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FedEx is considered the number one express logistics service provider in the world and has been going strong for over thirty years. CEO, chairman and President of the multibillion dollar corporation; Fredrick Smith has led the company to astounding growth by acquiring smaller logistics franchises and sub-companies by applying the FedEx principals and philosophies to guarantee their growth and stronghold on logistics market. FedEx continues to grow globally because of their ability to manage their supply chain, transportation and information services. With revenues of over 33 billion dollars annually, FedEx offers a unique business application to the express logistics arena (FedEx Corporation, 2010).
FedEx Corporation is led by Frederick W. Smith who is the current CEO and the founder of the company since 1971. While undergoing challenges of inefficiency of package delivery systems, FedEx was established to resolve the US's, logistical delivery by providing services across the US that was speedy and reliable. FedEx's primary operations started off in Memphis, TN., with approximately 14 aircraft being on its initial voyage. On its primary move forward, FedEx accomplished nearly 200 packages in over 25 different cities with complete success. In the mid 70's, FedEx utilized aircrafts such as Boeings 727's and MD, DC-10's to kick off their company to an astonishing and consistent 40% annual growth rate by the early 80's. Several acquisitions in the early 80's of smaller logistical companies played a significant role in FedEx's explosive growth. With these acquisitions, FedEx has become the world's largest full-service cargo airline to date. The acquisition of Tiger International Inc. in the late 80's was the purchase that solidified this ordeal by giving FedEx the additional 21 country cargo routes previously established by Tiger International before FedEx's buy-out.
It wasn't until 1994, where FedEx trademarked their name officially. Prior to FedEx's name, Federal Express was what the company was known by. In 2006, FedEx Corporation acquired Watkins Motor Lines and ANC Holding Limited to expand its business in long-haul LTL services and all United Kingdom domestic market share. In 2007, the company acquired Tianjin Datian W. Group Co. Ltd. of China, Prakash Air Freight Pvt. Ltd. and Flying-Cargo Hungary Kft of India and Hungary to expand their market share in Asia. (FedEx, 2010).
FedEx Logistics Responsibilities
FedEx Corporation utilizes subsidiaries that are specific in their area of expertise and this allows the company to maximize profits and ensures premium levels of quality and reliability from each of their businesses. These subsidiaries often called FedEx SpartPost, operates large and ever growing distribution centers across the east, west and international bodies to ensure detailed and accurate parcel and freight distribution (FedEx Corporation, 2010). These SmartPost distribution centers account for over 200 different country responsibilities and are located in strategic locations to ensure prompt and accurate deliveries.
With this level of responsibility, FedEx transportation management has an outsourced management solution that provides multi-modal, maximally optimized service by select carriers within the receiving country. The outsourced carriers allow for FedEx to overcome the challenges of global trade through duty drawbacks, freight forwarding, and customs brokered, insured delivery to include their U.S., international parcel and freight. (FedEx Corporation, 2010). With this flexibility, the customer has the choice of having their shipment go either full air, ocean, or rail; but typically utilized by a combination that would allow for a very competitive rate if time constraints are not an issue.
The FedEx Corporation breaks down into sub departments of which their financial reporting companies fall under the FedEx umbrella. Below are the sub-companies and a brief excerpt of what they provide the overall company.
FedEx Services - FedEx Corporate Services, Inc., this company began in late 2000 and its function is to coordinate sales, marketing, customer service and worldwide supply chain service support for the global brand. (FedEx, 2010).
FedEx Express - FedEx Express is the world's largest express transportation company, providing the quickest and most efficient means of transporting goods across the country and over 200 countries worldwide. (FedEx Corporation, 2010).
FedEx Ground - FedEx Ground specializes in the door to door delivery that is very comparable to the USPS but has point to point tracking and a guarantee that is unprecedented in the U.S. The avenues at which they do this are through FedEx Home Delivery and SpartPost (FedEx Corporation, 2010). Their system is a lot more sophisticated than that of their competitors and with a price range that is well worth their services.
FedEx Freight - FedEx Freight provides services in the U.S. and internationally for reliable delivery of freight shipments of more than 150 lbs. FedEx's competitors typically don't ship anything over 70lbs., and if they do, it will cost considerably more than FedEx's services. When you say "freight", FedEx comes to your location with pallet jack, ready for pick up.
FedEx Office - Formerly FedEx Kinko's Office and Print Services, FedEx Office stores provide high-speed Internet access, printing, binding and other professional office needs as well as the drop-off points for the items delivered by FedEx Express and FedEx Ground (ProQuest, 2010).
FedEx Custom Critical - FedEx Custom Critical handles JIT delivery, heavyweight airfreight, overnight shipping, and special delivery which are monitored by GPS. With this type of technology, you have exact location of your goods at all times.
FedEx has more than 138,000 employees that comprise of the worldwide FedEx air infrastructure. Their headquarters, which is located in Memphis, TN., generates revenue of just under 22 billion dollars a annually. Approximately, three and a half million packages of freight are processed by this hub and sent internationally to over 220 different countries to include the United States. The multi-billion dollar service provider owns over 600 aircraft worldwide. Besides the major hub in the US, FedEx also has over 8 other hubs to aide in their air infrastructure in delivery worldwide. They can achieve delivery times in less than two days typically.
FedEx's Trade Networks extensive ocean freight services reaches major world markets via ocean freight. FedEx utilizes the traffic lanes connecting North America, Asia and Europe as their major avenue in transporting internationally. Their customized cargo management services provide the most cost effective ocean container utilization, to which they maximize space availability and profitability. As an ocean transportation provider, FedEx Trade Networks contracts with more than a dozen ocean carriers for trans-Pacific and trans-Atlantic services (FedEx Corporation, 2010).
FedEx's ground fleet is comprised of over 50,000 tucks, and is tasked with the grunt work of freight pick up and drop-off. Although these trucks are assigned to specific locations they play a significant part in hub to hub transfer of parcel and freight. FedEx ground has over 700 worldwide service centers, 1,800 office locations, 8,000 authorized ship centers and just under 50,000 drop boxes (FedEx Corporation, 2010)
Even though the weight limit of international shipping are the same as with domestic shipments, FedEx handles them with the same ease and confidence, regardless of the products destination. The modes of transportation in international shipping encompass air, land and ocean methods, but are often dictated by the customers' needs. With any shipping need, the customer has many options of how they want their shipment handled and delivered. Of course the price will follow suite invariably, the customers' needs are a priority to the company, with competitive pricing that follow its quality.
Delivery Services System
FedEx's central hub is in Memphis, TN., and Primarily Memphis's International Airport. With the logistics strategy of consolidation and distribution methodology, FedEx has established this as their primary form of logistics streamlining. Even if packages are closer to their destination than the Memphis International (MEM) airport, packages or parcels are still routed to the hub for a streamlined distribution and delivery schedule. The network that FedEx has instituted has been state of the art and its efficiency has often been emulated in the logistics arena. With International shipments, they follow the same methodology but at a different hub (FedEx, 2010).
FedEx uses distribution centers in distributing their packages. Packages delivered from the central hubs sent to the distribution centers go through the process of sorting and processing. The sorting process is initiated by barcodes and conveyer belts that are done automatically. The packages are then grouped together to head out to the same distribution hubs for further processing. With many packages following unique locations, many may flow to different distribution centers before they are finally fragmented and delivered (FedEx, 2010).
During FedEx's fragmentation, which is the final step in final processing, the packages are sorted by zip code and shipped to the USPS mail stream to reduce transit time. The USPS handles this effort, which was the service that Parcel Direct provided until its acquisition by FedEx was made. During fragmentation processing, FedEx pinpoints the final destination and assigns the freight or parcel for final delivery (FedEx, 2010)
System utilized to track (Method of track)
FedEx offers five methods of tracking the packages or freights. The five methods are: Track by Reference, Signature Proof of Delivery, My FedEx, FedEx Desktop, and Access FedEx Insight (FedEx Corporation, 2010). The track by reference is what we typically see and are familiar with. FedEx has a friendly online web-portal which the customer can keep continuous monitoring of their shipment. In their portal, they can see the actual signature of the recipient that signed for the freight or parcel. With the FedEx InSight, the shipper and recipient can monitor shipments, bill of lading, invoices and actual points of destination in real-time. With this software, FedEx can manage their supply chain and correct issues that may arise in the future.
FedEx's SWOT Analysis
The key strength of FedEx is that it operates on a global scale and does it with exceptional ease. FedEx uses and continues to improve its resources with the use of technology to provide customers with value added quality for the same price. FedEx has a great reputation of a strong brand for continual success of nearly years of service. As the pioneer of the hub and fragmentation methodology, FedEx is considered the forefront and father of logistical transporting of freight and parcel service that is expedient and guaranteed.
While the company provides great service worldwide, the rising prices of its services are a major weakness for the logistics industry. Because the primary method of "express" comes with aircraft being the major part of the logistical process, staying competitive is the biggest challenge for the company.
Even with great challenges with the competitors, there are more global expansion opportunities. As previously done many times over the years, contracts with large corporation and possible joint venture opportunities often times lead themselves to FedEx because of their stake in the industry and their equity to overcome bankruptcy.
The threats are constantly created, especially with the relationship with foreign countries and new and upcoming world economic conditions. Other competitors in the industry make it that much more difficult for FedEx to stay competitive in the industry. Some countries want to stay within their country when it comes to transporting their goods and many companies encourage the use of their own countries methods of transporting goods. Countries are even imposing fuel surcharges for logistical operations, forcing FedEx to offset costs by transferring surcharges to the customer.
Conclusion and Recommendations
It is evident that FedEx has the stronghold in the logistics servicing worldwide. FedEx has a healthy history of nearly 40 years of endurance and strategy deployment while acquiring many smaller companies to attain such notoriety. The company always seems to think creatively and incorporates ingenuity in every business decision they make. Utilizing the latest technology in their logistical processes, FedEx will always seem to stay on top of the logistics industry as thee logistical corporation to handle corporate parcel and/or freight. As a recommendation for the logistics mogul, I would recommend that FedEx consider hedging fuel costs for future growth. I would also recommend that FedEx somehow cut costs for common domestic shipping, as their competitors have consistently shown fixed pricing on parcels up to 70lbs. shaking the stigma of being a "expensive" logistical carrier provider doesn't carry any benefits but when it comes down to it, FedEx's value for the shippers needs surpasses its predecessors by a landslide. Cutting costs domestically and hedging fuel for the future will enable FedEx to stay on top as being the world's most successful, dependable and fastest way to ship goods both domestically and internationally.