Dive Brief:
- FedEx aims to trim costs by increasing the number of deliveries it makes per stop through a “successfully piloted” program, President and CEO Raj Subramaniam said on an earnings call last week.
- The carrier's new "Hold-to-Match solution" holds ground packages slated for early delivery if another package is going to the same destination the following day. FedEx will still ensure that the packages are delivered on time, according to Subramaniam.
- "Hold-to-Match is increasing stop density and will help lower our cost per package," Subramaniam said. "We look forward to expanding the capability throughout the year."
Dive Insight:
FedEx wants Hold-to-Match to unlock more instances where it can deliver multiple packages destined for the same address in one stop, versus separate stops. This will help it produce more efficient delivery routes, reducing operating costs in the process.
Efficiency has been the name of the game for FedEx in recent quarters as the company navigates a weaker demand environment for delivery services. Beyond Hold-to-Match, the company is slashing costs through its ongoing DRIVE program and Network 2.0, an initiative to combine its separate Express and Ground networks.
"Our strategy is working," Subramaniam said. "We continue to see roughly a 10% reduction in pickup and delivery costs in markets where we have fully rolled out Network 2.0."
Rival UPS has also made progress in increasing the number of packages it delivers per stop. In 2022, the company announced a partnership with technology firm CommerceHub in which it temporarily holds an order until it's matched with another shipment going to the same destination.
"The virtual hold is only as long as the service level agreement allows," CEO Carol Tomé said during a 2022 earnings call. "But there's a lot of hours in that service-level agreement, 9 hours, 12 hours."
