacity. First, the company has built 15 new hubs around the U.S. to make shipping and distribution more efficient. Nine of those came online in the last five years. So did 58 automated stations.
Second, FedEx has invested in automation, software and robotics, aiming to “enhance the agility of the global FedEx network”—that is to make shipping more efficient and eventually, less reliant on human labor.
Those investments include autonomous self-driving vehicles, specifically “tugger technologies” that make it easier for ground services to handle large packages. FedEx has developed robotic trailer unloading systems and trailer load analytics software. It’s also begun using yard management systems, which create geofences around FedEx Ground facilities and send updates to the control center when trailers come and go.
Additionally, the company says it has installed infrared night-vision systems on cargo planes that help them land more safely when visibility is low. FedEx Express has purchased 210 aircraft since 2007.
Finally, FedEx says it’s “increasing its use of data science and analytics to enhance real-time decision-making around network engineering, scheduling and customer needs” across the board—that is using data to make its systems more efficient.
Despite these technological improvements, six-day delivery will require additional staff at least for the foreseeable future. FedEx plans to grow its workforce by more than 20 percent to meet holiday demand—from 420,000 employees to 475,000, all of those temporary workers. The company has not said how many people it will need to hire to keep six-day delivery working year-round, but it will likely be fewer than 55,000, since day-to-day volumes are far less than holiday volumes.
United Parcel Service (UPS), FedEx’s world’s largest competitor, recently reached a deal with its unionized employees to keep drivers on the road more days a week, including Sundays. The U.S. Postal Service already has deals with the e-commerce giant, Amazon and other major clients to deliver packages on Sundays.
FedEx currently delivers Tuesday through Saturday; it’s not clear whether its sixth day will be Monday or Sunday.
What This Means For Shippers and E-Commerce Businesses
Shippers and even brick-and-mortar stores are moving more parcels through carriers’ trucks and warehouses, and carriers are responding. FedEx’s detailed announcement shows that they have been anticipating these vastly increased volumes for years.
Even today, carriers aren’t just transforming to meet present needs. They’re looking toward a future of increased automation, continually increasing volumes and ever-more-stringent customer demand for fast, low-cost shipping.
They’re also planning for increased profits. FedEx alluded to that in its Sept. 12 announcement: “these significant facility and automation investments have been taking place for many years, but are now largely complete. This expanded capacity and increased efficiency will create margin and profitability benefits at the same time that FedEx Ground capital investment will be decreasing,” said their executive vice president.
As carriers transform their businesses to meet on-demand delivery and the growth of e-commerce, they’re doing so with shareholders primarily in mind. Meeting customer demand means they can keep shippers as clients, which means they bring in revenue. Shippers who are aware of their role in this equation can push their carriers to pass some of those savings onto them—so costs don’t have to rise exponentially as service expands.