May 2, 2005, 12:00 AM

Online retail growth = FedEx growth

FedEx Ground, the small-package delivery unit of FedEx Corp., is in the middle of a $1.8 billion expansion of its U.S. delivery network to support expected growth in FedEx’s shipments to consumers on behalf of online retailers.

With online sales continuing strong growth--rising 27% in the first quarter of this year over last year--Internet retailers are not the only ones faced with needing extra capacity. Somebody has to deliver all those packages to consumers` homes, which is one reason FedEx Ground, the small-package delivery unit of FedEx Corp., is in the middle of a $1.8 billion expansion of its U.S. delivery network.

The expansion project will support expected growth in FedEx`s shipments to consumers on behalf of online retailers, a spokesman says.

FedEx, also prodded by competition from UPS and DHL, says it will open three of nine planned distribution hubs this year. When all nine new hubs are completed over the next several years, FedEx Ground will have 39 hubs. In addition, a new home-delivery facility planned for Florida will be able to process more than 10,000 packages per hour. "The Fort Lauderdale facility is part of our ongoing efforts to increase the size, speed and efficiency of our network," says FedEx Ground vice president Mark DiBlasi.

FedEx is building the three new hubs in Dallas, Cincinnati and Hagerstown, Md. A fourth already under construction is due to open next year in Memphis, Tenn. The hub expansion project, which will also expand the 30 existing hubs and relocate nearly 290 pick-up and delivery terminals, will nearly double the company`s average daily hub package volume capacity by the end of its 2010 fiscal year, FedEx says.

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