Samantha Payne Polepaka: Why did FedEx Express opt to go ahead with this investment?
Alun Cornish: In October this year, in time for peak season, we introduced a new automated package import sorting system as part of an estimated $25 million investment in our Stansted facility to handle increasing demand from importers. It complements our new exporter which was launched in December last year. The new importer has doubled capacity, allowing us to handle 6,000 packages per hour, up from 3,000 previously.
The import facility is equipped with cutting-edge technology which allows us to capture data points via barcode scanning, providing instant updates to the FedEx operations team and the customer receiving the goods. The system has flexibility to connect to a range of different outfeeds, meaning parcels can be loaded into a number of different vehicles for onward connection.
We have chosen to invest in modernising and expanding import operations at this key UK gateway facility to strengthen FedEx's global network capacity and enhance service to our customers.
SPP: How will the new sorting system help prepare for peak season?
AC: The new automated sorting system, with its high-speed sorting capacity of 6,000 packages per hour, will help to significantly increase processing speed and efficiency during the peak season. The system can now sort double the amount of import volumes per hour.
The ability to adjust sorting plans on a minute-by-minute basis allows for more efficient operations. While real time tracking and data collection provides up-to-the-minute updates to customers and the FedEx operations team, ensuring we provide a seamless service to customers during a very busy time.
SPP: What is FedEx’s view about the upcoming peak season? What are the prospects going into next year and the strength of the UK market?
Robert Peto: Against the backdrop of a challenging economic environment, this peak has led to consumers tightening their purse strings, which is having an impact on the businesses we serve. Cost consciousness will be key this holiday season, and businesses will be looking at FedEx and the wider industry to provide reliable service at a variety of price points more than ever. And this trend is likely to continue through next year. The industry needs to meet this challenge with flexible, intelligent networks that facilitate the flow of customers’ goods at the speed and cost of their choice.
SPP: E-commerce globally keeps growing while the whole market went through a challenging time, can you share about growth rates and FedEx experiences? ii) How does e-commerce help UK businesses connect with global markets? iii) How e-commerce was affected by the pandemic and how did FedEx cope? iv) What share of FedEx business comprises e-commerce? Does the Stansted hub just deal with e-commerce, or does it handle other produce?
RP/AC: The pandemic significantly affected e-commerce volumes. As consumer shopping moved online, FedEx experienced surges in residential deliveries. We rapidly invested in expanding capacity, staffing, retail access points, and automation such as picture proof of delivery (PPOD) to manage these demand spikes and service customers effectively.
After enjoying phenomenal growth during the pandemic, e-commerce sales have slowed in the last couple of years, with growth set for just 3% this year across Western Europe. However, by next year, more than a fifth (21.2%) of total retail sales worldwide will happen online, and the global e-commerce market is expected to total $6.3 trillion by the end of 2023 – and top $7 trillion by 2025.
E-commerce can help businesses connect with customers all over the globe and there’s an opportunity for growth by reaching international markets. Data tells us that more and more consumers are looking to buy goods internationally, which is driving cross-border e-commerce growth as they hunt for unique products. Nearly three-quarters (71%) of millennials and 60% of Gen Zers in Belgium, France, the Netherlands, Portugal, Spain, and the UK are shopping cross-border several times a year, according to a June 2023 report by Worldline.
E-commerce represents a significant proportion of FedEx business. We continue to invest heavily in the development of our e-commerce capabilities, including increasing the number of access points for parcel collection from 3,800 to 7,000 by November 2023. This means that 75% of the UK population is within a 3km radius of access points. FedEx Delivery Manager allows customers to track their package every step of the way via text and email updates. Shippers can sign up for free at www.fedex.com/delivery or download the free FedEx mobile app. We also offer Picture Proof of Delivery (PPOD) which provides customers with peace of mind when they receive a photo confirmation that their holiday shipments have arrived.
At FedEx, we offer a range of services to customers – we work with both parcel and freight and our Stansted Hub handles both.
SPP: Could you provide any information about the UK air network, air services from Stansted and the routes (short-haul, long-haul etc)?
AC: Our UK air network comprises six gateways served by a combination of long-haul flights from the US and short-haul flights around Europe. Stansted has around 13 flights a day, including flights to Memphis, Indianapolis, Liege and Paris. We adjusted our network to align capacity with demand while maintaining connections to global markets.
SPP: How many FedEx sorting hubs are there in the UK?
RP: FedEx provides customers and businesses worldwide with a broad portfolio of time-sensitive, air-ground express service to 220+ countries and territories, connecting the vast majority of global GDP. In the UK, FedEx operates in six road hubs, six air gateways and 64 stations across the length and breadth of the UK.
SPP: What are FedEx views on incorporating AI technologies to bring added efficiencies to package deliveries?
RP: Innovation is in our DNA. From being the first to introduce barcodes to track shipments back in the 1980s, to looking at autonomous vehicles and e-bikes as a last mile solution in city centers, we are always looking at ways we can innovate for the future.
We believe AI and machine learning offer potential to enhance efficiency and service. The size and scale of the FedEx network and the millions of packages that pass through it every day give us a bird's eye view of global supply chains and trends – with more than 14.5 million packages in our network, each one is scanned multiple times throughout its journey. We use this data to gain insight and create smarter, more resilient supply chains, which in turn benefits our customers. For example, FedEx Surround uses AI and machine learning to calculate the risk of shipments arriving late so that customers can take action proactively and have control over their end-to-end supply chains.
SPP: What is FedEx’s strategy for 2024? What is your forecast for the sector next year, what significant challenges are you anticipating?
RP: While global growth may be slow next year, with our unparalleled global network, we are well positioned to facilitate trade and are committed to working with businesses of all sizes to expand both domestically and globally. We are doing this by expanding our e-commerce solutions for our customers and their customers and will continue to provide an exceptional service to our customers, focusing on increased automation and intelligence.
SPP: Anything else that you both would like to add?
AC/RP: FedEx is proud to enable global commerce and provide businesses of all sizes access to markets worldwide. Our reliability, custom solutions and innovations allow customers to grow in even the most challenging conditions. As the economic climate improves, our network stands ready to fuel global trade and UK companies' international ambitions. The FedEx networks are flexing as designed to provide the best possible service to our customers. Our combined air and ground network offers customers a variety of services both within Europe and to and from the rest of the world.