Ups vs Fedex

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Executive Summary
Based on our analysis regarding competitive advantage, company comparison, financial data and operational excellence, we believe UPS will be a better performer in the long run as compared to FedEx.
Competitive Advantage
UPS has a first mover advantage over FedEx, beginning air delivery service in 1929. Although FedEx was the first to own and operate their own planes and introduced the innovative “hub and spoke” distribution pattern, UPS leads in specialized transportation and logistics services. In 1975, UPS promised package delivery to every address in the United States; FedEx was not able to guarantee delivery in every area. When deregulation of the domestic airline industry and trucking industry occurred, the
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FedEx volumes in China grew by more than 50% between 2003 and 2004. UPS was active in China beginning in 1988, and was the first carrier to offer nonstop service from America. By 2003, UPS had 6 weekly flights to China with direct service to Beijing and Shanghai, serving about 200 cities with expected growth of about 60% on its main route. UPS also predicted peak-season demand to exceed capacity.
Financial Analysis
UPS appears to be the better bet for the long-term because its historical financial results are superior to and more consistent when compared to FedEx. If we consider EVA (Economic Value Added) as the key gauge for evaluating both firms, UPS is clearly the better performer. In the twelve year period of 1992 through 1993, UPS created $4.33 billion in cumulative economic value, while FedEx destroyed $2.25 billion.

Because of its superior profitability and cash generating capabilities, UPS has better prospects for funding growth through internal and external sources. Even if we weaken the assumption of past history as a good indicator for the course of future financial performance and management, the data still indicates UPS is in a better financial position for taking on future growth.
Decomposing EVA
UPS outperformed FedEx

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