FedEx Ground vans will soon be a Sunday fixture in neighborhoods across the U.S.

The delivery company, part of Memphis-based logistics giant FedEx, will begin delivering seven days a week for most of the country starting January 2020.

FedEx said Thursday that the move will help “further serve the fast-growing e-commerce market.”

“Expanding our operations to include Sunday residential deliveries further increases our ability to meet the demands of e-commerce shippers and online shoppers,” said FedEx President and COO Raj Subramaniam in a statement.

FedEx expects the average U.S. daily volume for small packages to double by 2026, he said, fueled by the growth in online shopping. He added that FedEx should continue to gain ground market share as it expands its operations.

FedEx Ground already delivers seven days a week during its peak season, around holiday shopping time. Thanks in part to that temporary expansion, which will happen again this year, the company already knows what it takes to maintain its service on Sunday, said Patrick Fitzgerald, senior vice president for integrated marketing and communications at FedEx.

It was less than a year ago when FedEx Ground brought Saturdays into the regular delivery fold. In September 2018, the company announced it would deliver six days a week year-round thanks to facility and automation investments.

Kevin Sterling, a FedEx analyst at investment bank Seaport Global, said the move helps FedEx customers “get on a more level playing field for shipping” with e-commerce giant Amazon, who can deliver on Sundays through the U.S. Postal Service and aims to bring one-day free shipping for its Prime members.

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“If you do same- or next-day delivery, you almost have to have the Sunday option,” Sterling said. “It’s e-commerce driven.”

The service expansion is the latest in a line of FedEx announcements citing e-commerce as the reason for a new company offering. The FedEx SameDay Bot, which will begin tests in Memphis later this year, FedEx Extra Hours and FedEx’s next-day prescription delivery service with Walgreens are among those recently revealed services.

FedEx to rely less on U.S. Postal Service

FedEx also announced it will begin relying less on the U.S. Postal Service for the last mile of residential delivery.

Almost 2 million FedEx SmartPost packages, a service in which FedEx ferries the package until giving it to the U.S. Postal Service for the final stretch, delivered daily “will be increasingly integrated into FedEx Ground operations” and delivered by those already handling residential packages for Ground.

Most of SmartPost package volume should be integrated into Ground operations for the last mile by the end of 2020, FedEx said. This means all home deliveries will be sorted and delivered within the same network, providing FedEx better density, efficiency and savings, as Subramaniam put it in a separate statement.

The last mile of a home delivery can be time-consuming and, consequently, costly for couriers like FedEx. Couriers may drive a long way just to deliver one small package.

“Delivery density has consistently been a challenge with e-commerce,” Subramaniam said. “We anticipate substantial density improvement and efficiency opportunities when all residential packages are sorted and delivered within the same ground network.”

Shifting these packages out of SmartPost “represents a huge reorganization and change in strategy” at FedEx, wrote Dean Maciuba, director of consulting services at Logistics Trends & Insights, who called the announcement “stunning."

“FedEx is reorganizing and changing to support improved profitability, which is a necessary thing as a publicly traded enterprise,” Maciuba wrote. “The challenge will be to maintain a high level of service during and after the transition.”

About 20% of SmartPost packages have integrated into the FedEx Ground network to date, FedEx said. The company credits that to technology that moves SmartPost packages into the Ground network when another parcel is going to the same address, or one nearby.

This fall, package integration “will be significantly accelerated,” FedEx said.

"Eventually all of those SmartPost packages will be delivered directly by FedEx Ground,” Fitzgerald said. “It’s not that the service is going away, it’s just that the final delivery will be handled by FedEx Ground as opposed to the U.S. Postal Service.”

Will UPS respond to 'transformational' move?

FedEx said it’s meeting demand for larger items ordered online, too, in part by designing new facilities and implementing equipment to existing facilities to better handle those orders. Oversized and heavy items make up more than 10% of FedEx Ground volume, and that number is expected to grow, FedEx said.

Oversized items don’t move through FedEx’s standard sort process where human contact is minimal, Fitzgerald said.

“These transformational steps demonstrate how the size, scope and technology of the FedEx network enable us to be nimble and responsive to the changing needs of e-commerce,” Subramaniam said. “Each one advances the company’s commitment to continued superior service and increased efficiency in handling all e-commerce packages — small and large — within one ground network, seven days a week, year-round.”

Rival UPS has Saturday delivery services in some markets but hasn’t yet entered the Sunday delivery fray.

Sterling said UPS will eventually follow suit on Sunday deliveries, but it may take time to get union members at UPS to “buy in” to the service. FedEx employees have a significantly smaller union presence.

Keith Schoonmaker, a FedEx analyst at investment research company Morningstar, said he wouldn’t be surprising if FedEx Ground margins declined early in the seven-days-a-week service’s life due to sortation costs increasing.

Max Garland covers FedEx, logistics and health care for The Commercial Appeal. Reach him at max.garland@commercialappeal.com or 901-529-2651 and on Twitter @MaxGarlandTypes.