Thursday, June 17, 2010

How Smart Post Makes FedEx More Profitable

In the conference call with analysts this week, Mike Glenn, President and CEO of FedEx Services, explained how Smart Post makes FedEx more profitable.

One of the key advantages that we have in our ability to not only deliver solid growth rates, but yield improvement at the same time is the ability to balance our ground and home services with SmartPost.

Customers that are benefiting from e-commerce and e-tailing in general tend to be growing at higher rates. At the same time, many of those companies produce packages that result in lower yields for us. While we’re prepared to handle that traffic, we’re going to ship that traffic where appropriate into the SmartPost network and allow us to balance our growth in the respective networks, and ensure that we get an appropriate yield per package for each one of those transactions. So we really have a good portfolio of services that is ideal to take advantage of the market trends and the growth out there yet at the same time deliver yield improvements.

FedEx SmartPost volume grew 23% in the quarter which is far faster than any Postal Service shipping or package service.   This growth confirms that FedEx is more than likely the largest supplier of parcels for delivery to the Postal Service and is taking market share from shippers that used to deal with the Postal Service directly as well as those that used parcel consolidation services offered by United Parcel Service and other providers. 

As noted earlier, SmartPost is used to handle light weight shipments for home delivery.   SmartPost as well as FedEx Ground and FedEx Home fit well as the last leg in the current supply chains that involve manufacturing overseas, sales via the internet, and delivery to a home and office.  

No comments: