Ground Transport Way to Future Growth for Package Shippers

FedEx recently announced a business model change that will realign its Express unit to match the changing dynamics of the package industry. Their previous model focused almost exclusively on getting packages to their destinations as fast as possible, using air transportation. Today, faster service is taking a back seat to cost savings as customers turn to slower ground transportation to save money.

In a tough economy, consumers will look for opportunities to stretch their dollars as far as possible. As more of those dollars are spent in generally less expensive online stores, as opposed to conventional retail outlets, the shipping industry is likely to see a sustained increase in package volume. Most of these packages are sent via ground transportation, and the shippers that offer the best value are likely to come out ahead of the competition.

While this represents a welcome boost in revenue for FedEx, its sustainability isn’t guaranteed as the weak economy may direct customers to less expensive competitors. Fuel surcharges and dimensional-weight price increases have driven shipping prices up notably at FedEx, and customers may look to other sources for lower priced alternatives.

Do you think the Postal Service is poised to increase its package shipping market share in the next ten years?

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1 Comment

  1. Anonymous

     /  December 27, 2012

    The PO is going to be around in 10 years??

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