Primer on FedEx's Distribution Network (2024)
ontheseams.substack.com141 points by hyperific 3 days ago
141 points by hyperific 3 days ago
As someone who relies on overnight 2-3 times per week, I have to say FedEx expresss (air) is a logistical wonder but unfortunately the packages still have to hit the ground to get to your door. And the ground service is a joke at least in SF. I never knew this but ground delivery drivers are not employees instead they are all independent contractors. Quite often packages come several days late. The driver will also falsely mark item as delivered or that no one was available. Customer support cannot reach anyone at the SF hub/station. I once went to the station and had to wait an hour before someone talked to me. I’ve heard they’ve had many layoffs and completely shut down the Oakland hub. Also heard UPS is much better and pays drivers better (they are union). If I didn’t get a 90% personal discount thru my work I would never use them.
FedEx has been the source of the majority of my delivery problems, too.
I remember one time I sat outside our office and waited for the FedEx truck to come up because the driver had a habit of skipping deliveries and marking them as delivered. I watched the driver go through our office complex but just not stop at the back row of buildings.
Trying to call FedEx customer support was its own frustration. The person on the phone told me some story about how they couldn’t actually get any info about the drivers or their deliveries at the end of the delivery chain. There was no interest at all in the driver who was skipping deliveries, but the person on the phone didn’t seem surprised.
One reason the quality of service at UPS has traditionally been stronger than at FedEx is that most UPS drivers are full-time employees rather than contractors or temporary staff. Many UPS drivers are able to earn a good living, often better than their peers at other companies including FedEx [0][1]. By contrast, some logistics companies pursue cost savings by classifying drivers as self-employed contractors, thereby avoiding social security contributions and other employee benefits. UPS’s approach reflects the vision of its founders, who believed a company cannot thrive unless it takes care of its employees.
However, the financial markets, which tend to reward short-term returns and a “winner-takes-all” mindset, have often penalized UPS for this philosophy. In recent years, to satisfy investor demands, UPS management has also turned toward cost-cutting measures. This shift coincided with leadership changes, as the current CEO came from outside the company. External leaders often emphasize sales and marketing over operations, and UPS has followed this trend. As a result, UPS, FedEx, and Amazon are now competing in a cost-reduction race, prioritizing sales growth while reducing operational staff—changes that inevitably affect service quality.
One critical element still missing from the broader logistics landscape is a truly integrated, multi-modal framework that seamlessly combines air, road, rail, and water transport to meet diverse customer needs. While rail may be less applicable in the U.S., it plays a vital role in Europe, China, Japan, and India and could be leveraged more effectively. Perhaps modern logistics theory should evolve to reflect this more holistic, global perspective.
[0] https://www.cnbc.com/2023/08/18/ups-drivers-can-earn-as-much...
[1] https://www.cbsnews.com/news/ups-drivers-170000-pay-benefits...
Rail is more applicable in the U.S. than in any of those other countries. We are the world leader in freight rail volume. Obviously it's not generally used for overnight delivery.
https://railroads.dot.gov/rail-network-development/freight-r...
As for financial markets, your blame is misplaced. This industry is tremendously price sensitive and it seems many customers are willing to accept somewhat worse reliability and service quality in exchange for lower prices. It's similar to passenger airlines in that regard.
Our UPS driver lives in our neighborhood. It’s a middle class suburban neighborhood, a nice, quiet place to live. That he can afford to live here is great. Needless to say, we get excellent UPS service. Very nice guy, too.
UPS is pretty close to this. UPS Ground will usually load stuff onto multi-modal containers and ship via rail where practical. Fedex does for east->west coast, but they seem to do alot of relayed truck shipping.
Rail is almost always cheaper, and has mostly displaced long haul trucking.
The missing link is water, and the Jones Act, which was specifically intended to destroy intra-US shipping in favor of trucking, has been incredibly successful in doing just that.
UPS is also the largest Teamsters Union employer in the country (300k members)
https://about.ups.com/us/en/newsroom/negotiations/negotiatio...
Might depend on location but I've always had Express packages delivered by a dedicated Express truck. Which feels wasteful sometimes when both a Ground and Express truck come down my street within the same hour.
It's touched on here:
> Unlike with Ground, which will send a driver out for the day to do pickups/deliveries, Express drivers typically have to work around time-committed packages, meeting one or a few loop deadlines for the day, doing on-call pickups, and making a certain number of required delivery attempts.
Various Express services have very hard deadlines (For example, Fedex 2nd Day AM is 10:30AM), whereas Ground/Home Delivery can be delivered at any time during it's commitment date and still be on-time. If a package is late by even a minute then the shipper is entitled to a full refund (with exceptions for things like weather), so the Express side doesn't want Ground slowing it down (plus they were two different organizations at one point, and are still pretty siloed).
(I'm the lead developer for Refund Retriever, and our primary line of business is auditing Fedex/UPS for those late refunds)
Exactly, my understanding was Express were owned/crewed by FedEx, whereas Ground are contractors and vary in skill and dedication.
But apparently you can GIVE a package to either and it ends up in the right place, eventually (better to give ground to express).
I still think of "FedEx Ground" as an acquisition/rebrand and I would not be surprised to learn that the integration between Ground and Actual FedEx is still minimal.
This is (or was the last time I was more directly involved) still how it was; FedEx Ground, Freight, and Express were basically three separate companies, with different portals, phones, and service levels.
UPS was much more integrated, though Freight is still a bit disconnected.
> “independent contractors”
I worked one Christmas for SF’s FedEx Ground 20 years ago. It’s worth noting FedEx routes are (were?) owned by drivers, who would subcontract the routes to seasonal labor like myself.
I've run into the "falsely marked as delivered" thing a few times (at home, wfh). Last time I called and threw a shit fit and the rep gave me the usual run around about "how you must have simply missed the delivery" or "maybe you didn't hear the doorbell" or whatever BS. I basically said "Look, I've got a security camera on my front door. I've pulled the video at the timestamp saying I'm not home. The truck isn't even on my street, let alone at my door. What's your email address and I'll send it to you?"
They always demure saying it isn't necessary, they can't accept it, yada yada. And somehow always insist that they can't get ahold of the local distro manager, and just to wait until tomorrow (in this case this was "Attempt" 2 of 3, both of which were a lie). I had to upgrade to the nuclear response "I'm going to send this video to the corporation who sent me the item to show them that FedEx is actively lying on their delivery statuses. And I'll CC our local news team who's bored and happy to burn down corporations because they've got nothing else going on." Turns out they actually CAN get a message to the local distribution manager (no shit, I know that) who CAN call me to apologize and the truck magically finds its way to my house by the end of the day.
I'm not sure who to be ticked with or feel bad for. The drivers are typically the ones being abused, so I sort of feel bad for them. But also... stop freaking lying. Don't say you tried when you did. It wasn't even something that required signature. All you had to do was to walk the 15 steps from the truck, chuck it as hard as you can towards my porch (because... of course they do), and call it a day.
Part of it is (sometimes) employees working "off the clock" where they'll mark a bunch of shit delivered, and then come back later when they're not "paid" and deliver them - because it prevents overtime and they still meet their targets.
Why do they do that? Are they penalized for working overtime too often?
Yes. The shipper (the smaller local organization that FedEx or Amazon contracts with) turns around and hires drivers. FedEx pays the contract company per piece, the company turns around and pays the drivers per hour.
FedEx has some mystical software that helps them gauge how many employees per delivery, etc they need, but that stuff always leans toward "perfect scenarios". End result is the driver is asked to be perfect or more than perfect, never break any laws, never get delayed by ringing doorbells, etc, and still get all the deliveries done.
One easy way out for the driver is to mark everything in the computer as it is supposed to be, and then go back and fix it later (which eventually doesn't happen - there are stories about it).
UPS has something similar, but the drivers get paid overtime and are more unionized (protected) but even THEY will pull the above bullshit because there are often federal laws about truck drivers that they're skirting around.
I've seen my normal UPS driver stop by my house past 10PM near Christmas, dressed in normal street clothes and in his minivan with family, to drop off ap package that had been marked as delivered earlier in the day.
The above is why more and more of the systems require the driver to take a picture of the delivery, which of course adds time, and slows things down ...
They work for contractors -- alot of the companies that used to do stuff like newspaper and courier delivery got into this, but it varies dramatically be region.
For the lousy contractors, it's sort of an uncanny valley between UPS and a crowdsourced model like DoorDash or Laser. The employees are sketch. At work, i used them to ship WFH user equipment -- they'd do shit like deliver laptops to dumpsters at apartment complexes (complete with pictures). In NYC, the couriers park on a side street, stack packages on the street and have casual labor deliver them.
I've also had bad experiences with dropboxes where the couriers pilfer high value items - return iphones in particular. They get misdelivered to incorrect addresses on purpose.
My boss actually caught them lying one time on camera. They're incentivized to lie, since a late delivery is entitled to a full refund (for the shipper) and loss of revenue.
(I work for Refund Retriever; we audit for late deliveries for Fedex/UPS)
20 years or so ago FedEx beat the pants off of UPS in my limited experience. The only thing brown did for me [1] was play football with my Newegg packages and bust them open which, for a child spending their entire net worth on a video card, was rather disheartening. Over the years this trend reversed to the point that I actively avoid FedEx so that my package arrives in one piece at my doorstep instead of at their distribution center with a giant hole ripped in the side of it.
I wonder whether Amazon's scale forced UPS to up their game when they were shipping partners. It's also very possible that my experience is completely anecdotal.
[1] https://wanderingeye.marketing/remember-that-ad-campaign-wha...
I live in Japan - when I see a package was sent to me with FedEx I feel a great sense of dread.
Fedex is the worst. I live in a house with a wooden fence all around. The sidewalk goes to the gate to get to the front door. Once fedex delivered something to my back deck where there is no sidewalk.
My parents live in a rural area. Two story house with a clear front and back door. Fedex decided to deliver a package by putting it on the storm cellar door on the side of the house.
I prefer getting packages delivered to a pickup point and doing the last mile myself. Although it restricts you to picking up during business hours I don't have to worry about something going wrong with it actually being delivered.
I would try that but then I’d have to change the delivery location after the shipment which can create an additional “change location” delay. It still has to be delivered to a FedEx store as well unless you are going to the station which can be a trek.
> have to hit the ground to get to your door.
Maybe the really high priority packages can be dropped out of the plane and delivered with a drone
Was excited to read about a fascinating topic but the second paragraph under the 'Express' heading accidentally cites a virtual airline's website rather than Fedex itself — a problem that unfortunately throws into question the accuracy of the rest of the article for me.
Remarkably, FedEx has its own map of every airport it services, along with routes, flight times, operators, and aircraft types. https://fedexvirtual.crewsystem.net/route_map.php
My most recent $75 overnight via FedEx Express was not delivered on time (day late which mattered and why I spent so much) and they straight up lied about it. Only anecdata but sad to hear so many concurring stories.
FedEx lost the paperwork I overnighted to try and get my dog unstuck from customs during an international (California to EU) move and gave me the runaround for 3 days telling me "it'll be delivered tomorrow!"
UPS got it there in under 24h.
Weeks later I got a "your package was delivered!" email from FedEx. Fantastic stuff.
Needless to say I'm never proactively choosing them again.
I have never given this a lot attention. I learned a few things from the post and I am always grateful for that.
One question that popped into my head is that with that having a fleet that big the company must be rather vulnerable if the number of packages decreases significantly over even a small amount of time.
Operating a fleet like that, and probably have lot of flights that cannot be canceled, to save money, given the propagation problems that would create downstream.
In a highly improbable hypothesis of a day without any package at all, the cost must be in the two digit millions
I dont think there is ever a day without packages but there are slow days and incredibly busy days.
> By far the largest Express sort facilities are in Memphis ...
I once worked for well known company with a large presence in Memphis. Our mostly empty parking lot was a mobile location for the city's new network of gunshot detectors. In Memphis I would guess 80% of residents carry firearms for protection.
https://www.atlasofsurveillance.org/a/aos009983-memphis-poli...
The true backbone of the American economy, the logistics network and supply chain. Most do not think about how their cheap Chinese plastic garbage is delivered to their door, only how quickly and for the lowest cost. If you really think about it, the engine of our consumption based economy is the humble cardboard box and pallet. Take stuff out of one box to put in another box so it can be opened somewhere else and be placed in another box to be opened up again and thrown away.
Not totally orthogonal, and quite interesting: https://arxiv.org/abs/1410.6723
I don’t think FedEx has ever been correct about a delivery to our address in NC. We just add one or two days to every estimated delivery and don’t stress about it but I just can’t believe they keep underestimating.
If Express is being encroached upon, maybe it needs to start doing weekend pickup/delivery.
When they can pack superhighways overnight with self-driving semis, it's going to get cheaper and better. I still am frustrated with self-driving that they are obsessed with city taxis. Self-driving on highways is so much simpler to automate, and a whole lot more useful to me as a midwest driver.
And what's the state of drone delivery for last mile? Fedex envelopes would seem to be perfect for them.
It’s not clear to me that on balance highway driving is easier. The physics of a Semi going 65 mph are more relatively constrained. You can’t just solve all of your problems by slamming on the brakes like you almost can in city traffic. Even though the interstate is designed to mitigate this, the tails are probably just as bad, ie, pedestrian suddenly jumps out into the road. It doesn’t happen as often as it does in the city, but it does happen, and at 65mph pulling 80 tons, it’s a lot more demanding problem.
That said, a semi going through the night on the interstate can make some serious miles and is competitive with an airplane for a whole lot of what needs to be delivered.
Overnight semis can travel more slowly, since they aren't blocking traffic, saves fuel, increases safety envelope.
Last mile seems to work well enough at the moment.
I do agree though, that I'm far more interested in limited access highway self-driving that urban.
So now that they have such a good network, they decide to worsen it just so people buy their express services more? Damn it, business schools ruin the world.