Move comes despite state’s high fuel tax
FedEx Freight is opening a Providence area service center to gain better access
to the growing Northeast shipping industry, but the state trucking association
predicts others won’t follow.
FedEx Freight, a subsidiary of FedEx Corp., provides regional and inter-regional less-than-truckload freight services in the United States.
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The company moved to the expanded service center on Industrial Drive in Cumberland in October from its previous location in Seekonk, an unusual move, according to Rhode Island Trucking Association President John Atwood.
“From a business standpoint it’s great that (FedEx Freight) moved to the state, but I don’t see a flood of trucking companies moving here unless the diesel fuel tax drops,” Atwood said. “We have the second-highest diesel fuel tax rate in the country, and that isn’t attracting anyone.”
The diesel fuel tax is 31 cents per gallon in Rhode Island, compared to 23.5 cents per gallon in Massachusetts and 26 cents per gallon in Connecticut.
After crude oil costs, taxes are the second-largest contributor to the price paid at the pump. Together, federal and state excise taxes on fuel account for an average cost of approximately 62 cents per gallon, according to RhodeIslandGasPrices.com, operated by the nonprofit group GasBuddy Organization Inc.
“Manufacturers have been moving out of the state because of the (fuel) cost,” Atwood said. “Given the budget situation and with so much of the fuel tax going to other areas besides transportation, it’s tough to try and reduce that tax. It’s been an ongoing problem in this state.”
FedEx Freight – with 22,000 employees and more than 9,000 tractors – called the move to Rhode Island strategic. The company also opened and expanded five other service centers around the country recently, including: Boise, Idaho; Kankakee, Ill.; Bangor, Maine; Oklahoma City, Okla.; and Jackson, Miss.
“The Northeast is a huge growth area for us, since we’ve only been in the market for three years now. We are constantly surveying the market, looking for growth areas,” said FedEx Freight Vice President of Physical Assets Dennis Beal. “Our market shares in that area continue to grow, so Providence is very important to us.”
The Industrial Drive facility is nearly double the capacity of the old center – increasing the number of dock doors from 28 to 48 with a 4,800-square-foot maintenance shop. The company also added 12 employees to handle the growing workload, Beal said.
FedEx Freight is different from its sister FedEx air and ground organizations by its cargo. Most of the cargo FedEx Freight moves is more than 1,000 pounds, mainly from manufacturers to retailers.
“Nearly everything you see in the mall or in the grocery store was brought there by one of our freight trucks,” Beal said. “Our focus is on bigger shipments.
“Much of what we deliver is on a next-day or second-day delivery basis. We go as far as 600 miles for next-day delivery and 1,600 for second-day.”
Beal said the Providence area also provides a suitable infrastructure for ground shipping.
He said the company works with transportation departments to prevent traffic and safety problems as the service industry – and roadway congestion – continues growth.
FedEx Freight was established in 2001, with headquarters in Memphis, Tenn.
The company’s fiscal year 2003 revenue was $2.4 billion, with more than 56,000 shipments every day.
