In the expanding world of e-commerce, delivering packages to customers’ doorsteps has become an essential and highly competitive aspect of the business. With the continued rise of online shopping, shipping carriers have had to adapt their operations to meet consumers’ increasing demands and expectations.
One particular challenge in the shipping process is the last-mile delivery, which refers to the final leg of a package’s journey from a local distribution center to the customer’s address. Interestingly, this seemingly short distance can often be the most costly and complex part of package delivery.
FedEx is one shipping company that has recently changed how they handle land-mile package deliveries. In 2021, the company began the rebranding from FedEx SmartPost to FedEx Ground Economy to keep up with the explosive growth of e-commerce and optimize its last-mile delivery process. Today, we’ll look at the former FedEx SmartPost, the shift to FedEx Ground Economy, and what that means for businesses like yours.
FedEx SmartPost was a hybrid shipping service that combined the resources of FedEx and the U.S. Postal Service (USPS) for package delivery. It was designed to provide a cost-effective solution for shipping lightweight packages to residential addresses by combining the speed and reliability of FedEx’s express network with the extensive reach of the USPS for final delivery.
When still operating, FedEx SmartPost utilized FedEx’s extensive express network for long-distance transportation and then handed off the packages to USPS for last-mile delivery. This collaboration allowed FedEx SmartPost to reach every U.S. residential address, including PO boxes and military residences, while offering competitive shipping rates for businesses. Despite the last mile being operated by USPS, shippers still had tracking capabilities and service available Monday to Saturday.
The way FedEx SmartPost functioned allowed the shipping company to offer competitive shipping prices. However, the program was most useful for small, lightweight packages that weren’t time sensitive. Some shippers complained that the service was too slow or unreliable.
The transition from FedEx SmartPost to FedEx Ground Economy was driven by several factors and the need to adapt to a changing market. Here are some of the likely reasons behind this decision:
The rapid growth of e-commerce has led to a significant increase in package volume being shipped to residential addresses. This surge in online shopping has placed greater demands on shipping services to handle higher volumes efficiently. FedEx recognized the need to optimize its operations to meet the growing demand and provide an improved customer experience.
FedEx SmartPost’s hybrid model of utilizing both FedEx’s express network and the USPS for final delivery presented some operational complexities. The transition to FedEx Ground Economy aimed to streamline operations by consolidating operations within FedEx’s own network and utilizing contracted drivers. This allows FedEx to have more control over the entire shipping process, resulting in improved efficiency.
By focusing on ground transportation for the entire delivery process, FedEx can optimize routes, utilize its own delivery fleet more effectively, and potentially reduce costs associated with third-party partnerships.
Overall, the transition from FedEx SmartPost to Ground Economy was driven by the need to adapt to the changing landscape of e-commerce, optimize operational efficiency, reduce costs, and provide an improved shipping experience for customers. By streamlining operations and focusing on ground transportation, FedEx aimed to meet the evolving demands of the market while ensuring efficient and reliable package delivery.
While FedEx SmartPost relied on FedEx’s express network and USPS for last-mile delivery, FedEx Ground Economy operates solely within FedEx’s own network, providing more control over the entire delivery process. FedEx Ground drivers, or sometimes contracted third-party drivers, complete the last-mile delivery, bringing packages directly to recipients’ addresses.
These changes are an effort by FedEx to ensure greater reliability and faster transit times compared to SmartPost. One major change from SmartPost to Ground Economy is the addition of Sunday deliveries. Ground Economy is a strong contender for businesses looking for outbound deliveries that are low-weight and non-urgent. Still, the following options are not available for Ground Economy:
The shift from FedEx SmartPost to FedEx Ground Economy began in 2019 as the company began delivering most SmartPost packages through their networks. The official rebrand happened in 2021 when they publicly introduced FedEx Ground Economy. The slow transition and similar product offerings meant that the two programs have many similarities; however, there are some key differences as well.
SmartPost utilized a hybrid model, combining FedEx’s express network for long-distance transportation and the USPS for last-mile delivery. Packages were handed off from FedEx to the USPS for final delivery.
Ground Economy operates solely within FedEx’s own network. It relies on ground transportation methods, such as trucks, for the entire delivery process, without involving the USPS.
FedEx SmartPost shipping time was generally longer when compared to other FedEx services due to the involvement of the USPS for the last mile. Estimated FedEx SmartPost shipping time ranged from two to seven business days, depending on the distance and destination, and there were no Sunday deliveries.
Estimated delivery times for Ground Economy are similar to that of SmartPost. Deliveries range from two to seven business days, depending on the distance and destination. However, FedEx now delivers Monday through Sunday, allowing them to shorten the average delivery time.
SmartPost Returns followed a similar process to outbound delivery. To offer returns for their customers, businesses would include a prepaid shipping label along with the shipment. Then, the customer could leave the box in their mailbox, give it to their USPS carrier, or drop it off at a FedEx office.
Ground Economy returns functions nearly the same as FedEx SmartPost Returns. However, customers now have even more options, with the ability to print a shipping label from a QR code or create one online.
Tracking was available for packages delivered through SmartPost, even once the package was handed off to USPS. The 20-digital FedEx tracking number was converted to a USPS tracking number once the handoff was processed.
Now that Ground Economy handles delivery for the entire process, only the FedEx tracking number is needed.
Now that we understand the similarities and differences between FedEx Ground Economy and FedEx SmartPost, we can compare them with another popular delivery option, FedEx Home Delivery. First off, Home Delivery accepts packages up to 150 pounds, while Ground Economy has a maximum of 70 pounds. In addition, Home Delivery is a bit faster, with deliveries made between one and five business days.
However, perhaps one of the largest differences between the two programs is the contractual agreement. Ground Economy is a contract service, meaning businesses must sign an agreement with FedEx outlining the terms and conditions of the contract. Meanwhile, Home Delivery is not a contract service.
The rebranding of FedEx SmartPost to FedEx Ground Economy brings significant implications for shippers. Parcel management, with its inherent complexities and risks, requires careful attention to avoid unnecessary costs. By eliminating the handoff to USPS and taking responsibility for final mile delivery in-house, FedEx aims to streamline the process and enhance efficiency.
However, this shift still necessitates FedEx contract negotiation and thorough FedEx invoice auditing to ensure accurate rates and maximize return on investment. Companies must be vigilant in monitoring any invoice errors or unjust surcharges on their bills each month.
The importance of analytics and shipment auditing cannot be overstated in today’s shipping industry. To address these challenges and optimize small parcel shipping costs, partnering with a cost reduction firm is your best choice. Companies like P3 Cost Analysts can provide invaluable expertise and solutions. By leveraging comprehensive analytics and auditing capabilities, we help shippers make informed decisions, uncover savings opportunities, and enhance their overall shipping strategies.
The exponential growth of e-commerce and the need for operational efficiency and cost optimization have prompted FedEx to streamline its operations and bring the entire delivery process in-house. By eliminating the transfer to USPS and relying solely on its own network, FedEx aims to enhance reliability, shorten transit times, and provide a better shipping experience for customers.
While the transition from SmartPost to Ground Economy offers several benefits, one thing remains constant regardless of which parcel delivery service business owners choose. Shippers must carefully review their contracts with FedEx, negotiate favorable terms, and conduct thorough invoice auditing to ensure accurate rates and avoid unnecessary costs.
Partnering with a cost reduction firm like P3 Cost Analysts can provide valuable expertise and solutions in navigating the complexities of small parcel shipping. We will help you get control over your shipping expenses and make sure the delivery companies are working for you.
For help in all aspects of parcel delivery, contact a P3 shipping expert today!