How RPS became the engine behind FedEx's parcel dominance

FedEx's decision to acquire RPS as part of its 1998 purchase of Caliber System for $2.4 billion fundamentally reshaped the company's parcel business and the ground delivery market itself, according to FreightWaves. When FedEx bought RPS in 1998, the carrier was processing 1.3 million parcels daily compared to FedEx Express's 3 million. FedEx wasn't even seeking an LTL operation at the time but needed to buy Viking Freight to secure RPS. The strategy paid off so well that founder Fred Smith acquired American Freightways in 2001 to fill gaps in lower 48 coverage. The numbers tell the story of a market transformed by e-commerce and free shipping. FedEx Express volume has since dropped to 1.8 million packages per day, while FedEx Ground, the successor to RPS, now handles 13 million pieces daily. The shift reflects a complete reversal in parcel mix from 80% business-to-business freight to 75% lightweight business-to-consumer shipments. RPS, founded by Daniel J. Sullivan in 1985, pioneered the low-cost ground delivery model using independent contractors with their own vans and later master contractors. By 1996, RPS held over 15% market share and served 100% of U.S. population while competitors like Spee Dee Delivery, GPS, and OnTrac collectively held less than 5%. That operating model became the blueprint Amazon and startups like Better Trucks, Jitsu, and OnTrac would eventually adopt. FedEx announced Monday it was spinning off its Freight division into a separate company.