FedEx Corp. plans to close nine shipping facilities in New York and one in Pennsylvania as its multi-year effort to integrate legacy express and ground delivery operations into one unified surface network enters its final phase, FreightWaves has learned.
Memphis, Tennessee-based FedEx (NYSE: FDX) completed its Network 2.0 consolidation program for Canada last April and has aggressively worked since then to optimize its terminal footprint in the United States. The concept aims to reduce expensive excess capacity and provide better service by streamlining pickups and deliveries so most neighborhoods are only served by one van each day.
The integrated parcel and logistics giant has so far optimized more than 360 ship stations to handle express and ground volumes, while closing over 200 locations. By the end of 2027, the company will have optimized more than 900 stations and will close over 475 locations, representing a 30% reduction in its national facility footprint, said Scott Ray, chief operating officer and president of U.S. and Canada surface operations at last month’s Investor Day event.
Nearly 25% of FedEx’s eligible U.S. and Canadian average daily volume now flows through hundreds of reprogrammed facilities, he said.
FedEx spokesman David Westrick disclosed the latest round of closures in an email to FreightWaves. Nine locations in New York are designated to end operations in June. They are:
- Binghamton – 2123 Link Dr., Binghamton NY
- Elmira – 358 Sing Sing Rd., Horseheads NY
- Syracuse – 6313 Running Ridge, North Syracuse NY
- Buffalo – 299 Cayuga Rd., Cheektowaga NY
- Plattsburgh – 768 Route 3, Plattsburgh, NY
- Ithaca – 747 Warren Rd., Ithaca, NY
- Conklin – 299 Broome Corporate Pkway, Conklin, NY
- Watertown – 22530 Fisher Rd., Watertown, NY
- Utica – 115 Dry Rd., Oriskany, NY
Another facility, on Sathers Drive in Pittston, Pennsylvania, is slated to shut down on May 2. Sixty-three employees will be laid off, according to an advance notice the company filed with state labor agencies. The FedEx facility in nearby Wilkes Barre will take over the delivery functions carried out by the Pittston ship center. In the Scranton area there are currently three facilities providing service. Some Pittston workers will be offered other roles within the company, FedEx said.
Network 2.0 was conceived in late 2022 to align capacity with demand as e-commerce volumes normalized after the pandemic spike and FedEx began losing market share to Amazon and new, independent couriers. A large part of the demand decline stemmed from a conscious decision to deemphasize low-margin last-mile delivery and focus on heavyweight, international and long-distance package service.
Ray said the network restructuring is now focused on larger metropolitan areas, such as San Francisco.
The initiative is producing strong results in terms of profitability and efficiency, with minimal impact on service levels during the transition, according to management. The company has targeted $2 billion in structural savings by the end 2027, with $1 billion in cost reductions expected this year, primarily from having to make fewer pickup and delivery stops.
“We’re seeing about a 10% reduction in pickup and delivery cost, higher stop density, and fewer duplicate routes,” Ray told stakeholders at the investor event.
Precise planning based on the special characteristics of each area and agility have allowed FedEx to reimagine a complex system while maintaining service levels at, or above, the national average, according to management.
“By prioritizing service, establishing dedicated routes for high priority services and customers, and leveraging our local market knowledge to determine optimal fit based on location, local nuances, and timing. One size certainly does not fit all markets,” said Ray. “Now the objective is to safely scale the integration over the next year and a half while continuing to deliver the strong service that our customers expect.”
In addition to faster delivery speed, customers benefit from a simplified experience because they don’t need to separate packages and maintain two separate pickups, according to the company.
Common technology systems, handheld devices and scanning processes rolled out through the new network are enabling the optimization effort.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
Write to Eric Kulisch at ekulisch@freightwaves.com.
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