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Industry Experts Weigh In on FedEx 2.0 Consolidation Strategy

Industry Experts Weigh In on FedEx 2.0 Consolidation Strategy

While this shift in modality may alleviate the costs, transit times are a very sensitive subject. Not only do consumers care, but shippers as well. They have made a name for themselves by offering customer service tied and even sales functions or service functions to this timed event. So, changing the middle mile transportation may in fact improve costs for the carrier, but what impact does that have on the shipper/receiver? At USPS we are expanding our network and making it frictionless for our customers and shippers to reach 80% of the total addressable market deliveries in 2 days! If you get a call from FEDEX discussing this option, before you decide, message me and let’s evaluate your business needs so that you can make the best informed decision that affect your volume and revenue or brand.

Examining FedEx's strategic move in air logistics: One of the latest reads on Supply Chain Dive delves into the intricacies of FedEx's air network redesign. Gain insights into the calculated steps aimed at boosting speed and profitability. 📊📈  Stay informed about the evolving landscape of logistics. #uct #shipping #logistics #fedex  

As Promised, FedEx Ground Reducing Line-Haul Cost Via Increased Rail Usage, But.... Max Garland's article is telling us that FedEx Ground is in fact reducing line-haul expense by using rail to support more middle-mile, line-haul transportation, versus truck. However, there is a risky downside to this cost cutting measure. Historically, FedEx has used very little rail for middle-mile Ground line-haul. Rail can add transit time (additional delivery days) for longer shipments, usually in support of zones 4-8. For about 20 years, FedEx had been taking Ground market share away from UPS because of the FedEx Ground transit time advantage, driven by not using middle-mile rail. It's hard to say how increased transit-times for some FedEx Ground shipments will impact customer carrier selection/usage. Newer ecommerce distribution models that favor moving origin fulfillment centers closer to the consumer may mitigate a potential loss of FedEx Ground market share. However, this all makes sense for FedEx because now, the investment community is watching the company closely to see that they keep their cost reduction promises. Transit times will have to take a back seat to cost reduction initiatives. #UPS #fedex #usps #fedexground #ecommerce #middlemile #amazon Ian Kerr Max Garland Perry Lavergne

FedEx is charging ahead with Network 2.0, as it plans to integrate its Express and Ground delivery operations at dozens more locations this year. The program has already been implemented in more than 50 locations across the delivery giant's network, President and CEO Raj Subramaniam said Thursday. FedEx has wrapped up integration in Alaska and Hawaii, and it will soon start the process in Canada. Need a refresher on what Network 2.0 is? It's an ambitious FedEx plan to slash overlapping routes and facilities. The company wants to avoid situations where Express and Ground trucks are in the same neighborhood making deliveries at the same time. Now, why does all of this matter to shippers? How about having your packages picked up by a single FedEx vehicle, rather than juggling different pickup times for both Ground and Express? "This has been the only feature gap we had to UPS in that segment and we are about to close it," Chief Customer Officer Brie Carere said. How do you think Network 2.0 will pan out for FedEx? Sound off in the comments! https://lnkd.in/eBFVAFfR #supplychain #logistics #lastmiledelivery

What will be particularly interesting thru 2024 and midterm next 6-8 quarters with “post-pandemic era market adjustments” will be evaluating which direct carriers and broker/3rd party firms made smart opex and capex reductions (including capacity) that improve efficiencies relative to markets, without materially impeding their revenue and market share growth capability, VS. cost reductions more intent on bolstering short term monthly/quarterly reporting and investor expectations. ✅ As I often remind my peers focused on ground trucking transportation, pro rata timeline cycles and budgets for #airtransport #aircargo (assets, labor, training, permitting/certification, etc.) are generally significantly more protracted and convoluted, which complicates such strategic #transportationmanagement and #forecasting decisions, particularly upscaling vs. downscaling. ✅ The fact that air solutions are also “tip of the spear” and a key component of #express #expeditedshipping sector, and thus more volatile in terms of variability in on-demand and scheduled market demand, simply exacerbates those challenges: something I regularly reminded my management peers at XPO and RXO during key finance and executive/board calls.

"management outlined a not very exciting prospect for 2025 of “a low-to-mid single-digit percent revenue growth” with a focus on continued asset optimisation. As part of this FedEx said that the “FedEx management and Board of Directors are conducting an assessment of the role of FedEx Freight in the company’s portfolio structure and potential steps to further unlock sustainable shareholder value”. This appears to mean that they are looking to sell FedEx freight and that they think they will get a good price. So, in the space of a week the logistics market has seen both UPS and FedEx seek to reduce their exposure to the US road freight market whilst continuing to struggle with mediocre demand in their core domestic air express market." source: Ti Insight , Thomas Cullen https://lnkd.in/ghv7JCPy

Have you heard of FedEx ‘DRIVE’? It’s a $4bn operating cost reduction and efficiency improvement strategy designed to reflect the reality of uncertain demand. DRIVE will affect the entire parcel delivery market and especially FedEx customers. If you are a parcel shipper, it’s important you understand DRIVE. One of the biggest initiatives within the larger DRIVE project is called ‘network 2.0’. Network 2.0 is the consolidation of the FedEx Ground and Express networks (as well as other FedEx operating companies, but not Freight). FedEx Express volumes have been under intense pressure and the idea is that with a consolidated network, there will be more flexibility and lower costs. FedEx Express is also reducing routes, aircraft, and crew which is already making an impact as per their most recent earnings report. The risk here is delivery performance. Capacity constraints and Express packages being delivered by Ground contractors will affect service levels.  The network consolidation is expected to happen in 2024. If you are a FedEx customer, it’s critical you understand how this will affect your shipments. If you aren’t a FedEx customer, any major hiccups by FedEx will send volume flooding into the market affecting your service levels and negotiation leverage as well. Do you think Network 2.0 will help FedEx become more or less competitive? There’s also much more to DRIVE. I definitely encourage any shipper to learn more about the initiative. Here are a couple of great articles to get you started: https://lnkd.in/e_nfHwen https://lnkd.in/eYQRFVaD. #ecommerce #logistics #fedex

In the course of 24-hours the winds have shifted from a UPS tentative agreement to FedEx pilots rejecting a tentative agreement (https://lnkd.in/dXKwEre5). If you've read my other posts, nothing is resolved to mitigate the risks to the shippers. It's just transferring risk from one major carrier to the other. To truly mitigate risks shippers need to upgrade their technology to a multi-carrier/multi-modal TMS thereby unlocking access to the alternative carrier networks not available through their proprietary carrier-based systems. This not only mitigates risk through diversification, but also can significantly reduce costs, and in many cases improve service. Shippers need to get comfortable with diversification and change if they want to take control back from UPS and FedEx and not be caught with their pants down when (not if) there is another issue where these two giants that put your business and customers at risk.