Fedex vs. Ups

In 1975 UPS reached a milestone in that it could promise to deliver a package to every address in the US. The same year the company expanded outside the US with its first delivery to Ontario Canada. The following UPS began service in West Germany with 120 of its trademark delivery brown vans.

UPS send their first flight to Asia in 1990. In 1992, they established the ability to track all ground packages. Between 1989 & 1993 UPS started delivering to 200 countries and territories and deliver 11.5 million packages and/or documents a day for over a million loyal customers across the world. In 1994, UPS’ website goes live www.UPS.com. In 1996, UPS customers have the ability to track their packages. UPS sells 10% of their stock in the first sale, in 1999, on the New York Stock Exchange. In 2000, customers now have the ability to calculate rates, find transit times on any digital device in the United States. Also in 2000, online tracking hits record high at 6.5 million in a single day. UPS established direct flights, in 2001, to China with China Express. The Intra-Asia hub opens in 2002, in Philippines. In 2010, UPS releases their new brand platform to show their customers their variety of logistics and supply chain management capabilities.

FedEx was roaring high and was killing all its competition by making them weaker with time.

From the beginning UPS and FedEx both had very different strategies in the delivery industry. UPS was focused on ground transportation, as more of a substitute for United States Postal Service. UPS has over 100,000 ground transportation vehicles compared to only 20,000 ground vehicles in service at FedEx. The focus of FedEx has always been to be an air delivery company that is trying to pursue a strategy of being able to deliver a parcel the next day. FedEx proves this focus with nearly 700 jets in service compared to only 300 at rival UPS. FedEx and UPS both say the market of overnight delivery as the direction to pursue. UPS was able to accept this and move forward allowing its ground department to absorb the expense, while FedEx suffered a great deal and we hit with higher cost do to them having to hire independent contractors. Over the years, these two companies have changed their overall positioning strategy in the domestic delivery industry. As

UPS has announced that after more than 90 years as a private company, it was planning an initial public offering to become a publicly traded company. In response to this, we will first analyze UPS¡¦s business strategy and it¡¦s sustainability of its current performance. Then we will look at key factors to estimate the UPS¡¦s market capitalization value using FedEx¡¦s multiples as well as ¡§best in breed¡¨ company premiums. From this, we concluded that UPS¡¦s IPO should create a market capitalization for UPS between $17,520 million and $30,415 million.

UPS started delivering packages by air as early as 1929 with United Airlines operating ford Tri-motors. UPS’s first airline venture started as a 50/50 partnership with DHL in a company called International Parcel Express (IPX). IPX hired a group of former Transamerica employees to gain the air carrier certificate. With 60 aircraft in the fleet of IPX by 1987, it was becoming difficult to manage with all the different contract carriers and aircraft. UPS announced it would be taking over all air operations in 1988 and using the IPX certificate as the basis for UPS airlines. UPS Airlines started on January 28th 1988. Ten months after receiving the operating certificate from the FAA, UPS Airlines had grown to an operation of 94

DHL 31%, USPS 8%, FedEx 27%, and Amazon 3%. From these numbers Amazon is a very small player in the shipping department. Every competitor, expect DHL, are currently shipping the excess freight that Amazon cannot maintain. With Amazon 's move to acquire more of the market, these competitors need to be on the lookout because portions of their market share can be taken away. These major shipping firms only provide shipping services not offering household products like Amazon. With Amazon starting by semi-supplementing their shipping avenues, Amazon has the potential to grow even larger. The market cap numbers are not a good basis to judge market share on since FedEx and UPS have the majority of the market in the shipping industry. FedEx and UPS are the major competitors against Amazon and its new shipping department. FedEx and UPS had the most recent annual net income of $50.3 billion and $58.3 billion respectively. They represent the majority of packages delivery from individuals, businesses, and online retailers.

UPS began as a messenger company in Seattle Washington. Jim Casey established a business delivering phone and telegraph messages, and the delivery of shopping bags and parcels to the homes of department store consumers. Merging with Merchant Parcel Delivery provided Casey’s messenger service with motorcycles and vehicles for delivery (“History Timeline,” n.d.). Casey and his management team developed an organizational culture centered on understanding then achieving the needs of clients. In 1919 American Messenger officially changed its name to United Parcel Service (“History Timeline,” n.d.). State by state UPS worked to achieve deregulation which allowed UPS’s to operate in the small parcel segment within the United States. In 1975 UPS

FedEx was first established in 1973 as a logistic company with the name Federal Express that be created by founder and first CEO Frederick W Smith. The Headquarters is in Memphis, Tennessee in the US. The company became well known for its fast and reliable delivery service around the world. On its first night of operation FedEx delivered 186 bundles to 25 urban locations in the US with only 389 employees and a 15 Dassault Falcon aircraft. In 1980 FedEx purchased a system for live updates on the packages. In this system, FedEx drivers share the current locations from the trucks to provide updates of the packages to the customers. This information was sent to a central computer of FedEx then the company improved the update system by introducing FedEx.com webpage. This webpage allowed the tracking data to be easily accessible. However, recently, FedEx uses Savvy bundle for packing and tracking the products across couriers. (Baldwin, 2016)

The parcel service industry is made up of four main competitors. These competitors are UPS, FedEx, Airborne Express, and the U.S. Postal Service. Since 2000, American consumers have spent more than $50 billion to ship parcels, packages, and overnight letters. New parcel distribution patterns developed due to the way U.S. manufacturing companies are operating. The Internet has expanded the reach of direct marketing, particularly with retail transactions requiring home delivery. Globalization has also created the need for parcel carriers to expand worldwide.

FedEx has not fared as well as UPS in financial performances. FedEx¡¦s total revenue has grown 60% from 1996 to 1999 while their net income has doubled in the same period. FedEx¡¦s acquisition of RPS will challenge UPS for the ground delivery business and affect the sustainability of UPS¡¦s advantage in the ground deliver business. FedEx has been competing well in the higher-end, high-service segment of the package delivery market. Although, digitations of documents and emergence of electronic signatures is threatening the express business which FedEx has the advantage over UPS.

UPS was formed in 1907, by 19-year-old Jim Casey. Originally, focused on delivering messages in Seattle. Over the 98 years since its founding, it had transformed itself several times i.e. from messages to package delivery, to international air Transport Company, finally, in the 1990s, to a logistics company. It is world’s largest package-delivery company. The company was leader in specialized transportation and logistics and it Serves 200 countries.

The overall organizational structure of the FedEx Corporation consists of six independent business units: FedEx Express, FedEx Ground, FedEx Freight, FedEx Custom Critical, FedEx Trade Networks, and FedEx Services, each of these businesses work in different sectors. “Although FedEx Corporation is the parent company of the six independent business units, it still offers strategic leadership at corporate level and they operate on their own and therefore are solely responsible for their decisions and ultimate success.” According to Boundless Management, the FedEx organization operates as a functional structure. “A functional organization is a common type of organizational structure in which the organization is divided into smaller groups based on specialized functional areas, such as IT, finance, or marketing.” Since the above chart displays teams in different parts of the organization, it is clear that FedEx also operates under functional departmentalization. Overall, FedEx puts more emphasis on its greatest asset, its personnel. By creating incentives like career advancement and ongoing career development helps to retain employees and encourages them to attain personal and team goals. It was Fredrick W. Smith, the CEO and founder of the organization whom insisted that employees should be an integral part of

FedEx was established on June 18, 1971, founded by Fredrick W. Smith, in Little Rock, AR. FedEx is a well known American corporation that brings courier global delivery service to its customers. Having such a wide range of portfolios, FedEx has been able to incorporate many different delivery systems for maximum customer satisfactory, with the help of e-commerce, and global delivery service it is no surprise that FedEx has consecutively been ranked amongst the most admired and trusted employers.

FedEx Corporation, situated in US, is one of the leading supply chain management solution providers in the world. With annual revenues as high as USD33 billion, the company offers incorporated business