All around the world, businesses are getting creative with the way their space is used outside of business hours. Some restaurants served as ghost kitchens when dine-in numbers dwindled due to the pandemic. Schools rent out their cafeteria for meetings and events. And breakfast cafés clear the tables to host evening yoga sessions. Finding ways to earn money when your store sits empty is a brilliant business move.
After years of siloed shipping, FedEx has announced a plan to cut bobtail miles, or the miles an 18-wheeler is driven without a trailer. Network 2.0 will cost approximately $2 billion to implement over the next five years, but the payoff is worth it. In their investors’ meeting last month, the carrier predicted that this strategy would add $2 billion to its annualized operating income within the next five years.
How will they achieve this goal? FedEx is increasing efficiency by boosting Freight, Ground, and Express collaboration. By 2027, the carrier says it will operate 100 fewer stations and reduce the number of pickup and delivery routes by 10%. This collaboration will cut millions of miles of driving annually.
For the past several decades, Freight, Ground, and Express have operated independently, and that made sense at the time. Now, it makes more sense to collaborate. With the drastic increase in e-commerce and the fact that nearly all customers use more than one shipping method, operating independently is no longer an asset.
In the new Network 2.0, FedEx will use a proprietary dashboard that directs Freight drivers completing bobtail miles to pick up a Ground trailer. This isn’t a new strategy. The two brands collaborated during peak season last year. However, the new, long-term plan formalizes the arrangement and brings Express into the mix, too. In Network 2.0, Express will utilize Ground for some of its last-mile deliveries.
With different peaks for different services, Network 2.0 allows all three services to share the burden of busy times, allocate resources, and reduce strain on any specific one. By combining Ground and Express into co-located stations, FedEx aims to improve communication and facilitate better package transfers between the services. Just one example? FedEx will be able to make decisions based on route effectiveness rather than the network chosen by the client. The result? Packages should be delivered more effectively and at a lower cost to the carrier.
FedEx is joining thousands of companies worldwide by boosting their efficiency to boost their bottom line. You can do the same. When you streamline your parcel audits with ShipRx, you won’t need to take time away from your busy schedule to track packages or hunt down refunds and credits when the carrier fails to complete their delivery as promised.
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