Ups vs Fedex

Topics: FedEx, United Parcel Service, Express mail Pages: 5 (1693 words) Published: September 21, 2008
Executive Summary
Based on our analysis regarding competitive advantage, company comparison, financial data and operational excellence, we believe UPS will be a better performer in the long run as compared to FedEx. Competitive Advantage

UPS has a first mover advantage over FedEx, beginning air delivery service in 1929. Although FedEx was the first to own and operate their own planes and introduced the innovative “hub and spoke” distribution pattern, UPS leads in specialized transportation and logistics services. In 1975, UPS promised package delivery to every address in the United States; FedEx was not able to guarantee delivery in every area. When deregulation of the domestic airline industry and trucking industry occurred, the operating landscape changed, and FedEx became the beneficiary by expanding its delivery fleet. The just-in-time supply movement enabled FedEx to grow as well by creating a larger demand for express delivery. Technological innovations, such as its package tracker, assisted FedEx in improved customer service; UPS was able to keep pace with technological innovations of its own, such as its own package tracker. UPS’s key to success was and remains efficiency, timing all delivery routes to traffic signal patterns for example. UPS also expanded into Canada and Germany before FedEx. In recent years UPS has invested heavily in information technology, aircraft and other facilities. Competitor Comparison

UPS went public in 1999, starting direct stock competition with FedEx UPSFedEx
Offered package delivery services to the entire US and over 200 countries, delivered over 13 million packages and achieved profits of $3 billion, and AAA bond rating in 1983Operational leader reached $1 billion in revenues during 1983 and was poised to own the market for express delivery Restructured by becoming an aggressive company and expanding through acquisitionsNo unions Acquired Miami based carrier with operations in Latin AmericaAchieved $15 billion in assets, net income of $830 million on revenues of $22.5 billion in 2003 Opened Mail Boxes Etc. franchise stores, providing packing, shipping and mail service Invested in IT, aircraft and facilities to support service innovations, quality and reduce cost Became involved with all aspects of supply chain logistics to offer another service to its customers By 2003, UPS and FedEx were in very similar business positions, providing express service in the US and abroad. Express Segment: 1999 - 2003

Focus on customer serviceFocus on customer service
Started price war, but later settled on regular price increasesSettled on regular price increases Cut costs through economies of scale, investments in IT and business process reengineeringCut costs through economies of scale, investments in IT and business process reengineering IT: UPS employs on DIADs for drivers to scan package barcodes during pickupIT: COSMOS transmits data from package movements, customer pickups, invoices and deliveries to central database in Memphis, TN UPS installed drop off boxes, 165 drive through and 371 express delivery stores, Saturday pickups to expand services and match FedExPurchased ground vehicles worth $200 million to match UPS delivery fleet Offered integrated logistics service to large corporate clients with total inventory controlCompeted for large corporate clients providing integrated logistics service

In the international package-delivery market, UPS exceeded and had more success and dollar investment marked for international growth than FedEx. International Package-Delivery Market
European entry in 1988 with acquisition of 10 continental courier services Lost estimated $1 billion in Europe since entry in 1984 and eventually sold European hub to DHL Spent an additional $1 billion in 1995 to expand it European operationsExpanded routes in Latin America, Caribbean and introduced AsiaOne next business day service between Asia and US in 1995 Begins direct...
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