Analysing the Global Logistics and Transportation Industry Essay

Logisticss is pull offing the flow of goods, information and other resources, including energy and people, between the point of beginning and the point of finish to run into the demands of consumers. The chief maps of logistics include buying, stock list direction, transit, and repositing.

The transit industry can be identified in three major sectors such as transportation, rider conveyance and fabrication of equipment. In this paper we discuss about transporting which is responsible for transit of supplies.

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FedEx was incorporated in June 1971 but operations were begun officially in April 1973 since so FedEx remained as the industry leader. FedEx provides clients solutions in planetary transportation, worldwide express bringing and land little package bringing, less than truck load cargo bringing, electronic commercialism solutions, planetary logistics and supply concatenation solutions. They deliver more than 3 million bundles over 200 states daily.


Their mission is “ to bring forth superior fiscal returns for stakeholders, by supplying high value-added logistics, transit and related information services through focussed operating companies ” .

( )

FedEx ‘s new Organization Structure

FedEx Freight

FedEx Trade Network

1 ( a ) Strategic Vision and Visionary Leadership behind FedEx Corporation

Vision statement as mentioned by William Conely, VP, FedEx Logistics, Managing Director Europe.

“ If we ‘re all operating in a twenty-four hours to twenty-four hours environment, we ‘re believing one to two cryings out. Fred ‘s thought five, 10, 15 old ages out ” .

Today the same vision has been translated into three countries of accent referred as V3 scheme.

Vision – Global express transit web

Value – Delivering added value for clients every twenty-four hours

Virtual – State-of-the-art information systems and engineering

1.a.1. How FedEx applied the airy thought of Fred Smith?

A scheme such as engineering promotion has allowed them to hold superior client service quality that was unparalleled to any other company. Superior engineering inventions were introduced which attracted the best and the brightest people.

FedEx has acquired and realigned figure of little companies and managed synergisms in order to command more of the market. Acquisition scheme of FedEx has given chance to capture different countries of logistics and transit concern with different client base and locations thereby incorporating their operations to accomplish better synergisms and economic systems of graduated table.

Business without boundary lines – Having their ain fleet enabled them to reconfigure their systems and reroute bing flights in order to take advantage of the markets. Same manner feeding three dearly-won webs — air, land, and information engineering is abundantly expensive.

They operated in a Global graduated table in order to offer clients illimitable chances thereby spread outing client base and accomplish planetary economic systems of graduated table.

FedEx involves in many Corporate Social Responsibility plans as a stigmatization scheme by transporting coon bears, penguins and giants across the states to supply them with proper life conditions. Though this type of transit is considered hazardous FedEx does this with fondness in order to protect them.

They maintain a strong trade name name as a scheme and advantage of its trade name image, the name that clients have counted on for dependable service and cutting border engineering.

Frederick W. Smith

Chairman, President and

Chief Executive Officer

Fred Smith was a charismatic-visionary leader. He pioneered the transit field and founded FedEx when he was 27 old ages of age. He had a desire, a thrust to take the company. He was confident, intelligent and besides had the job-relevant cognition in the field.

His military background helped him to believe that the FedEx ‘s people are more valuable than engineering. Fred ever started believing outside the normal which made FedEx a great success.

Though he was a hazard taker and invested extremely in IT he succeeded in the concern because of his airy thought and finding to travel in front.

Fred re-shaped the full transit industry. FedEx believes in leading through “ handiness ” which makes all signifiers of interaction with clients.

( B ) Transportation system and logistics substructure within FedEx Corporation

FedEx acquired its ain fleet of conveyance while rivals were engaging infinite on commercial air hoses and sub-contracting their cargos to 3rd parties. With this, the demand for booking infinite in commercial vass ceased and FedEx experienced cost advantage over other companies.

Landing larger cargo planes were allowed after the de-regulation of the air hose industry and utilizing these reduced the operating cost. After de-regulation of the hauling industry, FedEx established regional hauling system further reduced the cost.

FedEx ‘s odd air path governments and substructure make it the universe ‘s largest express transit company, supplying speedy, dependable and time-definite transit with easy entree to the locations.

To cut down cost and clip, bundles from all over the state were flown to a cardinal point or hub at dark where traffic lanes were relatively empty. Packages were sorted, redistributed at the hub and once more flown to their ultimate finish to make them following twenty-four hours.

Even with the restrictions such as attachment to the skyline ordinances, land clearance and administrative issues, FedEx managed to do this a turning point towards their success. ( Please mention annexure page aˆ¦aˆ¦ for more inside informations )

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Value added services such as multiple repositing, scanners given to drivers to capture bundle information and nightlong distribution system were external factors contributed to the growing in FedEx concern.

Just-in-time stock list direction created demand for velocity and truth in transit and shortened the lead clip for companies

Integration between FedEx and clients blocked them from traveling to rivals.

How it helped FedEx

Michael Porters Value Chain

How FedEx reduced cost by using value concatenation ( mention papers ‘New FedEx and dragon ‘ )

Primary activities

Outbound Logisticss

Processing clip at the local offices was reduced since they did non necessitate to make full signifiers and go to to clients separately. In FedEx ‘s point of position cut downing processing clip means cut downing labour costs. FedEx has achieved enormous nest eggs by strategic execution of IT. Tools such as just-in-time fabrication and entire quality direction are adopted for stock list control and enhancing of service quality.

Selling and Gross saless

Information on clients ‘ penchants, geographical informations and traffic volumes of each web page collected automatically. These informations could be used for strategic enterprises, planning and selling. World Wide Web is a low cost media for advertisement in the planetary market and discovers possible markets. Boxing in a timely manner was one of the selling tools they used.

Customer Service

FedEx discovered that its advanced IT systems contain a female parent load of information about the profitableness of each client. They knew which clients make how much net income, which really end up bing FedEx.

Secondary activities


Strategic programs are developed with providers to back up the procedure and development of new services. Minutess are managed through Web to accomplish greater efficiency. Further they are streamlined through Electronic Data Interchange. FedEx had agreed upon better traffics with the fuel with providers.

Human Resources

FedEx will endeavor to develop reciprocally honoring relationships with its employees, spouses and providers. They recruited right people and top places were filled with competent directors. Further inducements, net income portions and internal publicities are given to maintain the staff moral high in order to do their procedures less dearly-won and effectual. They motivated the forepart line drives conducted a just intervention plan to all staff.

Information Technology

When clients log onto the FedEx system they could put orders to pick up and pay utilizing the recognition cards which made greater convenience. Traveling the procedure to the cyberspace reshaped the transit industry. In using systems like Cosmos, PowerShip, EDI and Netscape integrated services supplied to clients are tremendous.

1 ( degree Celsius ) Virtual Information substructure at FedEx Corporation

How it helped

FedEx provides its clients supply concatenation solution from the point of natural stuffs to stop of the merchandise life rhythm. Each phase of the supply concatenation has IT applications and systems that have been implemented by FedEx in order to carry through efficient client solutions.

Some of the systems were transit direction solutions, order processing and related distribution Centre operations, fulfilment, just-in-time stock list control, buying and production which provide peace of head throughout the full distribution rhythm.

COSMOS is a client oriented services and direction operating system. This Centralized computing machine system kept path of all bundles handled by the company. This was made possible by puting a bar-code on each point of pickup doing greater dependability to its clients. Further information bundle motion, pickup, invoicing and presenting informations to cardinal informations base.

PowerShip – Features such as Label printing, online packaging pickup petition, bundle tracing and stored often used references of most active clients.

EDI and Internet – This allowed companies to construct one-to-one relationship with clients was the perfect scenario for industries. They could fit supply and demand without wastage.

Agreement with Nescape to follow their package as the primary engineering for accessing its corporate intranet sites. Advantages of the Nescape are mentioned below.

Customers would construct incorporate web sites utilizing FedEx application

Free down burden from which incorporated a nexus enabling them to track bundles straight from their ain site.

Enhancement to package-tracking service. Information with respect to 25 cargos can be checked at the same time and frontward same to three e-mail receivers. Some states are able to entree information in their native linguistic communication.

FedEx claimed to hold the largest online client waiter web in the universe that operated in existent clip

Web based application – 1994 ( write )

FedEx can make clients in other states more easy through cyberspace. This will further spread out operations at FedEx in the planetary market.

A originative confederation with market place will let FedEx to tap into the turning e-commerce market for consumers. Web surfboarders link different companies ‘ web sites, where they can order a assortment of merchandises and services.

IT substructure will back up supply concatenation operations. The FedEx web site was launched in 1994 and included a bundle tracking application and allowed clients to bring forth their ain alone bar-coded transportation labels. The web site provided speedy and client focused characteristics.

( Please refer annexure for elaborate account of the systems and application of supply concatenation at FedEx )


FedEx has developed many advanced services that would non be possible without its strong IT capableness. IT enlargement at FedEx efficaciously created a barrier to new entrants in this industry.

Even though FedEx ‘s coverage to provide concatenation through integrated systems by fastening, bettering and synchronising the assorted parts of the supply concatenation, it was no longer a competitory advantage but a competitory jussive mood as the clients saw the benefits of squashing clip and stock list out of the system.

The practical information substructure at FedEx vastly supported to keep the market leading in the past old ages. They have forecasted the hereafter in a positive way and enforced right determination by funding on IT development. Throughout the old ages this has helped FedEx to cut down cost, minimise procedure clip and go client focussed and finally increased the net income borders which helped in a growing in planetary GDP and International trade.

Even though FedEx has extremely invested on IT for upgrading on a periodical footing, proficient issues such backup systems, virus protection, managing issues with web choping have been successfully addressed in order to stay in the market leader place.


Amalgamations and acquisitions ( M & A ; A )


2.0.1. Amalgamations

Joining of two or more companies to organize a individual legal entity can be defined as a amalgamation. The assets of the smaller company are merged in to the larger. Share holders of the smaller company ( or the mark company ) will be bought over by the geting company.

In general amalgamations take topographic point in a friendly scene. Executives of the several companies participate in a due diligence procedure to guarantee a successful combination of all countries of concern.

2.0.2. Acquisitions

Buying of more than 50 % of voting portions of a company by another company is an acquisition. Both companies can go on as separate legal entities. Geting company will be the parent company ( or keeping company ) and the mark company will be the subordinate.

Acquisition may take topographic point through a hostile coup d’etat by buying the bulk of portions of the company in the unfastened market.

( Beginning: A Simple M & A ; Model for all Seasons by Bu Sam Rovit, David Harding, and Catherine Lemire )

2.0.3. Amalgamations and acquisitions schemes

Amalgamations and Acquisitions are a common scheme in Global Logistics and Transportation industry by which companies in the industry expand geographically and increase the range and entree.

2.1 Benefits and restrictions of M & A ; A schemes in the Global Transportation and Logistics industry

2.1.1. Benefits

Obtain maximal value and make sustainable competitory advantage

Increase end product

Obtain new engineerings, expertness and supply full new merchandises

Improved focal point on nucleus accomplishments of the house

Improvements in usage of the trade name names

Increased consumer public assistance and overall cost decrease from the joint ingestion of complementary merchandises

Fastest method to accomplish growing

Making a wide and deep merchandise portfolio

Strength in storage gross revenues and services

Integrate engineerings and patterns across full merchandise line such as strong capablenesss in informations file awaying, manage merchandises to better turn to the regulative conformity and market chance

Capability to incorporate disparate concern procedures and information into one common model

Quicker and cheaper growing of the organisation, synergisms of market size and distribution channels, easier finance ( gross and cost synergisms ) , economic systems of graduated table, deriving clients, cost efficiencies, improved substructure.

Achieving maximal benefit of synergisms by integrating

Decrease in dealing cost and transit cost

Carry throughing increasing / composite clients demands

Redesigning of the planetary supply concatenation

Obtain extra capacity in footings of production and repositing installations

Amalgamations and acquisitions improve market efficiency by capturing synergisms between houses.

May aid in taking inefficient direction or to react to economic dazes

2.1.2. Restrictions

Most of the surveies have shown that amalgamations have failure rates of more than 50 per centum

Acquisitions are complex and hard to put to death and pull off successfully.

The companies should hold the ability to incorporate the proficient know-how and the resources to convey that know-how to market merchandises.

In amalgamations and acquisitions there may be a important impact on corporate civilization. The buying company sets the quality saloon high for the people in the company to be acquired. The companies cultural norms will be will be reinforced by the invention, coaction and unity and client focal point of those employees. By and large there are clangs in such a state of affairs.

Though companies expect the synergisms from return over ‘s, it is found that geting companies lose about 10 % of their value during the first five old ages after amalgamations.

2.2. How FedEx Corporation managed the acquisition of Caliber Systems in 1998- whether it is a success or failure

FedEx Acquisition History up to twelvemonth 2000





Gelco Express International

FedEx dramatically expands its presence outside of the U.S. with the acquisition of Gelco Express, a worldwide messenger with service to 84 states.


Tiger International Inc.

With the integrating of the Flying Tiger Line, FedEx becomes the universe ‘s largest full-service, all-cargo air hose. The acquisition includes paths to 21 states, a fleet of lading aircraft including Boeing 747s, installations throughout the universe and Flying Tigers’expertise in international airfreight.


Caliber System Inc.

FedEx creates FDX Corporation ( subsequently renamed FedEx Corporation ) and grows its portfolio of services with the add-on of land small-package bearer RPS ( now FedEx Ground ) , Western U.S. less-than-truckload bearer Viking Freight ( now portion of FedEx Freight ) , Caliber Logistics ( now FedEx Supply Chain Services ) , Caliber Technology ( now portion of FedEx Services ) and Roberts Express ( now FedEx Custom Critical ) .


Tower Group International Inc.

World Tariff Ltd.

FedEx Corp. creates FedEx Trade Networks. Today, FedEx Trade Networks is one of the largest-volume imposts entry filers in North America and provides FedEx clients with end-to-end transit and imposts clearance solutions around the universe.

acquisitions history.cfm.htm

2.2.1 Caliber Systems

FedEx acquired caliber systems in 1998 and five separate subordinate companies were formed such as Federal Express, RPS ( Roadway bundle Systems ) , Robert express, Viking cargo and FDX Logistics.

They focused chiefly on the little bundle concern. Each subordinate was managed individually and was responsible for its ain histories. Caliber had developed its expertness in traveling natural stuffs, home bases of steel bars and managed in work-in-progress. It manufactured autos and fork-lift trucks. After acquisition FedEx started offering other services besides express transportation. Federal Express

Federal Express was the universe leader in planetary express distribution. They offered 24 to 48 hours bringing. Besides was the leader in nightlong bundle bringing concern. Goods shipped ranged from flowers to lobsters to computing machine constituents. RPS

RPS was the 2nd largest land little bundle bringing of business-to-business. Besides it was a low cost, non-union, technology-savvy company. Cargos were done in one to three yearss. RPS had the lowest cost theoretical accounts in the transit industry. With the take-over by FedEx, RPS moved on to business-to-consumer bringing service and took advantage of electronic commercialism. They operated through independent teamsters who are contractors and specialized in presenting little bundles between concerns at rates lower than UPS. Viking Cargo

This was the first less-than-truck-load cargo bearer in western USA. They shipped 13,000 bundles per twenty-four hours. Robert Express

This was the universe ‘s prima surface-expedited bearer for non-stop, clip critical and special-handling cargos. This was the smallest company within the FedEx group. Robert Express Entirely allowed clients greater control at a monetary value. They had a limited figure of aircrafts but they had to pay for usage and crew clip. Caliber Logistics

Caliber logistics was the innovator in supplying customized, incorporate logistics and warehousing solutions worldwide. The acquisition of quality brought over the-road transit and warehousing capablenesss. Caliber Logistics was renamed as FDX Logistics.

2.3 Merging of Caliber Logistics and FLEC

New company was FedEx Logistics brought together all splintered operations of logistics in all the subordinates, streamlined costs and presented one bill of fare of logistic services offered to clients. They aligned R & A ; D of systems upon common, agreed platform.


Acquisition contributed to reenforce FedEx committedness to go more than merely a bringing company. With the acquisition, company image was transformed to a keeping company. Consequently company changed its name to FedEx Corporation.

FedEx managed the subordinates by runing independently, each company focused entirely on presenting the best service for its specific market. They competed jointly. Under the FedEx streamer they offered wholly different services, different client footings and different gross revenues processs. Use of IT resources spread among the group. FedEx introduced a one-stop shopping as solution for all degrees of supply concatenation. This was the ultimate end of FedEx in order to convey the subordinates closer together to make synergism.

FedEx trade name name had been inculcated in the people ‘s heads throughout the old ages. This strong planetary trade name name and the trade name image created among the full universe from the origin had sufficient market for FedEx to run even after acquisition. Operating under the FedEx streamer created client assurance although the companies acquired were runing in their ain names.

Acquisition improved FedEx ‘s non-express bringing capablenesss and brought in other new concerns to the company.

When UPS had the advantage of advancing merely one trade name, UPS was to sell the full company and the services it offered.

Acquisition of Caliber Systems enabled FedEx to fit UPS in offering a broad assortment of bringing options. But, UPS ‘s extended web for doing door-to-door bringings was far in front of FedEx. Business at UPS was somewhat affected after the acquisition of Caliber Systems by FedEx.

Further the schemes adopted by the FedEx direction such as heightening concern capablenesss though IT and constructing up strong relationships on a regular basis with clients and communicating with the planetary market, created competitory advantage at the clip of acquisition of the Caliber Systems.

Hence acquisition of the Caliber Systems by FedEx was a success.


Internet is the extended, worldwide computing machine web available to the populace. It is interconnected to computing machine webs that are connected by internetworking.

E-tailing ( electronic retailing ) means the merchandising of retail goods via Internet. E-tailing done largely with business-to-consumer ( B-to-C ) minutess.

E-tailing began to work for some major corporations and smaller enterprisers were started around twelvemonth 1997.

( Beginning: hypertext transfer protocol: //, ,sid182_gci212079,00.html )

3.2. How internet/e-tailing had been applied to the transit and logistics industry?

At the clip when the web based purchases were turning, UPS one of FedEx rivals were in front of them in footings of land conveyance. FedEx identified the flourishing chances originating with the growing in cyberspace based purchases. FedEx bought over Caliber System in January 1999 and the purpose was to heighten the range of concern to concern coverage while providing to increasing demand from cyberspace based purchasing.

FedEx anticipated growing in ecommerce and planned to get down FedEx Home Delivery to cooperative specialising in business-to-consumer e-tailing. At that clip, in 1997 FedEx was managing transportation for merely 10 % of all goods sold online, compared to the 55 % handled by UPS. In 1999 FedEx signed up with CISCO with mission of critical one halt online beginning for gross revenues tools and client information.

Web portals such as Yokel! had been offering store-building services for some clip, as did all other Internet service suppliers. By that clip UPS, their chief rival was had been offering the same services since 1997 through sellers Harbinger Corp. and IBM Corp. FedEx started to offer its ecommerce Builder Internet platform free to clients subsequently, with e-commerce services.

3.3. Non-financial public presentation at FedEx in the context of “ Internet market and e-

Chasing ”

Internet was the footing for competition. It opened chances in logistics direction as most concerns started integrating with client supply ironss utilizing the cyberspace. FedEx had the right concern theoretical account to take advantage of this chance.

Growth in e-tailing needed aid of express transit to carry through the client outlooks and FedEx already was a elephantine in the field achieved advantage over the state of affairs.

FedEx was the leader in the market and enjoyed a strong trade name image in the conveyance and logistics industry. Even though they identified and awaited tremendous chances which came up with the development in e-tailing, UPS was the leader in land transit. FedEx made a smart move by purchasing over Caliber Logistics and subsequently incorporating all systems and a powerful proficient architecture that enabled internet commercialism use.

The competition became ferocious with the as the major transit companies were wagering large on engineering. Even though FedEx were puting 1000000s on IT and introduced cyberspace in 1994, it became the industry norm instead than a competitory advantage.

FedEx developed all its package in-house where rivals like UPS formed strategic confederations with Open Market Inc. , and worked with IBM.

One of chief grounds for FedEx ‘s successful public presentation financially and non-financially was that they identify anticipate the alterations and follow themselves consequently.

3.4. Fiscal public presentation at FedEx in the context of “ Internet market and e-tailing ”

Online vacation shopping, which accounted for $ 650 million in 1997, grew to quickly $ 4 billion over the vacation season of 1999.

By the terminal of twelvemonth 2000, more than 20,000 client Web sites were linked to the FedEx Marketplace, and the ecommerce Builder unit had secured around 2,000 clients. Despite the analysts concerns their net incomes totaled $ 688 million on gross revenues of $ 18 billion.

The expected growing associated with e-tailing was USD 7.0 billion in 2000 and USD 327 billion in business-to- concern presented tremendous chances for FedEx.

( Beginning: hypertext transfer protocol: // )

Annual study of 1999 reflects that the growing in gross as follows.


Growth in Revenue


5.67 %


11.48 %


11.91 %


8.5 %


13.76 %

FedEx ‘s mean gross growing is about 10 % . In twelvemonth 1999 this has reduced to 5.67 % which they claim as a consequence of the high fuel monetary value. FedEx has invsted in IT and was

Market portion growing



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