FedEx Corp., Memphis, TN, completed its $120 million acquisition of Parcel Direct from Quad/Graphics, New Berlin, WI, the company said yesterday. The move marks FedEx's entry into the emerging parcel consolidation market.
FedEx said it now will be able to deliver low-weight, less time-sensitive goods to residential customers. Parcel Direct will operate as a subsidiary of FedEx Ground and will target customers in the e-tail and catalog industries. It will be led by Ward Strang, a 16-year veteran of FedEx Ground who was instrumental in the growth of the company's residential ground service, FedEx Home Delivery.
Strang will direct all operations for the 12 distribution hubs and 450 employees from Parcel Direct headquarters.
Parcel Direct's model is based on a network designed to take advantage of the U.S. Postal Service's Parcel Select service, a wholesale ground package pricing program used by package consolidators and others. With Parcel Select, companies enter packages deep into the mail stream and receive reduced rates because delivery zones are skipped.
Thousands of packages are transported daily from customers' facilities to one of its 12 distribution hubs. Packages are sorted and consolidated at these locations and transported to local post offices for delivery to residential customers. Packages are delivered from businesses to consumers in two to six days with Parcel Direct compared with one to five days with FedEx Home Delivery.
