Posted 2:04 PM by brad
FedEx Expands Delivery Tests Using U.S. Mail
Friday, January 23, 2004
Reuters News Service
MIAMI — FedEx Corp., the huge express company pushing into ground deliveries, on Friday said it was broadening tests of a low-cost parcel service using U.S. mail carriers for home deliveries.
"Tests are going well enough that we are offering it to some more customers," said FedEx spokesman Jess Bunn. "We are looking at offering it to other customers in late May or early June, if the tests are successful."
Best-known for overnight document deliveries between businesses, Memphis, Tenn.-based FedEx is increasingly challenging United Parcel Service Inc. in transporting packages by ground as growth has eased in express services.
UPS, which is by far the bigger player in U.S. ground deliveries, has already introduced a stripped-down service for big commercial shippers trying to inexpensively reach rural homes and other thinly populated destinations.
Each service carries the packages mostly in their own transport systems and then drops them at U.S. Postal Service facilities. U.S. mail carriers then deliver the FedEx and UPS packages to homes and small businesses along their routes.
"These customers tend to be large shippers looking for a lower-cost option beyond express and ground," Bunn said, adding a clothing merchant and a gift retailer were among the first businesses testing the new FedEx service.
Prudential analyst Daniel Hemme said the new FedEx service, if rolled out, would not significantly affect the company's earnings for years but said it filled out the company's delivery offerings and may open new markets for FedEx.
"We believe FedEx will use the new service for incremental volumes but believe the greatest marginal improvement remains in shifting existing low-density high-cost transactions into the postal delivery infrastructure," he said in a research note.
Hemme said at least 20 percent of FedEx parcel deliveries now go to homes, which are more costly to serve than office buildings and other commercial destinations.

Posted 9:39 AM by brad
The weather has improved. Not bad out. Holiday today. Martin Luther King day. Go visit Paul The Postman at Isabella`s Teddy to vote on the gory story you`d like to have him tell.