FedEx Corporation (FDX - Free Report) announced that its low-cost delivery unit, FedEx Ground, will deliver packages seven days a week, January 2020 onward. In order to cope with the surge in e-commerce demand, the company announced this year-round facility for majority of the U.S. population. Currently, customers enjoy this seven-day service only during the holiday peak season.
E-commerce giant Amazon (AMZN - Free Report) currently offers Sunday deliveries through U.S. Postal Service (USPS) while United Parcel Service (UPS - Free Report) does not provide this facility.
Coming back to FedEx, the company has been making consistent efforts over the past several years to enhance capacity, technology and automation at its Ground unit. These initiatives should help the company cater to the growing expansion in average daily volume for small parcels in the United States, which is expected to double by 2026.
Additionally, the company is initiating changes in its last-mile delivery service to increase efficiency. To this end, the company intends to integrate approximately two million FedEx SmartPost packages into its Ground network for direct delivery to homes. Under the previous scenario, packages were handed over to the USPS for final delivery to residences.
With high-quality technology, FedEx has been able to move 20% of its FedEx SmartPost package into the FedEx Ground network since 2016. This integration process will be expedited beginning this fall and the company is anticipated to deliver majority of the SmartPost packages through its own network by 2020 end.
Zacks Rank & Key Pick
FedEx carries a Zacks Rank #4 (Sell).
A better-ranked stock in the broader Transportation sector is GATX Corporation (GATX - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
GATX flaunts an impressive earning history, having outperformed the Zacks Consensus Estimate in each of the trailing four quarters.
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