FedEx cuts Sunday deliveries in the United States as e-commerce cools

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FedEx Corp. plans to cut Sunday delivery service to remote parts of the United States, the latest evidence that the Covid-19-spurred e-commerce surge is ending.

The Mail Land Unit will reduce service in rural and sparsely populated areas, reducing its coverage to around 80% of the population from the current 95%, according to a statement Thursday.

“As economic conditions have changed, we are making operational adjustments to suspend Sunday delivery operations in certain low-density rural markets,” FedEx said.

The 6,000 small businesses that deliver packages for the ground unit complain of losing money due to rising costs. On Wednesday, a major contractor demanded the abolition of Sunday service and an additional payment to cover increased expenses for fuel, wages and vehicles.

FedEx accelerated the rollout of Sunday service in 2020 to handle a historic surge in residential deliveries after Covid-19 spurred lockdowns to stem the spread of the virus.

Ground unit volume jumped 33% for the quarter ending August 2020, at the height of the pandemic. During the last quarter, the company announced that the unit’s parcel volume fell by 6.2%.

Complaints from contractors

It’s unclear what role contractor complaints played in the decision to cut Sunday service, which chief executive Raj Subramaniam touted as a competitive advantage at an investor meeting in Memphis last month.

Spencer Patton, who has about 225 FedEx Ground delivery routes in 10 states, said his estimates showed the company was losing up to $500 million a year on Sunday deliveries because volume wasn’t enough. high to manage sorting centers efficiently.

Low volume on Sunday also makes contractors less efficient and creates problems for driver scheduling, Patton said as part of his drive to get FedEx to increase its compensation for contractors.

In 2019, FedEx announced that it would begin year-round Sunday service in January 2020 after making seven-day deliveries only during the peak holiday season. United Parcel Service Inc. relies primarily on the US Postal Service for its Sunday deliveries.

(Updates with volume drop in fourth paragraph)

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