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UPS versus FedEx UPS versus FedEx versus USPSversus USPS

FedExFedEx

(Federal Express)(Federal Express)

Started by Frederick Smith in Started by Frederick Smith in 19711971

First InvestmentFirst Investment 1980’s:1980’s:

FedEx reached its FedEx reached its maturing stage.maturing stage.

First US company to First US company to reach $1 billion in reach $1 billion in

revenues. revenues. FedEx handles 3.3 million FedEx handles 3.3 million

packages packages History of FedEx Express Frederick W. Smith

incorporated Federal Express in June 1971.

Officially began operations on April 17th, 1973, delivering 186 packages to 25 cities.

Rapid growth in the industry began in 1977 following air cargo deregulation.

In 1984, the company expanded to global coverage with services in Europe and Asia.

UPSUPS(United Parcel Service(United Parcel Service))

Founded in 1907 in Founded in 1907 in Seattle, Washington by Seattle, Washington by Jim Casey.Jim Casey.

Headquartered in Headquartered in Atlantic, Georgia.Atlantic, Georgia.

UPS’s early fleet of UPS’s early fleet of delivery included a delivery included a Model T and a few motor Model T and a few motor cycles.cycles.

Has a fleet of 15,000+ Has a fleet of 15,000+ trucks & over 500 trucks & over 500 planes, and serves every planes, and serves every company in Fortune company in Fortune Magazine’s list of the Magazine’s list of the 1,000 largest companies 1,000 largest companies in US.in US.

Service to and from Service to and from more than 200 countries more than 200 countries & territories.& territories.

423,300 employees 423,300 employees worldwide (9worldwide (9thth largest largest global employer) global employer)

USPSUSPS

((United States Postal United States Postal ServiceService))

Founded in 1775 by Ben Founded in 1775 by Ben Franklin, the first post Franklin, the first post master general.master general.

Tenacious delivery despite Tenacious delivery despite bad weather.bad weather.

Responsible for 46% of the Responsible for 46% of the world’s card and letter world’s card and letter deliveries.deliveries.

Preferred choice for less Preferred choice for less important packages. important packages.

HISTORY

Past ScenarioPast Scenario

UPSUPS

Adept ,reliable Adept ,reliable &economical ground &economical ground transportation transportation systemsystem

SlowSlow Certain amount of Certain amount of

tracking donetracking done Had a tightly defined Had a tightly defined

business.business.

FedExFedEx

Invested in extensive Invested in extensive fleet of planesfleet of planes

Deliver overnightDeliver overnight Charged a premium for Charged a premium for

its speedy service & its speedy service & sophisticated tracking sophisticated tracking systemsystem

Big and small Big and small businesses willing paid businesses willing paid for this.for this.

USPSUSPS

Famous for their Famous for their tenacious delivery of tenacious delivery of mail despite rain, snow mail despite rain, snow or even bad weather.or even bad weather.

Today USPS is Today USPS is responsible for more responsible for more than 46% of the world’s than 46% of the world’s card and letter card and letter deliveries.deliveries.

It had no tracking It had no tracking system hence more system hence more favourable for favourable for residential customersresidential customers. .

UPS LogisticsUPS Logistics

Region headquarters in Singapore, 40 countries and territories served in Asia, Region headquarters in Singapore, 40 countries and territories served in Asia, 6,500 employees in region 6,500 employees in region

Region headquarters in Singapore, 40 countries and territories served in Asia, Region headquarters in Singapore, 40 countries and territories served in Asia, 6,500 employees in region 6,500 employees in region

Generated incomes around 50 billion dollarsGenerated incomes around 50 billion dollars employed 4,25,000 people of which 3,58,000 were in USAemployed 4,25,000 people of which 3,58,000 were in USA service area covers 200 nationsservice area covers 200 nations 4.0 billion parcels per year & 15.8 million per day of which 2 million are carried by 4.0 billion parcels per year & 15.8 million per day of which 2 million are carried by air transportair transport extensive infrastructure : 2400 distribution centresextensive infrastructure : 2400 distribution centres 93000 vehicles93000 vehicles 238 airplanes going to 391 airports in USA & 219 abroad238 airplanes going to 391 airports in USA & 219 abroad worldwide distribution facilities combined with global transportation servicesworldwide distribution facilities combined with global transportation services Effective supply chain management requires precise management of the three Effective supply chain management requires precise management of the three flows of commerce: Goods, Funds and Information.flows of commerce: Goods, Funds and Information. time definite deliverytime definite delivery emergence of e-commerceemergence of e-commerceUPS Access Points:UPS Access Points: 23 UPS Customer Centers, 136 Mail Boxes, Two The UPS 23 UPS Customer Centers, 136 Mail Boxes, Two The UPS Store, 2,147 AffiliatesStore, 2,147 Affiliates

DISTRIBUTION SYSTEM OF DISTRIBUTION SYSTEM OF FEDEXFEDEX

FedEx offers rapid, time-specific delivery to 211 countries.FedEx offers rapid, time-specific delivery to 211 countries. establishment FedEx Express Distribution Centers(EDCs) in 11 establishment FedEx Express Distribution Centers(EDCs) in 11

countries across Asia.countries across Asia. Intra-Asia overnight delivery through the FedEx AsiaOne network, Intra-Asia overnight delivery through the FedEx AsiaOne network,

launched in September 1995. launched in September 1995. logistics services are also linked to FedEx's other global networks logistics services are also linked to FedEx's other global networks

through direct flights.through direct flights. Internet shipping software, the FedEx interNetShip. Internet shipping software, the FedEx interNetShip. Streamlined distributionStreamlined distribution.. Establishment of kinko’s.Establishment of kinko’s.

SWOT ANALYSIS OF FED EXSWOT ANALYSIS OF FED EX

Strengths Strengths

Household nameHousehold name Product quality Product quality Global expansion Global expansion Abreast in technology Abreast in technology Air fleet Air fleet

Weaknesses Weaknesses

Employee racial discrimination Employee racial discrimination Lack of ground transportation force Lack of ground transportation force Costly technology innovations Costly technology innovations Judgment for late deliveries Judgment for late deliveries Increased debt Increased debt

OpportunitiesOpportunities

Global business growthGlobal business growth Online consumer Online consumer servicesservices Increase demand in logisticsIncrease demand in logistics Alliance with USPSAlliance with USPS

ThreatsThreats

Foreign competition entry into homeForeign competition entry into home Economic standing Economic standing Online competitive advantages of rivalsOnline competitive advantages of rivals Gain in competition service costsGain in competition service costs

SWOT Analysis - UPSSWOT Analysis - UPS

Strengths: Strengths: E-Commerce CapabilitiesE-Commerce Capabilities Emphasized global network and stability Emphasized global network and stability

creating an image “not American, but creating an image “not American, but more worldwide.”more worldwide.”

Sought to build relationships discreetly, Sought to build relationships discreetly, on Chinese termson Chinese terms

Opportunities:Opportunities: Like FedEx, UPS can build around its Like FedEx, UPS can build around its

multinational customer base with ASIA multinational customer base with ASIA operationsoperations

UPS can pass on cheap cargo to target the UPS can pass on cheap cargo to target the more document and small package more document and small package market, since they do not need to fill an market, since they do not need to fill an aircraftaircraft

Weaknesses: Weaknesses: Lacked own air services in China, making Lacked own air services in China, making

it less logistically versatile than FedExit less logistically versatile than FedEx Unlike FedEx, UPS does not have as muchUnlike FedEx, UPS does not have as much Trucks and drivers build further brand Trucks and drivers build further brand

recognition unlike FedEx in Chinarecognition unlike FedEx in China

Threats: Threats: Like FedEx, shipping companies already Like FedEx, shipping companies already

well established in China pose as a threat well established in China pose as a threat

UPS contends it will add its own UPS contends it will add its own airplanes in ASIA when it becomes airplanes in ASIA when it becomes necessary, by that time FedEx may necessary, by that time FedEx may already be far ahead in this areaalready be far ahead in this area

SWOT Analysis - USPSSWOT Analysis - USPS StrengthsStrengths

Wide CoverageWide Coverage Huge resourcesHuge resources

OpportunitiesOpportunities

Venture with FedExVenture with FedEx Semi privatisationSemi privatisation

WeaknessesWeaknesses

Inflexible Inflexible Assurance for only priority mailAssurance for only priority mail Too much spending on Too much spending on

employeesemployees No internet connectivityNo internet connectivity Lack of technologyLack of technology

ThreatsThreats

No tracking systemNo tracking system Lacking in technological Lacking in technological

operationoperation InflexibilityInflexibility No differentiationNo differentiation Negligence of time value of Negligence of time value of

moneymoney

OPERATIONSOPERATIONS

As a whole, all the three services focused in As a whole, all the three services focused in the following areas:the following areas: Globalization Globalization Advancements in technologyAdvancements in technology Challenges for shipping suppliers as well as Challenges for shipping suppliers as well as

their customers their customers

FedEx Express OperationsFedEx Express Operations

Fed Ex Express delivers packages to Fed Ex Express delivers packages to every address within the United States.every address within the United States.

International Express is guaranteed toInternational Express is guaranteed to

more than 220 countries and more than 220 countries and territories.territories.

In 1994, Federal Express officially In 1994, Federal Express officially became FedEx. became FedEx.

Fed Ex gained authority in 1995 to be Fed Ex gained authority in 1995 to be the sole U.S. based, all carrier in China, the sole U.S. based, all carrier in China, with aviation rights to the worlds mostwith aviation rights to the worlds most

populated nation.populated nation. Fast deliveryFast delivery Overnight deliveriesOvernight deliveries International overnight marketInternational overnight market

FedEx Five-Point Strategy

• Improve Service Levels• Lower Unit Costs• Establish International Leadership and Sustain Profitability• Get Closer to the Customer• Maintain the People-Service-Profit Philosophy

OPERATIONS OF UPSOPERATIONS OF UPS

Model that prescribes everything of the Model that prescribes everything of the firmfirm

Fast ground transportationFast ground transportation Negotiate at lower pricesNegotiate at lower prices Senders can receive real-time status Senders can receive real-time status

report about their shipmentsreport about their shipments Encryption technologyEncryption technology

OPERATIONS OF USPSOPERATIONS OF USPS

Expedited delivery service from US to Expedited delivery service from US to other countriesother countries

Improve Express (next day) as well as Improve Express (next day) as well as Priority Mail (several day) servicesPriority Mail (several day) services

Strategic PrinciplesStrategic Principles

Stimulus for Stimulus for

Volume GrowthVolume Growth

Ease of UseEase of Use

FlexibilityFlexibility

CompetitivenessCompetitiveness

UPS vs FedEx UPS vs FedEx

Started to enter rival’s core competent area.Started to enter rival’s core competent area. UPS entered air delivery system whereas FedEx UPS entered air delivery system whereas FedEx

started challenging UPS on road.started challenging UPS on road.

WTC attacks tested FedEx.WTC attacks tested FedEx. UPS invested on advancement of technologyUPS invested on advancement of technology ..

UPSUPS FedExFedEx

RevenueRevenue $31 billion$31 billion $20 billion$20 billion

ProfitProfit $3 billion$3 billion $700 million$700 million

Contd..Contd..

USPS’ business affected by both UPS and USPS’ business affected by both UPS and FedEx.FedEx.

Extensive revenues spent on labor (76%) as Extensive revenues spent on labor (76%) as compared to UPS (56%) and FedEx (42%).compared to UPS (56%) and FedEx (42%).

Being a government monopoly hurt USPSBeing a government monopoly hurt USPS Continuation of non profitable post office Continuation of non profitable post office

boxes.boxes. Cannot freely raise or lower prices.Cannot freely raise or lower prices.

UPS Market LeaderUPS Market Leader

Efficient Operating systemEfficient Operating system UPS has been more profitable over recent UPS has been more profitable over recent

years years It is much larger in size if we look at It is much larger in size if we look at

assetsassets UPS has an AAA credit rating compared to UPS has an AAA credit rating compared to

FedEx with has a rating of BBBFedEx with has a rating of BBB

Target market strategiesTarget market strategies

Fed Ex- Fed Ex- – International market International market – Delivery of highly confidential and administrative lettersDelivery of highly confidential and administrative letters– 15mn packages for 6.1 mn customers per day15mn packages for 6.1 mn customers per day

UPS UPS – Daily delivery service Daily delivery service – US domestic package US domestic package – International package operations in around 200 countries International package operations in around 200 countries

USPS USPS – Letters and postcards Letters and postcards – Hub and spoke model Hub and spoke model – To every nook and corner of the countryTo every nook and corner of the country

ConclusionConclusion

Fedex is best for International & over night Fedex is best for International & over night delivery. delivery.

UPS is best for Ground transportation with UPS is best for Ground transportation with in US.in US.

USPS is best for Cards & less important USPS is best for Cards & less important packages.packages.

THANK YOUTHANK YOU