FedEx and real estate
Shipping giant influences where businesses settle here, and maybe soon overseas
1 October 2012
Although it has strong market share and impressive brand recognition, FedEx is one of those companies that doesn’t get that much attention. After all, there are many things we take for granted in the fast-paced world of business, and express delivery is one of them.
So when it was announced that FedEx managers would speak at the Sept. 12 luncheon for the local chapter of the Society of Industrial and Office Realtors, I stuck around to hear why they were on the agenda, which is typically related to real estate.
I got my answer from John Ramous of Harsch Investment Properties when he introduced the program.
“A couple years ago, we were wondering why so many companies were seeking out specific locations,” Ramous said. One big reason: They wanted to be near a FedEx.
Yes, FedEx offices are so popular, they influence real estate sales. So, with rumors of a FedEx expansion locally, SIOR’s timing was right.
On a couple of levels, actually. FedEx also is one of those service providers that some analysts consider to be a barometer of the national economy.
If that’s true, however, it’s bad news since FedEx fell short of profit forecasts during its fiscal year that ended Aug. 31.
Regardless of the economy, however, the business world remains impatient, forcing both FedEx and its competitors to deliver faster and at a lower cost. Demand for “next business day” delivery is booming and accounts for about one-third of local FedEx business.
Handling 5 million packages a day, the company operates with five divisions. FedEx Ground has adapted to people’s busy work schedules and personal lives by focusing on customer service. It offers delivery to homes, offices or hotels, at night, on Saturdays or by appointment. Basically, wherever and whenever.
“We try to catch people when they’re home,” said Ken Barnes, manager of the local FedEx Ground division.
Ground transit is more affordable than air delivery and relies on a foundation of drivers who are independent contractors rather than employees. They generally own the trucks they drive and buy their own gas. The company sees the strategy as making FedEx more competitive and effective.
It seems to have worked. Local FedEx Ground folks now guarantee delivery to any city west of the Mississippi within three days. They boast they can reach the East Coast in four days.
“Ground is becoming very popular,” said local Sales Manager Tim Chaplin, who noted that Las Vegas receives many more packages than it sends.
FedEx will invest about $4 billion in operations in the coming year, including potentially in China, which it sees as an attractive growth market.
It already is the dominant player in the United States — and a factor in the real estate industry.
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