(Bloomberg) -- FedEx Corp., under pressure to handle surging volume from online commerce, plans to deliver seven days a week in the U.S. year-round and boost its ability to handle larger packages.
The Ground unit will move to seven-day deliveries by January 2020, following a September announcement beginning six-day service. The courier already had delivered on seven days during the holiday season, the Memphis, Tennessee-based company said in a statement Thursday.
Earnings have been pressured as e-commerce boosts residential delivery, which is less cost-effective than dropping off multiple packages at businesses. Operating profit margin in FedEx’s Ground unit was 11% for the quarter ending Feb. 28, down from as high as 16.5% four years earlier.Increased efficiency will enable the Ground operation to handle more of the 2 million daily SmartPost packages that are handed to the U.S. Postal Service for final delivery to homes, FedEx said Thursday.The courier’s attempts to stanch profit bleeding from e-commerce include a partnership with Walgreen Co. that lets consumers pick up packages at the drug-store chain. The courier also is testing robots for package delivery within three miles of retailers including Walmart Inc., Lowe’s Cos. and AutoZone Inc. The company is building separate facilities, including one unveiled in March in Savannah, Georgia, and modifying existing Ground hubs to handle oversize items, said Chief Operating Officer Raj Subramaniam. FedEx will look at “rationalizing” large package pricing to spur volume above the 10% such items represent now, he said. Surcharges for big packages now can reach several hundreds of dollars.
The shares fell 1% to $157.90 at 1:53 p.m. in New York. FedEx declined 1.1% this year through Wednesday, while the S&P 500 advanced 11%.
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