FedEx Getting into the Bulky Game

FedEx Getting into the Bulky Game

One of the greatest beneficiaries of a booming economy has been the transportation industry. In particular, the impacts of eCommerce, higher consumer confidence, and a stronger job market have helped transportation companies rake in record profits.

One particular area in transportation, however – delivery of larger, bulkier items – had not seen the kind of impact that the rest of the industry had.

However, over the last few years, that has changed – and traditional carriers, like FedEx, are taking notice.

This week, it was made public that FedEx’s freight business is piloting a full-service bulky product residential delivery service – called FedEx Freight Direct. FedEx Freight is LTL focused on industrial shipments – traditionally, full-service delivery of bulky products was left to traditional trucking companies due to sorting challenges.

While traditional freight can deliver bulky items, they were never brought into homes – larger trucking companies, however, had been doubling down on bulk for some time, in order to capitalize on the growth of eCommerce.

This comes after FedEx announced last year that it would be investing $1 billion in modernizing its World Hub, some of which will be directed towards a bulk truckload building and area to improve oversized shipments.

Last mile delivery of bulky goods has usually not been an area in which carriers were active. Traditional trucking companies (J.B. Hunt, XPO Logistics, Ryder etc.) have generally dominated this space.

Why, then, is FedEx now expanding its presence the bulky goods delivery space with full-service delivery?

What Does “Full-Service” Mean

As mentioned earlier, delivery of bulky products is not necessarily new for FedEx and other carriers. However, in order to make this kind of delivery desirable to end-customers, merely dropping a disassembled bedframe on someone’s curb is not going to suffice.

The only way that a consumer will find online purchases of larger items more beneficial than in-store is if the true value of eCommmerce convenience is fully realized. Therefore, the bulky item delivery that FedEx is now piloting also includes the service of bringing the item directly into the customers home and, in some cases, assembling the item.

eCommerce Changes Everything

Two decades ago, the idea of purchasing items online to be shipped to your house was still something many people were uncomfortable about. A decade ago, the idea of purchasing large items, such as appliances and furniture online was equally rare. However, over the last few years, ordering of bulky items online has skyrocketed.

When eCommerce first became viable, the shipping industry began to experience a boom in business.

Between 2014 and 2016, global package shipping volume increased by nearly 50% – it is set to grow between 17% and 28% each year between now and 2021.

Larger, bulkier items were often considered “eCommerce Immune,” due to the fact that it was thought they could not be delivered at a cost-effective level, as well as the perceived discomfort consumers would have for purchasing such large items online.

As with many predictions for the constraints of the Internet, “they” were wrong. Consumers have become more and more comfortable with eCommerce as a primary source of purchasing, and reliance on eCommerce for purchasing larger items has increased as well.

Examples of Popular Bulky Items Purchased Online

What, exactly, falls under the rubric of “bulky”? Well, it’s a bit vague. However, here are some items that consumers – primarily driven by millenials – have become more comfortable purchasing online:

  • Major Appliances
  • Tools and Home Improvement
  • Outdoor and Sporting Goods
  • Major Appliances
  • Furniture

Furniture presents the most obvious case for how bulky items have benefited from eCommerce trends. And how, in turn, the transportation industry has capitalized:

The statistics above come from a study conducted by One Click Retail, released in the summer of 2018. The data itself is taken from Amazon, but it can be seen as indicative of the greater comfort consumers are feeling when it comes to purchasing large items online.

Bullish on Bulky

FedEx is not the only company that is bullish on bulky goods delivery – traditional trucking companies have been doubling down on it for the last few years. In fact, this month J.B. Hunt made a $100 million acquisition of big and bulky item transportation service, Cory 1st Choice Home Delivery.

The market for bulky deliveries is stated to be around $9 billion dollars. In the increasingly competitive areas of retail and transportation, an opportunity that large is simply too good to pass up.

Intelligent Audit provides its clients with a global, all-mode transportation audit, recovery, freight payment, and business intelligence reporting partner.

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