Federal Express was born out of a term paper written by Frederick W. Smith who attended Yale University. It all started back in 1965 where Smith invented an industry that was bound to change the logistical challenges that faced pioneering firms in information technology industry. For most airfreight shippers, they relied heavily on passenger route systems though they did not make any economic sense when it came to urgent shipments. In his term paper, Smith proposed to design a system that specifically accommodated shipments that were time-sensitive such as computer parts, medicine, and electronics (FedEx, 1995-2018). Apparently, Smith’s professor did not see any significant implications of his thesis and he was awarded an average grade. Later in August 1971, the military faced a stint that saw Smith bring controlling interest in Arkansas Aviation Sales, located in Little Rock, Arkansas. During his firms operations, he faced difficulty delivering packages and other airfreight in a span of one or two working days. Therefore, Smith decided to find a better way of attaining his delivery objective and this is how he used his term paper to actualize his idea.
Federal Express is a company that managed to revolutionize global business practices and defined reliability and speed. According to Smith, federal is a word that suggested an interest in economic activities in a nationwide perspective. The headquarters of the company was later moved to Memphis, Tennessee due its central location within the U.S soil. Moreover, Memphis International Airport experienced bad weather and thus, it rarely closed. The willingness of the airport to make necessary improvements for additional hangar space and operation was something that was readily available. The operations of Federal Express (FedEx, 1995-2018) began officially on April 17, 1973 with a total of 389 team members. That very night, 186 packages were delivered by a small aircraft to 25 U.S. cities from New York to Florida. Though profits for the company were realized later in July 1975, in the marketplace they became premier carriers of high-quality goods. As such, high standards were set for express shipping industries being established.
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Federal Express Corporation is a foreign operator engaging in international express air cargo delivery services such as transportation, logistics, e-commerce, and supply chain management. In 1984, FedEx started its international operations to Asia and Europe. In 1988, the company managed to initiate its direct-schedule cargo service to Japan. The operations of the company are conducted under three categories namely: FedEx Express, FedEx Ground, and FedEx Freight. FedEx division offers its customers a wide range of shipping services that cater for the delivery of freight and packages (Morrell, 2016). The strategy of FedEx has enabled the corporation to compete collectively and operate independently through its integrated business solutions. Through its independent operations, FedEx has enabled optimal service to be focused, reliable, and of good quality. By having such a strategy, the carrier continues to gain competitive advantage. Humanitarian supplies were successfully delivered and this translated to serving customers, overcoming challenges, and executing the company’s business strategy. All this is made possible due to their unique competitive advantages considering the fact that they are the world’s largest all-cargo airline (FedEx, 1995-2018).
The global network of FedEx is impossible to duplicate considering that is connects 99 percent of the world’s gross domestic product (GDP) in 1-2 business days. This was made possible by the fast and broad network (physical and digital) established by the company, which enabled it multiply its benefits of size and scale of organizations and individuals globally. It has more than 425,000 team members, 5,000 hubs and facilities working across more than 220 countries and territories. Currently, it has 700 aircraft that includes Boeing 757-200, 767-300F, and 777 Freighters. FedEx is the largest aircraft fleet and largest Airbus operator with Airbus A300, Airbus A310, ATR 42, McDonnell Douglas MD-11 aircraft, Boeing 727, McDonnell Douglas MD-10, and Cessna 208 (FedEx, 1995-2018). In 2016, Boeing 727-200 was replaced with Boeing 757 planes because of their fuel efficiency. It also has an estimated 180,000 motorized vehicles pick up. Delivery is done to more than 14 million shipments routed, processed and delivered daily. Secondly, the team members are committed to achieving the Purple Promise: “I will make every FedEx experience outstanding.” This philosophy has helped the team members set a high bar if excellence in the company. As such, the company had earned the trust and loyalty of its customers and this has made the corporation the most admires in the world and is even considered a great place to work (Hu & Huang, 2011). In 2018 fiscal year, FedEx managed to deliver solid financial and operational results, which is attributed to their corporate strategy of managing the company as a business solutions portfolio. Over the years, FedEx’s strong financial performance has given it resources that have facilitated FedEx ‘multiplier effect’ to continue expanding their horizons for communities, businesses, and the environment. Thus, the company is able to respond to the changing marketplace quickly and efficiently. Team members of FedEx also managed to deliver critical relief during 2017 devastating hurricanes, earthquakes, floods, and wildfires. This was made possible with the aid of their logistics expertise that helped in connecting organizations, individuals, and communities. As such, aid was quickly transported in response to America’s unprecedented scope of disasters. The goods transported totaled to more than 4.5 million and 79,000 shipments were done (FedEx, 1995-2018).
Multiplying efficiency efforts of FedEx operations has seen them seek new ways to maximize on their efficiencies, minimize impacts, and foster innovative solutions. They represent 92 percent emissions footprint and are guided by their approach of Reduce, Replace and Revolutionize. Efficiency efforts at Federal Express and FedEx Freight in 2017 saw them save more than 44.5 million gallons of vehicle fuel. Moreover, they managed to avoid more than 457,000 metric tons of CO 2 emissions. The company is also investing in sustainable energy products such as adding to their fleet electric vehicles. Across their operating companies, FedEx uses hydrogen fuel cells and biodiesel as alternative fuel types to enable them become more efficient and sustainable in their operations. The company also has on-site solar-energy systems, which serves as an alternative energy source for company operations.
FedEx Corporation has a broad portfolio of services, which has helped them in meeting the needs of their customers. Online customers look at security, convenience, and control and this has been promoted by FedEx’s operations. Most of their customers use services from two or more of the operating companies. FedEx operates networks by applying high concentration of activity at Memphis, its principal hub, despite hub proliferation and spokes experienced in recent years. Factors such as market centrality and intermediacy, competing and complementary airline networks, and the support of ground transportation networks are things that have propelled FedEx to its current market position. In the hub, managers, directors and senior managers were rotated periodically to extend the company’s nightly operations because many processes required to come together so as to launch the planes on time. The directors’ horizons were broadened due to their hands-on experience in all areas and thus, they gained deeper appreciation and knowledge of the entire operation (Birla, 2012). These factors have helped FedEx in meeting its mission, which is to connect people and possibilities. The company also believes in contributing resources directly to its daily operations.
The automation and expansion at FedEx ground has focused on e-commerce growth. Hub expansion and technology investments have added FedEx’s capacity and keep them ahead of their competitors in terms of handling growth of e-commerce. Moreover, it continues to manage their costs, at the same time, increasing their safety and productivity. The company continues to gain revenue market share and has over 130 automated facilities. The holiday volumes are also accommodated by FedEx’s Ground network that can be rerouted and packages sort at any of their hubs. Such services continue to enable the company to serve their customers even in prevailing weather contingencies and other unexpected situations. Robotics technology is another innovation FedEx is considering to boost their productivity and enable team members to focus on jobs that require higher skills. Through their hubs, self-driving tugs is present and has moved large and overweight packages.
The fleet modernization at FedEx is also replacing their old aircrafts with newer models like the Boeing 777F, which burns 18 percent less fuel and produces 18 percent fewer emissions. Such operations help FedEx to save on fuel and reduce their emissions while at the same time, enhancing flexibility of their operations and improving on their profit margins. Last year, for example, the company managed to save 89.3 million gallons of jet fuel and avoided more than 860,000 metric tons of CO 2 emissions. In 2018, Boeing 777F was the first of their newer aircraft models that flew 100 percent on biofuel. The shortage of aviators has seen FedEx launch a pilot-development plan in the airline industry called Purple Runway (FedEx, 1995-2018).
In today’s marketplace, customers are looking for a company that will provide them with specialized logistics and e-commerce solutions. As such, FedEx has looked into the issue and is considering having temperature-controlled shipping for customs clearance, healthcare businesses and e-commerce fulfillment. Through combining their specialty operating companies within the trade networks of FedEx, they intend to make it easier and efficient for their customers with regard to achieving their business objectives. The specialized company under the organizations new umbrella will offer its customers with a wide range of air cargo and ocean freight services; e-commerce fulfillment; inventory warehousing and distribution; secure payment technology; brokerage and trade facilitation; and forward logistics and 3D printing. Recently, FedEx managed to acquire global e-commerce transportation solutions that will give support to the rapidly growing e-commerce. The provider P2P offers FedEx with unique low-cost options of delivery that leverages with its relationships with postal, private, retail, and clearance.
References
Birla, M. (2012). FedEx delivers: How the world’s leading shipping company keeps innovating and outperforming the competition . Hoboken, New Jersey: John Wiley & Sons.
FedEx. (1995-2018). Fedex annual report 2018. Chairman’s Letter. Retrieved from http://s1.q4cdn.com/714383399/files/oar/2018/AnnualReport2018/chairmans-letter.html
FedEx. (1995-2018). About FedEx. Retrieved from https://about.van.fedex.com/our-story/history-timeline/history/
Hu, K. C., & Huang, M. C. (2011). Effects of service quality, innovation and corporate image on customer’s satisfaction and loyalty of air cargo terminal. International Journal of Operations
Research , 8(4), 36-47. Morrell, P. S. (2016). Moving boxes by air: the economics of international air cargo . New York, NY: Routledge.
