Having an app doesn't give Uber a delivery advantage over FedEx

Fred O'Connor

IDG News Service

• Mar 19, 2015 2:10 PM
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FedEx isn’t worried about car-hailing startups encroaching on the parcel delivery business.

There’s always been a market for same-day delivery services offered by taxi companies, courier services and now Uber, said FedEx CEO Fred Smith.

“Great company, great concept, but I don’t think it’s likely to be a major player in the logistics business,” said Smith during an earnings call Wednesday.

Having an app doesn’t give a company an advantage in handling the logistics associated with a major shipping operation.

“I think there’s just an urban mythology out there that the app somehow changes the basic cost input of the logistics business or changes the Circadian patterns or the underlying business situation,” he said, adding that he uses Uber.

The market for delivering goods locally in a few hours is “much smaller” compared to the greater global delivery industry, Smith said. Also, the hours that Uber drivers work may not line up with online shopping patterns, he added.

“A huge part of the e-commerce marketplace, for instance, are orders that are processed after 8 p.m. in the evening until midnight,” said Smith, implying that Uber drivers could be sleeping when these transactions are occurring.

Ride-hailing apps have expanded beyond transporting people and are starting to deliver goods. Last April, Uber launched its UberRush courier service for package delivery in parts of New York City. In February, Sidecar expanded its same-day delivery service to all the U.S. cities it operates in after testing the feature in San Francisco.

Same-day deliveries will account for half of Sidecar’s business this year, the company said. Same-day deliver already constitutes around 10 percent of Sidecar’s ride volume in San Francisco, the startup said.

Ride-hailing startups aren’t the only technology companies exploring the quick-delivery industry. Amazon and Google offer similar services in several U.S. cities.

During the FedEx call, Smith noted that the company offers a same-day package delivery service in 23 markets.