Case Study of Fedex and UPS
UV2561
Rev. Sept. 7, 2011
FEDEX CORP. VERSUS UNITED PARCEL SERVICE OF AMERICA, INC.:
WHO WILL DELIVER RETURNS FROM CHINA?
On April 17, 2006, the International Air Cargo Association hosted its first-ever meeting in China. The location could not have been more appropriate. China was shaping up to be the world’s most significant market for air cargo, and Yan Yuanyuan, director general of China’s
General Administration of Civil Aviation, had just announced that China would be opening up its air cargo market to an even greater degree. The major global cargo companies had been picking up their level of investment in China and were poised for growth: FedEx Corp. had just begun construction of a major regional hub in Guangzhou and already had over 200 Chinese cities in its international network, and United Parcel Service of America, Inc. (UPS), was just completing a new logistics hub in Shanghai and had recently begun domestic Chinese express package services. The question on the minds of many was which of these two cargo giants was going to make the most of this opportunity.
Spurred in part by entry into the World Trade Organization in 2001, growth in trade with
China had accelerated and the need for cargo shipment and logistics support had skyrocketed. On
June 18, 2004, the United States and China reached a landmark air-transportation agreement that quintupled the number of commercial cargo flights between the two countries. The agreement also allowed for the establishment of air-cargo hubs in China and landing rights for commercial airlines at any available airport. The pact represented the most dramatic liberalization of air traffic in the history of the two nations.
FedEx had been quicker to seize the new opportunities this agreement presented. By year-end 2005, it operated more all-cargo flights to China than any other airline. During 2005, the company launched the express industry’s first direct service to China (from Europe). In
January
Rev. Sept. 7, 2011
FEDEX CORP. VERSUS UNITED PARCEL SERVICE OF AMERICA, INC.:
WHO WILL DELIVER RETURNS FROM CHINA?
On April 17, 2006, the International Air Cargo Association hosted its first-ever meeting in China. The location could not have been more appropriate. China was shaping up to be the world’s most significant market for air cargo, and Yan Yuanyuan, director general of China’s
General Administration of Civil Aviation, had just announced that China would be opening up its air cargo market to an even greater degree. The major global cargo companies had been picking up their level of investment in China and were poised for growth: FedEx Corp. had just begun construction of a major regional hub in Guangzhou and already had over 200 Chinese cities in its international network, and United Parcel Service of America, Inc. (UPS), was just completing a new logistics hub in Shanghai and had recently begun domestic Chinese express package services. The question on the minds of many was which of these two cargo giants was going to make the most of this opportunity.
Spurred in part by entry into the World Trade Organization in 2001, growth in trade with
China had accelerated and the need for cargo shipment and logistics support had skyrocketed. On
June 18, 2004, the United States and China reached a landmark air-transportation agreement that quintupled the number of commercial cargo flights between the two countries. The agreement also allowed for the establishment of air-cargo hubs in China and landing rights for commercial airlines at any available airport. The pact represented the most dramatic liberalization of air traffic in the history of the two nations.
FedEx had been quicker to seize the new opportunities this agreement presented. By year-end 2005, it operated more all-cargo flights to China than any other airline. During 2005, the company launched the express industry’s first direct service to China (from Europe). In
January