Report: FedEx rolls out last-mile pilot program

FedEx Freight, the less-than-truckload (LTL) subsidiary of Memphis-based transportation and logistics titan FedEx, is taking its initial steps into the rapidly-growing, e-commerce-driven last-mile logistics sector, according to a Bloomberg report published earlier this week.

The report stated that FedEx is testing full-service residential delivery of bulky product, which is a $9 billion market that has been traditionally handled by motor carriers, rather than couriers and integrators, as larger items tend to not fit well in couriers and integrators sorting operations.

And FedEx told Bloomberg that this pilot program will focus on industrial goods in six major markets, with FedEx Freight moving large items and sectional sofa into a customer’s home and assembling them, too.

“FedEx Freight is in the beginning stages of piloting a new service, FedEx Freight Direct, that will move larger, bulkier items to customers’ homes and businesses, and even offer light assembly for an additional fee,” FedEx said in a statement e-mailed to LM. “Demand for these types of delivery services has grown in recent years and we expect that trend to continue.”

The entrance into the last-mile market by FedEx is not unique, in that many of its primary competitors have already taken the step, with some having a major foothold established.

These companies include XPO Logistics, Ryder System, and J.B. Hunt, among others. One thing XPO, J.B. Hunt, and Ryder each has in common in this space is that they have made acquisitions to gain immediate entrance into the last-mile logistics market, which has given them room to run and expand operations while becoming a market player and leverage the very active e-commerce market at the same time.

Earlier this year, J.B. Hunt subsidiary, J.B. Hunt Transport Inc., entered into a definitive agreement to acquire Secaucus, New Jersey-based Cory’s First Choice Home Delivery, which provides home delivery services of big and bulky products in the continental United States and U.S. territories using 14 warehouses and other customer-owned facilities. The company utilizes more than 1,000 independent contractors, carriers and delivery drivers to complete more than 2 million annual deliveries.

And Ryder announced last October that it formally expanded its Ryder Last Mile service, which is a home delivery and white glove installation offering for big and bulky goods in 11 North American markets. Through this expansion, Ryder increased the square footage at its last-mile fulfillment facilities in Toronto, Atlanta, Ga., and Lathrop, Calif., with the expansion also including partnerships in eight “strategically located U.S. cities. What’s more, Ryder said that the company’s e-fulfillment network is now comprised of 136 facilities that cover 95% of the U.S. and Canada within a two-day window. And the company also noted that this expansion augments Ryder’s standing at the second-largest last-mile provider of big and bulky goods, based on an independent audit by Simon-Kucher, a global consulting firm [XPO is the largest].

Top executives at these companies and others have indicated that they are, and will continue to invest in last-mile initiatives, as that is where their customers are seeing strong growth, due to e-commerce, and they have also noted that the impact of a rapidly growing e-commerce market on the last mile sector, especially for heavy goods, is something that cannot be overstated.