How Does Fedex Ground Shipping Work?

FedEx Uses Distribution Centers

When a FedEx Ground package is picked up, the company immediately forwards it to the nearest distribution center for sorting and processing. The company boasts nearly two dozen distribution centers strategically located around the country, and the millions of packages that arrive at these centers each day are removed from incoming trucks and introduced into the facility on automated conveyor belts. As a package works its way through the distribution center, advanced bar code scanning technology automatically routes the package based on the label applied when the package was shipped. The package is grouped with other packages destined for the same geographic area then loaded onto a truck for delivery or transport to another distribution center.

Some Packages Visit Multiple Distribution Centers

If a package is travelling a long way--from the west coast to the east coast, for example--it may have to pass through several distribution points before being delivered to the final destination. At each distribution center, the same scanning technology groups packages together based on the destination, and the packages are loaded on a truck for additional transport. In most locations, FedEx uses a proprietary staging process to ensure the packages are properly routed and grouped with other packages with similar destinations. If the package is to be sent to another distribution center, it is staged for and loaded on a truck headed for the next center en route to the destination. If the package is ready for delivery, it is loaded on a truck designed for local delivery along with other packages destined for that truck's delivery route.

FedEx Uses Contractors

Unlike its competitors, FedEx relies on contracted drivers rather than company employees to transport its cargo across the country. This business model is attributed to the 1997 Teamsters strike that crippled competitor UPS; during this time, FedEx absorbed enough business to purchase Pittsburgh, PA based rival RPS. RPS used contract labor to drive packages from location to location, reducing the company's liability and lowering payroll expenses (independent contractors do not receive company benefits, such as vacation, medical and dental insurance or company 401(k) plans). Realizing the additional profitability in contract labor, FedEx quickly adopted the RPS business model and continues to use independent contractors to drive packages across the country.

Resources

• Official FedEx Website