Flexibility And Speed Of Fedex Corporation Commerce Essay

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FedEx Corporation (FedEx) provides transportation, e-commerce and business services. The company operates via four business divisions: FedEx express, FedEx ground, FedEx freight and FedEx Kinko's (FedEx Corporation ND).

For instance, as the largest revenue source of FedEx Corporation, FedEx Express has highly flexible and efficient services provided to customers with different needs, as is shown in Table 1:

Table 1 FedEx Services



Transit times

FedEx service

Service features


Up to 68kg


Next day by 9am to 10am

FedEx Europe First

Proof of delivery

Money-back guarantee

Shipment tracking

Dangerous goods accepted

Customs clearance included

Next day by 12 noon or end of business day

FedEx International Priority


Next day by 8am or 8.30am

FedEx International First

Next day by 10.30am or 3pm

FedEx International Priority


Next day or up to 4 days

Between 68 and 1000kg


2-4 days

FedEx International Priority Freight


Up to 50kg


2-5 days

FedEx International Economy

Proof of delivery

Shipment tracking

Customs clearance included

Up to 68kg


4-6 days

Between 68 to 1000kg


FedEx International Economy Freight

Meanwhile, besides courier and freight services, FedEx has a series of supply chain services as well; the prime objective of FedEx Global Supply Chain Services (FGSCS) is to offer customers comprehensive and strategic supply chain management and solutions, incorporating FedEx transportation and IT integration in order to support the specific needs of customers.


To gain a comprehensive global coverage, FedEx has an integrated global network, comprising 53,500 drop-off locations, more than 280,000 team members worldwide, of which around 14,800 within Europe, as well as 684 aircrafts, 375 airports served worldwide and 80'000 vehicles and trailers.


At the very beginning of shipping goods by FedEx, customers could find instructions for every type of shipment and will be guided step-by-step, either by well-prepared online applications or by phone. FedEx also provide customers with continuous shipment visibility, which means customers can check the status of their shipments across the world in real time, step by step, through to delivery.


Since FedEx has a remarkable on-time delivery record based on the reliability of their systems, FedEx is confident enough to offer a money-back Guarantee if they miss any published delivery time by even 1 minute.

Strong brand image

FedEx has a strong brand image, which can be regarded as their top advantage. The company had been ranked first, ahead of Deutsche Post and UPS, in the Fortune's list of most admired companies in the delivery sub-segment during the past few years. FedEx is amongst the most recognized names in the globe express delivery services segment. The four business divisions operate under the FedEx brand name, and the brand image makes it possible that while referring to express transportation, the name 'FedEx' can emerges in the consumers' mind straightaway.

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However, while creating so many values for their customers. Their supply chain sometimes suffers from various pressures.

Pressure 1: High operating costs

In order to provide the customers with diversity and efficiency, the complexity of organization would increase correspondingly. As a result, not only the operating but also the labor costs are significant. Given a negative example, in 2004, merely by diverting anxious caller to its Web site, FedEx saved as much as $1.87 per call. FedEx claimed its call centers handled 83,000 fewer calls per day than in 2000-which was 470,000 calls per day at that time-a saving of 57.56 million dollars per year (Gage 2005).

Pressure 2: Great opportunity to meet extensive competition

Because of the large scale of their business, FedEx has bigger possibilities to face intense competition particularly in the freight and express package markets. The competitions in this industry is mainly based on factors such as price, extent of geographic coverage, ability to track packages, frequency and capacity of scheduled service, reliability and innovative service offerings. Its key competitors worldwide include other package delivery companies, principally UPS, DHL, TNT, Royal Mail, regional express delivery plants, passenger airlines offering express package services and airfreight forwarder. Most of its key competitors such as UPS and DHL have strong international operations particularly in Europe, which could put FedEx at a competitive disadvantage (Datamonitor 2007).

Pressure 3: Increasing transportation cost

FedEx is exposed to fuel risk arising from operating one of the largest transport fleet. As a result of increased oil prices, higher transportation costs had a substantial impact on materials expense of the company. For instance, due to the skyrocketing fuel costs, in the year 2008 FedEx reported a fiscal fourth-quarter loss of $241 million, compared with a year-earlier profit of $610 million. Furthermore, for the full fiscal year, the company reported operating income of $2.08 billion, down 37 percent compared to the previous fiscal year. Net income dropped 44 percent to $l.l3hillon (FedEx Corporation 2008).

Pressure 4: Low mistake tolerance

As FedEx makes their services backed by the money-back guarantee, in order to offer shippers the ability to receive time-definite shipments, there is less chance for them to delay the transportation by even 1 minute. For not only do the carriers lose revenue from these shipments, it is costly and time-consuming for them to process the claims and adjust their invoicing (Sailor 2003). Finally, even though the package was delivered "late," the carriers still sustained the cost to deliver the package to the consignee.

Pressure 5: Large advertising cost

FedEx promotes its brand through large quantity of broadcast and print advertisings, corporate sponsorships, and special events, which can bring it significant cost. For instance, the company's advertising expenses amounted to $374 million in 2010, $379 million in 2009 and as large as $445 million in 2008. (FedEx Corporation 2010)


For any company, it is essential to understand who its customer is and what its customer genuinely values. Based on these values, potential products can then be developed. While doing this, the company has to deal with the pressure that these values put on its supply chain. Therefore, it's crucial for the company to built appropriate supply chain strategy, otherwise the pressures on the supply chain may lead to serious consequences.