FedEx Acquires Shipping Consolidator

FedEx Corp. revealed plans Monday to acquire for $120 million Parcel Direct, a shipping consolidator for catalog and Internet retailers with 450 employees and roughly $250 million in annual revenue. The acquisition of the ground-delivery arm of Quad Graphics, a leading catalog printer, is scheduled to close within 60 days.

Parcel Direct specializes in consolidating slow-moving, lightweight parcels from Internet and catalog retailers and shipping them through the Postal Service, generally to consumers. The volume reduces costs, a FedEx spokesman says. "The company is a leader in this space," he says.

FedEx Ground captured 14.8% of the $22.4 billion parcel market in 2003, up from 14% in 2002, and held 15.5% of ground package revenue and 17.8% of tonnage, up from 14.7% and 16.6%, respectively, in 2002, according to research firm the Colography Group. Gains, according to the research firm, largely came at the expense of United Parcel Service Inc., whose share of shipments, tonnage, and revenue declined on a year-over-year basis. But the Colography Group says UPS still dominates in the U.S. domestic ground parcel market.

Parcel Direct will become a FedEx subsidiary and will require some IT back-end integration with its new parent company. It's too early to tell whether FedEx will convert the company's IT infrastructure to match its own.