DC Velocity - November 2019

www.dcvelocity.com NOVEMBER 2019 DC VELOCITY 31 the company says it’s confident in its growth prospects, the quality of its services, and the attractiveness of its multifaceted service portfolio, which can address consumer needs as well as the complex supply chain needs of retail, commercial, and industrial shippers.

The company noted in its recent earnings call that 98.8% of U.S. revenue comes from customers using two or more FedEx operating companies.

And e-commerce remains “one of the greatest opportunities for our industry,” says Ryan Kelly, vice president, global e-commerce marketing for Memphis, Tennessee-based FedEx Services.

By its own estimates, the company projects 56% of overall e-commerce market volume growth through 2026 as addressable for FedEx. Kelly also cites the potential for the nation’s 32 million small and medium-sized businesses to grow with e-commerce. “They’re an important customer base,” he says.

Lastly, the company is moving ahead with plans to rationalize its operating network through “additional cost-re-duction initiatives,” parking and retiring a portion of its air fleet after peak season “to better match capacity with demand,” according to its recent earnings announcement.

As older aircraft are cycled out, the company expects to see lower costs through better fuel efficiency and reliability, and lower maintenance expense.

THE REGIONAL PLAY

E-commerce is also fueling the growth of regional parcel delivery firms such as Chandler, Arizona-based OnTrac, which covers the eight largest Western states with 85% of its deliveries going to residential addresses. The company has added over a million square feet of facility space in the last three years, and this summer put the finishing touches on a new $36 million automated sort hub in Reno, Nevada, it’s first. “We’re putting our money where our mouth is,” says Mark Magill, On Trac’s vice president of business development.

From Reno, Magill says, On Trac delivers next-day over a footprint extending 850 miles north and south, as far as Ferndale, Washington, and Yuma, Arizona, respectively. It is moving to seven-days-a-week operations for the 2019 peak season and will extend that year-round starting in January 2020.

The new Reno hub, central to On Trac’s service area, will P H O T O C O U RT ES Y O F O N T R A C

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