FedEx Express Division: The Cost of Service Delivery

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My organization is FedEx, the courier company. I once worked there and still have friends there. The company has a number of different divisions but my project will be focused on the Express division, which is focused on the overnight courier business. The division has a geographic structure, with operating divisions all over the world. The prices are generally for services, so for example a domestic envelope by 9am or a domestic envelope by 10:30am. The revenue side of the business is entirely on the pickup side, as no revenue is charged to receive a package. Therefore, the entire delivery side of the cost structure is either a fixed cost or a variable cost that is built into the price. This would have to be determined either way is reasonable and I do not know how FedEx does this. The cost of delivering the service is more difficult to ascertain, but I believe that it can be estimated. Most of the service cost is considered to be a fixed cost. Intuitively, this makes sense because one additional package or envelope has a negligible impact on the cost of flying the plane, and the plane's schedule is not going to change in the short run. The variable part of the cost comes from the cost of the courier working the route where the pickup is made. If some conclusions can be reached as to the number of packages picked up by a courier in a day, an estimate of what the variable cost of a package might be. There are also costs associated with trucks, but for the sake of

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