FedEx brings back a same-day delivery option

FedEx announced on Tuesday that it’s rolling out a new, faster offering: FedEx SameDay Local.

The announcement comes at a time when retailers including Amazon, Walmart, and Target are also offering ever-speedier delivery times on the products they sell customers.

For now, FedEx says, the service is just for companies to consumers.

FedEx used to offer same-day delivery services, said Bruce Chan, a senior equity analyst at Stifel. Stifel has an unrelated investment banking relationship with FedEx.

“The company made a strategic decision to pivot away from a broader-based same-day option for its customers that it primarily used its own capacity to service and address,” Chan said.

Chan said FedEx largely exited the same-day market back in 2023, except for select items, like temperature-controlled pharmaceuticals.

Now, the company is offering local same-day service again — this time, by partnering with another company, OneRail.

Chan said this allows FedEx to reduce risks. “They are not using, you know, their own owned trucks and employees.”

Nowadays, customers might decide to go with another company if they find out delivery might take a few days, said Prakash Mirchandani at the University of Pittsburgh.

“Because of what Amazon has been doing, what Walmart and Target have been offering, that those expectations have gone up,” Mirchandani said.

Those are retailers Arun Sundaram at CFRA Research follows.

To deliver for their customers, so to speak, Sundaram said those retailers outsource their last mile services to third parties, too.

“They're able to increase delivery speeds to more cities. They're able to reduce costs,” Sundaram said.

To pay for it all, Sundaram said, those retailers offering fast delivery can lean on subscription fees and advertising revenue.

As for the new FedEx service, spokesperson Jason Brenner said customers will see it as an option when checking out an order with a participating retailer.

“You can get it delivered in three to five days. You can get it delivered priority,” Brenner said. Or you can get it delivered via FedEx that day, between 4 and 6 p.m.

On how much it’ll cost, Brenner said, “we're not in the business of telling our customers, the retailers, what to charge their customers for shipping, but we will have a very competitive rate card.”

And retailers, he said, will use that to decide what to charge for same-day delivery.