To someone standing outside the FedEx Ground distribution hub in Hagerstown, Md., the package delivery business appears deceptively simple.
On one side of the building, workers unload trucks full of boxes and parcels that have been picked up from businesses and various regional drop-off points. On the opposite side of the building, they load the same packages -- now sorted by ZIP code -- onto more trucks. The outbound vehicles then head for points north, south, east and west to deliver their time-sensitive loads of small packages on a specified date -- FedEx Ground's specialty -- to destinations anywhere in the continental United States and Canada.
But if you venture inside the cavernous, warehouse-like facility, it's a different story. First, there's the noise -- a loud and steady hum from the network of whizzing conveyor belts that speed up to 7,500 packages an hour through a highly complex and thoroughly automated categorizing and tracking process that involves a primary sort, a secondary sort and no fewer than 12 scans before packages reach their destinations.
The scans record each package's physical dimensions, weight and destination ZIP code, plus other information, such as where the package is at any given moment, whether in the hub or en route to its destination.
At the hub, "after a package is unloaded from a trailer, the next time it is touched by human hands is at the loading dock," says Ken Spangler, a senior vice president and CIO at FedEx Ground, a $7 billion unit of FedEx Corp. "Everything in between is automated."
And "everything in between" -- such as the routing of the package -- can also be changed on the fly. But it all happens at lightning speed, and that's critical because winning market share in the ultra-competitive $31 billion domestic ground package-delivery business comes down to a matter of milliseconds.
"Over the last five years, we have been on a mission to get faster and faster," Spangler says. "We re-engineer and speed up our lanes an average of twice a year, and sometimes more frequently than that. Over 80,000 ZIP-code-to-ZIP-code lanes are at least a day faster now." As a result, the company's ground service is able to deliver in a single business day almost a quarter of the 3.5 million packages it handles daily. Most packages -- about 85% -- are delivered within three business days.
In the past six years, FedEx Ground has fully automated 53 of its terminals and opened nine new hubs, such as the 600,000-plus-square-foot Hagerstown facility, which has been expanded twice since it opened in 2005. The business result: FedEx Ground has gained market share for 25 consecutive quarters, notes Spangler.
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