Fedex Case Summary
What this case is about
FedEx vs. UPS
China & US agreement for the establishment of air-cargo hubs in China and landing rights for commercial airlines at any available airport
China is battleground for the two package delivery giants
Assumption: success in China was widely seen as the litmus test for corporate survival in the new millennium
No guarantee for how new cargo routes would be allocated between UPS and Fed Ex
Which company was better positioned to attract the capital necessary to win this competitive battle?
Current facts
FedEx
had largest foreign presence in China invented customer logistical management innovative, entrepreneurial, operational leader
2003
assets: $15.4 B
Net Income: $830 M
Revenue: $22.5 B
Performance assessment: superior financial returns
No unions – flexible with costs
Model asset attentive
UPS
world’s largest package-delivery company historically bureaucratic and industry follower overhaul of image repositioning as leading provider of logistics and supply-chain management services small-package market - $60 B vs. worldwide supply-chain market is $3.2 T everything from the moment something gets made until it gets delivered for final delivery, and then after market, it’s parts replacement
2003
assets: $28.9 B
Net Income: $2.9 B
Revenue: $33.4 B
Performance assessment: long-term competitive return
History of FedEx
1971
Fred Smith Yale
Purchase planes instead of using cargo space on passenger airlines like competitors
Largest venture-capital start-up at the time ($91 M)
No unions!
1970’s
severe losses
1980’s
generated more revenue than any other U.S. air delivery company acquired more trucks/aircraft/capital competition emerges companies started imitating the hub system and acquiring airplanes
UPS positioned overnight letter at half the price
Ad about quality quelled this
Owned market for express delivery
1990’s
Operational leader
Award from president
1st company to win in service category focus on customers, total quality
FedEx vs. UPS
China & US agreement for the establishment of air-cargo hubs in China and landing rights for commercial airlines at any available airport
China is battleground for the two package delivery giants
Assumption: success in China was widely seen as the litmus test for corporate survival in the new millennium
No guarantee for how new cargo routes would be allocated between UPS and Fed Ex
Which company was better positioned to attract the capital necessary to win this competitive battle?
Current facts
FedEx
had largest foreign presence in China invented customer logistical management innovative, entrepreneurial, operational leader
2003
assets: $15.4 B
Net Income: $830 M
Revenue: $22.5 B
Performance assessment: superior financial returns
No unions – flexible with costs
Model asset attentive
UPS
world’s largest package-delivery company historically bureaucratic and industry follower overhaul of image repositioning as leading provider of logistics and supply-chain management services small-package market - $60 B vs. worldwide supply-chain market is $3.2 T everything from the moment something gets made until it gets delivered for final delivery, and then after market, it’s parts replacement
2003
assets: $28.9 B
Net Income: $2.9 B
Revenue: $33.4 B
Performance assessment: long-term competitive return
History of FedEx
1971
Fred Smith Yale
Purchase planes instead of using cargo space on passenger airlines like competitors
Largest venture-capital start-up at the time ($91 M)
No unions!
1970’s
severe losses
1980’s
generated more revenue than any other U.S. air delivery company acquired more trucks/aircraft/capital competition emerges companies started imitating the hub system and acquiring airplanes
UPS positioned overnight letter at half the price
Ad about quality quelled this
Owned market for express delivery
1990’s
Operational leader
Award from president
1st company to win in service category focus on customers, total quality