By Max Garland / www.commercialappeal.com / January 14th, 2019
Photo Credit: Commercial Appeal
FedEx Freight drivers are delivering large items to homes in five cities — and even moving some inside and helping assemble them — through a new company service, tapping into online shoppers' growing appetite for bulky goods.
A study from the trucking arm of the Memphis logistics giant and retail media company Multichannel Merchant has revealed more about FedEx Freight Direct, a service company executives touched upon briefly in December's earnings call.
FedEx Freight Direct has heavy and hard-to-handle items delivered to last-mile destinations in Atlanta, Omaha, Oklahoma City, Tulsa and Dallas with two-hour delivery windows, per the study. The shipment can originate from anywhere.
FedEx lists four service levels for customers to choose from in the study:
- Standard: To the home’s first ground-level room.
- Premium: Any room, plus packaging removal.
- Premium with light product assembly add-on: 30 minutes of labor, no power tools.
- Customer pickup at FedEx service center.
Some restrictions apply for the service. FedEx says in the study it won't handle product installations or deliver pre-built furniture or packages weighing more than 300 pounds through Freight Direct.
FedEx Freight Direct will use 24-foot box trucks with lift gates, which FedEx says are ideal for residential settings.
The service streamlines the shipping process for businesses, with FedEx being the single point of contact and providing “crystal-clear communication” like regular notifications regarding the order, it says in the study.
FedEx did not provide further information about the study or Freight Direct when asked last week.
Businesses see hurdles in shipping large items
Multichannel Merchant and FedEx Freight's "The Heavy & Hard-to-Handle Delivery Retail Insights Study" features results of a survey of retail and brand executives involved in heavy-goods delivery.
Most retailers and brands have tweaked their big-item delivery process or are at least studying new avenues to do so, the study said. Heavy and hard-to-handle goods can include appliances, furniture, consumer electronics and sporting equipment.
Survey respondents noted the overall costs in handling these heavy goods and the propensity for them to be damaged as primary obstacles in doing business. The survey found damaged shipments accounted for 13 percent of deliveries on average.
The amount of parties involved in a big-item delivery could also pose problems, the study said. Currently, two-thirds of retailers and brands are using three or more providers for delivering these goods, it said. Thirty-eight percent are using five or more carriers.
“These findings suggest there is potentially a high level of complexity in simply managing a number of logistics and delivery providers,” the study said.
David Payton, vice president of product marketing for FedEx Services, said in the study FedEx wants to aid businesses in delivering heavy goods with demand continuing to rise.
“As online commerce has grown over the past few years, so has the volume of heavy and hard-to-handle shipments,” he said. “Today it is not uncommon to see furniture and large sporting goods items like ping pong tables and kayaks in our networks.”
With FedEx entering the heavy, hard-to-handle shipping space, customers have a new carrier option that brings experience and know-how, Payton said.
'$10 billion market opportunity'
FedEx Freight has been offering deliveries to private residences prior to the Direct service, charging $144 per shipment in that category.
But the service's launch shows FedEx wants to be more involved in delivering big items to their final destination, as consumers get more comfortable with ordering goods of all sizes online.
In a December earnings call, FedEx Express CEO Raj Subramaniam said the market for heavy, hard-to-handle products “is one of the fastest-growing segments” in e-commerce, representing “roughly a $10 billion market opportunity.”
“The customer response to FedEx entering the market has been quite positive and it'll represent a new revenue stream for us as we go forward,” Subramaniam said, referring to FedEx Freight Direct.
The study didn't say when or if FedEx Freight Direct will expand to other cities, or why FedEx chose those five cities to launch the service.
When asked for more information about the program in November, FedEx said, “FedEx Freight recognizes the increasing demand for residential and last-mile deliveries generated by the growing e-commerce market and we are exploring opportunities to address our customers’ needs.”
Other carriers are apparently aware of the market's potential. Rival UPS is eyeing an in-home delivery service of its own with the help of trucking company Werner Enterprises, Reuters reported last year.
A major player in the space now is XPO Logistics, which says it’s the largest last-mile logistics provider for heavy goods in the country.
Using contracted workers, XPO provides services like delivery to room of choice, product assembly and complex product installation. XPO says it facilitates 485,000 complex assemblies and installations annually.
XPO operates a Verizon warehouse in Memphis. The company announced a new policy for pregnant workers there amid calls for a congressional investigation following a New York Times investigation.
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