Essay about The Smal Package Express Delivery Industry

a) Economies of scale—the top three carriers (Federal Express, UPS, and Airborne Express) serve slightly more than 85% of the domestic express mail market. All three carriers deliver a high volume of packages, and thus, are able to spread fixed costs over more units. Also, each carrier has integrated technological systems that improved operational efficiency. In addition, intensive training programs of employees increase service and delivery efficiency.

Fedex is the fastest delivery service. Faster than me, faster than cheetahs, faster than god… I will let the decisions arise out of mental thought. All my life I have been blind to the facts, FedEx can deliver before they even know they delivered. Only when I walk in the distribution centers, I will understand the velocity at which these valiant men and women work to get the services one desires. Like a beehive on speed, the boxes and products are alive. Each with the their own story, a brave and exquisite on the path to satisfaction.

In the case file for FedEx, Fred Smith the founder of FedEx mentions how business were having trouble figuring out how to get urgently needed packages to the right places quick and Smith knew that the need for business to move packages fast would only grow with time. From the beginning, FedEx was built on a foundation of obsessive customer focus (“FedEx,” 2015). Needs in marketing is the state of self-deprivation (Vander Schee, 2016). The tenacious pursuit of fulfilling customer needs in FedEx’s early days led to developing what is known at the company today as the purple promise, a

FedEx has two major customers who consist of businesses and individual customers. These business customers have accounts with FedEx to arrive at their location to pick up packages daily or weekly. Two-thirds of FedEx’s business comes from these customers so FedEx curves their operations to satisfy this clientele. Since FedEx’s competition is trying to acquire some of this clientele they have begun to operate and market to this clientele more effectively. Individual customers are also in FedEx’s internal environment. These customers represent one-third of their business. With increased competition from competitors FedEx has marketed to this market substantially. They have created boxes that are prepaid for shipment as long as the contents fit into the box. This has effectively increased business amongst individual customers for FedEx.

In this report we focus on the two main competitors in the package delivery industry: Federal Express Corporation (FedEx) and United Parcel Service of America, Inc.

In the past there was no thing as overnight express delivery for packages or freight. Then the top 3 competitors in the delivery service industry that held 85% of the market were Airborne Express (AE), United Parcel Service (UPS) and Federal Express (FedEx) and, the remaining market share was among six second-tier companies. In the past few years, the express mail businesses had grown extremely fast due to the ability to provide and fulfill overnight shipping accompanied by next-morning delivery services for both individuals and businesses customers. By 1996, this segment of the expedited shipment delivery had grown to a $16-17 billion dollar industry business in the US alone.

By capitalizing on this strategy, FedEx was able to boost its average delivery volume in 1976 to 20,726 packages per day via its three services, Priority-One, Standard Air, and Courier Pack, compared with an average of 10,521 delivered daily the prior year. Clearly the company’s calculated use of strategically-located hubs, nighttime flight routes, and limited package size allowed the company to carve out a niche by reliably delivering packages on an immediate, overnight basis.

Rivalry among established companies: This industry is highly consolidated with only 3 major players - somewhat an oligopoly. The industry is also characterized by numerous price wars between the 2 giants, namely, UPS and FedEx. Rest of the companies generally follow the trends set by these two firms or fall out. The exit barriers to this industry are high. This is due to the investments in hubs, vans, jets and other capital extensive infrastructure.

United Parcel Service (UPS), is the world’s largest express package delivery firm that handled more than 4.7 billion packages and documents in 2015. This global transportation and logistics service provider operates in more than 220 countries, and offers an array of supply chain management solutions (UPS Fact Sheet, n.d.). The firm has diversified its products and/or services to include freight forwarding and logistics services via air, ground, rail, and sea. U.S. Domestic Package operations, International Package operations, and Supply Chain and Freight operations are the three operating segments UPS. Through technology advancements UPS delivers online package tracking, e-commerce services, and specialized

FedEx’s new product Courier Pak makes sense because of its’ high profit margin and potential to generate new volume. Out of the 3 services that Fed Ex provides, CP yields the highest profit margin at 66% while Priority-One is at 55% and SAS is only at 27%. In addition to this, the company believes that it will be able to boost up sale of CP from 1300 to 6000 packages per day. This shows that CP is the most profitable and huge potential for growth.

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)

In 1907, a 19 year old entrepreneur James E. Casey and his partner developed a business for the Seattle, Washington area that provided quality messenger services. Within a century, the company managed to globalize the industry of delivery services along with a name many have

UPS and FedEx are the leading parcel carriers in the U.S. FedEx has significantly expanded their capability to compete with UPS’s dominant ground delivery service.

UPS has been in the package delivery business for 95 years, providing services to businesses and consumers worldwide in more than 200 countries. In 1994, UPS began to investigate the potential of e-commerce and started an internal group focused on enabling e-commerce. UPS redefined its core business and found ways to change its structure and processes, forming new businesses to take advantage of new opportunities. UPS was interested in finding ways to leverage their extensive infrastructure and expertise in basic transportation of goods, services, and

The two core elements of the business are the overnight delivery service and the ground-based delivery service. The overnight service utilized aircraft in a hub-and-spoke network system that covers much of the globe, with the objective of delivering packages overnight or as quickly as possible to as many locations as possible. This is the company's premium service and the one that is most commonly available around the world. UPS competes with FedEx, DHL and TNT, along with