Fedex vs. Ups

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FedEx Corporation Federal Express was founded in 1971. In 1973, FedEx started operations officially and its hub-spoke distribution pattern enabled it to offer cheaper and faster service than its competitors. By 1981, UPS began to enter into the overnight air market and the United States Postal Service (USPS) cut its overnight letter at half the price of FedEx’s. Despite facing such extreme competition in the industry, FedEx could still excel due to change in the business environment. The success of the firm could be attributed to several factors: 1. Deregulation: Deregulation of the domestic airline industry allowed FedEx to purchase several Boeing 727s to replace smaller planes. Also, trucking industry deregulation permitted FedEx to…show more content…
7. Investment Expenditures: Between 1992 and 2003, FedEx raised an annualized rate of 34.64 percent in capital expenditures while UPS raised that of 36.78 percent in capital investment expenditures. International Package-Delivery Market FedEx had invested heavily in European delivery market. However, since 1984 an estimated loss of $1 billion in Europe compelled FedEx to sell its hub in Brussels, Belgium to DHL and relied on local partners to continue its delivery services. In 1995, FedEx expanded its services into Latin American and the Caribbean and introduced a next- business-day service between Asian countries and the United States. UPS entered into European market with the acquisition of 10 European courier services in 1988. In 1995, UPS announced a $1 billion expansion into European operations over 5 years. For customer’s convenience, UPS created a system which helped to code and track packages and automatically billed customers for customs’ duties and taxes. Potential for China: According to experts, China would become second-largest economy by 2015 and the largest by 2039. Inter-Asia trade projected at growth rate of 16.8 percent annually through 2005 and air cargo market expected to grow at 30% annually over five years in China. Both FedEx and UPS mostly focused on the import/export package market which was nearly $1 billion rather than on the intra-China domestic market which was approximately $800 million. Moreover, the

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