FedEx is pulling back from chasing general e-commerce volume to focus on more profitable “specialized” B2C and B2B segments such as healthcare, automotive, aerospace, data centers, and the premium end of e-commerce.
The company said it expects only low single-digit growth in B2C volume through 2029, but that it's intentionally growing slower than the overall e-commerce market as it avoids competing heavily in low-margin, lightweight package shipments that are easily handled by USPS, Amazon, and other competitors.
To be clear, FedEx isn't abandoning consumer deliveries entirely, it simply plans to target heavier, higher-value, and longer-distance shipments that it has a network in place to handle well.
Why the pivot? FedEx says:
- Its US network is already at high volume levels relative to overall capacity. Chief Customer Officer Brie Carere said, “We have not seen this utilization since the pandemic.”
- The company sees an opportunity to grab share in more profitable verticals than home deliveries to consumers. Carere said that the priority verticals it wants to focus on represent a combined $130B market opportunity.
- A healthy portion of its B2C volume already fits within its priority areas. Carere noted that 70% of FedEx’s ground shipping service revenue comes from shipments traveling more than 300 miles.
Last year in May, UPS initiated moves to slash its Amazon volume by half, close 73 facilities, and cut 20,000 roles. Both companies appear to be moving away from high-volume, low-margin general e-commerce delivery towards more specialized courier services, which is a great opportunity for USPS to step in and regain some market share.
