In the year 2004, the U.S. domestic express delivery market worth $45 billion. Mainly, this vast market is divided between the two major package delivery companies, United Parcel Services (UPS) and Federal Express Corporations (FedEx). This service is consists of three categories: 1) Weights: Letters, Packages, Freights
2) Mode of Transit: Air, Ground
3) Timeliness: Overnight, second-day, 3-day delivery, regular delivery (4 or more days) The air-express portion of the entire U.S. market worth $25 billion, in which concentration is in letters, packages, overnight and deferred, and air or air-and-ground. The UPS obtains 22 percent of its revenue from the air-express market where as FedEx which virtually all their activities are based on express delivery. UPS entered in the express delivery market with a price strategy that offered half price as FedEx fairs, but it was not a successful plan because of lack of service quality and not delivering packages on time. Since then, FedEx has the advantage in package express delivery market. In addition, due to the new agreement between China and the U.S., there is a vast opportunity for both companies to improve their services. According to economic and industry experts, China would become the world’s second-largest economy within 11 years and the largest by 2039.Therefore FedEx and UPS focused primarily on the import/export package market and not the intra-china domestic market, using local numbers to pick up and deliver parcels within the country .This huge growth in China shows more demand.
To compare both companies in terms of their financials, UPS tends to have a better rate on asset, higher package delivery volume, and larger size of revenues (Table 1). UPS has a revenues of $33.4 billion whereas FedEx of $22.5 billion. Also in terms of Economic Value Added (EVA), FedEx carries a negative EVA for most years between 1992 to 2003 while UPS has a growing positive value added to the company. For the year...
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