Analysis Of Global Express Transportation And Logistics Industry Commerce Essay

Global Transportation & A ; Logisticss Industry comprises a broad scope of service suppliers, covering all manners of conveyance – air, route, rail, sea – every bit good as related services such as repositing, managing, stevedoring, and eventually value added services like packaging, labelling, piecing etc. In add-on to these ‘physical ‘ services, T & A ; L involves all kinds of planning, organizing and pull offing services in the country of transit and logistics. Over the past old ages, we have seen a tendency to variegation ( growing strategies – amalgamations & A ; acquisitions ) , which consequences in larger incorporate groups runing in more than one of the T & A ; L sub-sectors. As a consequence, it becomes really ill-defined to understand the bounds between the different T & A ; L sub-sectors.

About FedEx – FedEx corporation offers transit, e-commerce and concern services through its web of subordinates, divided into four concern sections. The FedEx express section includes Federal Express Corp. , a taking planetary express transit company offering time-certain bringing within one or three concern yearss ; and FedEx Trade Networks Inc. , a supplier of client securities firm, planetary lading distribution and Global Trade Data and Global Trade Tools package merchandises. The FedEx land section includes FedEx Ground Package System Inc. , which provides little bundle land bringing to about 100 % ofA U.S.A abodes. The FedEx Freight section includes FedEx Freight Corp. , a US supplier of following twenty-four hours, 2nd twenty-four hours and interregional less than truckload ( LTL ) cargo services ; FedEx Custom Critical Inc. , the universe ‘s largest supplier of expedited clip critical cargos ; and Caribbean Transportation Services Inc. , a supplier of airfreight send oning services between the US and Puerto Rico. The last section is FedEx Kinko ‘s, dwelling of FedEx Kinko ‘s Office and printing services Inc. , which provides copying and printing services, marks and artworks, videoconferencing, high velocity radio and wired Internet entree and computing machine use, every bit good as retail entree to all FedEx land and planetary express transportation services. ( Jack W. Plunkett 2007 )

Porter ‘s Value Chain Analysis

This subdivision assesses the planetary express transit and logistics industry through the value concatenation analysis of Porter. The reappraisal is done across the primary and support activities for the value concatenation with the inside informations presented in the undermentioned tabular array:

Primary Activities


Inbound logistics

Increased presence in assorted markets to spread out footmark and gaining control market portion by participants ( Lai et al, 2008 )


Increased cost in operations due to lifting fuel monetary values ; borders of industry participants hit ( Wadewitz, Johnson & A ; Weinz, 2008 )

Outbound logistics

Important activity as nexus to clients

Distribution Centres being set up by the largest participants in the sector in new markets such as China ( Lai et al, 2008 )

Selling and gross revenues

Increased importance in current market with force per unit area on borders though participants have by and large kept pricing subject


Service to client could potentially alter with new force per unit areas and competitory kineticss ; current focal point on service but concern theoretical accounts on client service bringing could alter ( Greene & A ; Longson, 2008 ) .

Support Activities


Firm substructure

Entrepreneurial civilization typically

Management of houses could be forced into action with possible consolidation in the sector driven by force per unit areas in reduced concern and borders ; could take to synergisms and value ( Fitchie, 2008 )

HR direction

Human resources continues to play an of import function as endowment influences the activities across the value concatenation

Technology development

Technological capablenesss continue to be critical factoring the sector and a demand to be a participant ( Greene & A ; Doshi, 2007 )


Important lever for sector given big capital spending required for edifice or replacing fleet

Some are prosecuting this activity despite sector force per unit area as concern has decreased ; FedEx late reported to hold bought some aircraft from Rolls-Royce ( Armitage, Fornaro & A ; Crispin, 2008 )

We note from the analysis above and the back uping statements in articles, the cardinal factors impacting the value concatenation are the undermentioned:

Integration of the house ‘s activities across primary and support activities – Though each of the activities above have their influence on the sector and its development, the of import implicit in factor is the integrating of the primary and support activities in order to drive the efficiency of the houses in the sector, and guarantee the bringing of the client service required by clients.

Use of engineering to drive integrating and besides efficiencies across the value concatenation – Aside from the integrating of the activities, a cardinal driving force every bit good is the usage of engineering to both thrusts the integrating and besides pushes the efficiencies across the value concatenation as this impacts the pricing of services and bringing of client demands.

Strong direction to drive actions and enterprises across the concatenation – Finally, strong direction is needed in order to place the chances and be able to force for the execution of these enterprises, peculiarly in engineering and in integrating. The current industry force per unit areas from higher fuel monetary values are altering the kineticss of the sector.

Supply Chain Management

Supply Chain analysis involves working across multiple endeavors or companies ( Inter-enterprise ) to shorten the supply concatenation clip in the bringing of goods and services to the consumer or client. Demand uncertainness in supply ironss can be addresses by faster response times. A basic merchandise supply concatenation can afford longer lead times and batch fabrication of big batch sizes to run into the demand. A supply concatenation that produces manner or mass customization merchandises must react rapidly and be more nimble. Most supply ironss are traveling in the way to back up a more rapid changing of demand by the consumer or client.

Good transit and logistics companies besides natures in cut downing entire costs through supply concatenation direction excellence. Supply concatenation direction means pull offing the concern procedure from the initial provider to the ultimate client concentrating on velocity and flexibleness, ensuing in the lowest entire cost and highest client satisfaction-from provider ‘s provider to client ‘s customer-with supply determinations based on entire life rhythm costs.

In this Context, FedEx identifies five chief properties of supply concatenation direction:

Strategy – Making an effectual supply concatenation direction organisation and back uping fact-based schemes and programs.

Resources – Developing and deploying human resources and information systems necessary to maximise public presentation. Nothing happens without top-notch, highly-skilled professionals utilizing effectual proficient tools.

Procedures – Making strategic programs based upon entire cost direction and in sourcing/outsourcing analysis and using a systematic attack to better using the supply base.

Optimization – Aligning the supply base with our supply concatenation ends and continually seeking to better the supply concatenation methods and composing.

Globalization – Sing supply chances on a planetary footing.

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1.4. FedEx – Core Competences and Dynamic Capabilities

The analysis above of the planetary express transit and logistics industry provides an indicant of the demands needed in order to be successful in the sector. This sub-section presents the nucleus competences and dynamic capablenesss of FedEx and will show the nexus with the sector ‘s demands for success.

The nucleus competences and dynamic capablenesss of FedEx are the undermentioned:

Human resources: authorising employees – One of the nucleus competences of FedEx is the authorization of employees which has led to entrepreneurial behavior among the employees ( Schindehutte, Morris & A ; Kocak, 2008 ) . This authorization is the ground that FedEx is able to accommodate rapidly to market alterations and maintain abreast of the development in the planetary express transit and logistics sector and in front of competition.

Selling: presenting client value – FedEx is known for their innovativeness in presenting value to their clients. It is partially the point above on employee authorization which drives this. However, it is besides mostly the strength of their selling administration in being able to place the value that clients require and their ability to present this through convenience and minimised relational costs ( Smith & A ; Colgate, 2007 ) .

Information systems and engineering: providing accurate 24/7 information – FedEx has invested significantly in its information and engineering systems in order to supply clients with information to track the services being provided by FedEx. The house realised early on in their concern history, and good in front of the other houses in their sector, the importance of information ( e.g. bundle trailing, drop-off location finder ) and the power this brings to run intoing clients ‘ demands ( Bhattacharya, 2006 ) .

Management: go oning acquisition and application to operation – This nucleus competency of FedEx is driven by their Chief executive officer and Founder Fred Smith who stated that the success of FedEx is based on “ continual acquisition and instruction and the subject to use those lessons to your operation ” ( Sarros, Cooper & A ; Santora, 2007 ) . FedEx ‘s actions have been based on a continual apprehension of their market state of affairs and the execution of enterprises to run into the demands of the germinating sector such as technological demands and client service degree demands.

Strategic Vision and Infrastructure within FedEx Corporation

FedEx – Strategic Vision and Visionary leading.

Frederick W Smith, the Chairman, President, and CEO of FedEx Corporation was presented the “ Peter F. Drucker Strategic Leadership Award ” for the twelvemonth 1997. The award, established in 1995, was in acknowledgment of an person ‘s advanced and result-oriented leading. With the aid of his squad he executed a vision with consistence and focal point. Analysts recognition Smith ‘s leading as the ground for the transmutation of FedEx, from a one time loss doing company, to a planetary logistics industry leader with grosss of “ $ 22.5 billion. ” Under his leading, FedEx direction has developed strict procedures with highly low defect rates ; employees are empowered through information, engineering and thorough preparation. Information engineering has transformed the company into a internet leader every bit good as a logistics trailblazer.

Smith was one of the few concern leaders who foremost anticipated the application of Internet in concern operations, ensuing into the launch of the website in 1994, enabling clients to make concern online.

FedEx had been established as a technologically driven company. Smith stipulated three ends, which he believed would organize the critical success factors of FedEx ‘s concern in future – velocity, dependability and client service. In order to accomplish these ends, Smith invested to a great extent on IT. Smith strongly believed that for an express industry, it was necessary to utilize IT to supply clients with real-time information about the motion of their documents/packages.

Airy Leadership – FedEx Supply Chain Services will be an acknowledged universe leader in planetary incorporate logistics direction, supply concatenation solutions and time-definite bringing. Our motivated associates will hammer reciprocally profitable partnerships with our clients utilizing first engineering and concern patterns.

Smith besides believed that in a service oriented organisation like FedEx, it was really of import to hold extremely committed employees, neglecting which ; it was non possible to present the sort of service that the clients expected. FedEx ‘s employees were made to believe that they were non simply executing their responsibilities but were work outing the transit jobs of the clients. It is clear from these analyses that FedEx Corporation had been really competent in engineering and human resources which resulted in its great success. FedEx ‘s corporate strategic vision is based on three rules ;

runing independently: by concentrating on independent webs to run into distinguishable client demands ;

compete jointly: by standing as one trade name worldwide and talking with one voice

Manage collaboratively: by working together to prolong loyal relationships with their work force, investors, and clients.

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FedEx – Transportation system and Logistics Infrastructure

FedEx Corporation ( “ FedEx ” ) provides a wide portfolio of transit, e-commerce and concern services through companies viing jointly, runing independently and managed collaboratively, under the well-thought-of FedEx trade name. These operating companies are chiefly represented by Federal Express Corporation ( “ FedEx Express ” ) , the universe ‘s largest express transit company ; FedEx Ground Package System, Inc. ( “ FedEx Ground ” ) , a taking supplier of small-package land bringing services and FedEx Freight Corporation, a taking U.S. supplier of less-than-truckload ( “ LTL ” ) cargo services ( FedEx Annual study 2007 ) .

Overall, FedEx hasA over 280,000 employees worldwide, A operates about 50,000 bead off locations and managed over 10 million square pess of warehouse infinite worldwide. They have 670 aircrafts, and 75,000 vehicles and dawdlers, managing about 6.5million day-to-day cargos to more than 220 states and districts. ( Jack W. Plunkett 2007 ) . FedEx Corporation introduced express bringing to the universe in 1973, and remains the universe ‘s largest express transit company and it is the universe ‘s largest nightlong bundle bearer with about 30 per centum market portion.

Taking into considerations the cardinal elements from the above analysis and FedEx ‘s nucleus competences it can be figured out that FedEx primary activities are Marketing and Gross saless, look intoing orders, fiscal analysis and having payment, packaging, transportation merchandises, logistics, managing and hive awaying of merchandises to be shipped, managing orders, bringing of the merchandises, and eventually Service to guarantee client satisfaction. But, the key elements which support these activities are:

Procurement ( buying, trucks, planes, gas and other assets ) .

Research and Development ( R & A ; D ) activity which include engineering development, investings in systems invention, and information engineering ( IT ) development.

Human Resource Management that includes hiring, preparation, developing and counterbalancing employees from the truck drivers to the top direction.

Firm substructure which includes general direction, planning, accounting, legal support, authorities ordinances, and other general demand to back up the value concatenation.


FedEx – Virtual Information Infrastructure

Information Technology is the anchor of the FedEx Corporation which is vastly responsible for its success and its competitory advantage over its challengers. FedEx ‘s consistent attempt in the development of information engineering and system inventions has ever been its premier concern which created the direct interconnectedness between its clients and services. FedEx ‘s Virtual Information System emerged as a revolution in this context which closed the spreads between the consumer and marketer.

In 1979, a centralised computing machine system – Customer, Operation, Master Online System kept path of all bundles handled by the company. This computing machine system relayed informations on bundle motion, pickup, invoicing and bringing to a cardinal database. In 1984, FedEx started to establish a series of technological systems. The Power-Ship plan, aimed at bettering efficiency and control, which provided the most active clients ( around 850,000 ) with the proprietary online services. But, the most important development in this field came between the old ages 1994-99 which started giving the form to the practical information substructure. They were foremost to offer on-line bundle position tracking through FedEx website so that clients can really carry on concern via cyberspace. In 1995, a Windows-based transportation and tracking package allowed around 650,000 users to treat and pull off their cargo from their desktops. FedEx Virtual-Order Software in 1996 linked cyberspace telling with the bringing and online trailing. In 1997, FedEx introduced e- Business tools for easier connexion with transporting tracking applications. FedEx decided to pass its internal I.T. substructure under the Project GRID ( Global Resources for Information Distribution ) . The undertaking involved replacing 60,000 terminuss and some Personal computers with over 75,000 web systems. Besides, in 1999 FedEx signed an understanding with Netscape to follow Netscape package as the primary engineering for accessing its corporate intranet sites. FedEx ‘s intranet included more than 60 Web sites, created for its terminal users and some instances by its terminal users. At this point of clip FedEx was the largest on-line client waiter web in the universe that operated in existent clip. The benefits of these services were non limited to FedEx ‘s clients. Its online services, which in 1999 handled 60 million minutess per twenty-four hours, saved FedEx cost of 200,000 client service employees. In bend, the Company reported disbursement 10 per centum of its 17 billion U.S. dollars one-year gross on I.T. in 1999. Information had allowed FedEx to take down its costs such that the cost to clients of utilizing FedEx in 1999 was lower than it was 25 old ages ago.

FedEx Virtual Order Process

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CHAPTER-2: Mergers & A ; Acquisitions in Transportation and Logistics Industry.

2.1. Benefits and restrictions of amalgamation and acquisition scheme.

Amalgamation and Acquisition is fundamentally a mechanism by which an organisation grows. It is a sort of external growing scheme which involves utilizing the concern ‘s money to put in other concerns, whereas the internal growing occurs by puting net incomes in the same concern. A amalgamation occurs when two separate companies agree, normally by common consent, to come together. On the other manus, acquisition is a coup d’etat which involves buying a shareholding of over 50 % , and so this company can command and enforce its will upon this. Merger and acquisition are growing schemes are good for transit and logistics industry, as in all the other industries if two companies decide to fall in custodies after a elaborate research and studies.

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Benefits of amalgamation and acquisition:

Amalgamations and acquisitions normally win in edifice cost efficiency through the execution of economic systems of graduated table. Basically, a new economically stable house emerges, through the brotherhood of two parent houses with an increased graduated table of operations. As a consequence, there are opportunities that the cost per unit will come down with rise in end product production. In context of T & A ; L industry the company will acquire a bigger substructure and they may acquire easy entree to the countries which were to hard to make. This in bend will increase their logistics offerings and their efficiency with decreased cost, which was non possible if they would hold thought of increasing the subdivisions on their ain.

This procedure besides frequently leads to an increased value coevals for the company. It is expected that the stockholder value of the freshly established house would be greater than the amount of the stockholder values of the parent companies which is applicable in T & A ; L industry every bit good.

One of the benefits of amalgamations and acquisitions is addition in market portion. When a financially stable company acquires a contrastingly hard-pressed one, the freshly found organisation experiences a significant addition in market portion. The new house is normally more cost-effective and competitory when compared to its financially weak parent organisation.

Restrictions of amalgamation and acquisition:

If due to amalgamations and acquisitions, a company has well a large market portion so there could be less competition complacence amongst firmsA can take to lower quality of services and less investing in new merchandises and services.

Due to amalgamation or acquisition, if a company expands excessively much so it could besides take to diseconomy of graduated table. In this status, it will take the house to bring forth merchandises and services at increased per unit costs.

Amalgamations and acquisitions can take to loss of occupations.

Amalgamations could be a factor of de-motivation for staff, for illustration, directors would prefer to work for large company where they acquire higher wages and more prestigiousness.

There could be failure to procure good will of a broad scope of stakeholder groups in both companies.

Potential struggle between single and corporate aims is non given sufficient acknowledgment and is n’t managed.

Repute can besides be damaged during the amalgamation procedure.

2.2. Acquisition of Caliber Systems in 1998 by FedEx Corporation

In the twelvemonth 1998, FedEx took a large spring in context to its variegation by geting Caliber System Inc. As a consequence of this, five subordinate companies were formed: Federal Express, RPS, Roberts Express, Viking Freight and FDX Logistics. Apart from Federal Express, all the other four were the portion of Caliber System and all were managed independently. The logistics operations of both FedEx and Caliber were different as differed in client bases and service offerings. Caliber was expertness in supplying an luxuriant logistics operation concentrating chiefly on high priced goods industries such as traveling natural stuffs, pull offing work-in-progress, fabrication of autos and fork-lift trucks etc. Federal Logistics and Electronic Commerce ( FLEC ) before the acquisition was non able to supply complete supply concatenation solution because they merely focused on finished goods and contrary logistics. But, the acquisition led FLEC to set there hands into countries like repositing and transit apart from the basic logistics maps. Subsequently, Caliber became apart of FDX Logistics and FLEC continued as a division under Federal Express.

The load which this acquisition brought along with it to the company was that, the company has to free its image of merely being an express bringing company. The challenge was that all the critics including the client related the FedEx trade name merely with transit. One solution to this challenge was the renaming of the company. In this context, the acquisition gave the name to the keeping company as ‘FDX Corporation ‘ but they did really less to advance the name. Therefore, the transit subordinate FedEx Express still lived on as a trade name image and the corporate name was still under screen. Unlike other companies such as UPS which ran merely under one name for all its services, FedEx was seeking to advance all its subordinate companies with wholly unrelated names under FDX logo.

The cardinal docket here was that, the two separate logistics concerns within the group with separate gross revenues and client service staff created confusion within clients and resources were duplicated. The large thing was despite holding such confusion the subdivisions continued to run and offer solutions at all degree of supply concatenation. In this scenario, the liberty of all subordinate companies where maintained but the challenge was to convey the companies closer to make the synergism. These companies were runing with separate accounting systems and client service staff, so they made a vision to “ come on separately but compete jointly. ”

Therefore, we can calculate out that this acquisition was non a complete success as all the subordinate companies sustained but the ultimate end for the corporation was to supply clients with a individual point of entree to the whole Group. In ulterior old ages, this became the chief ground for the company ‘s structural transmutation through promotion in information engineering within the company.

CHAPTER-3: Events Leading Up To January 2000 Reorganization

This subdivision provides an analysis of the events taking to the January 200 reorganization of FedEx. The first sub-section reviews the public presentation of FedEx and the developments in the Internet market while the 2nd sub-section touches on the impact of the major strategic enterprises undertaken. The concluding sub-section provides a speedy sum-up of the analysis.

3.1. FedEx Performance and Internet Market Developments

The January 2000 reorganization was mostly driven by the hapless public presentation of FedEx in the preceding periods. While public presentation remained strong and positive up to 1999 with record net incomes, this proved to be the start of a downtrend in public presentation. The following several quarters saw FedEx ‘s public presentation experience considerable in income and net income. This was partially influenced by the lifting fuel monetary values but the failure of the company to respond and still be moderately profitable in a background of lifting fuel monetary values led direction to believe that alteration was needed.

The public presentation of FedEx was sub-par and merited hapless reappraisals. The lower fiscal public presentation aside, FedEx ‘s public presentation was unequal for the undermentioned grounds:

Un-reactive and inflexible – It took several quarters of hapless public presentation for FedEx direction to take action. FedEx could hold been more aggressive in its actions and realised instantly after the first one-fourth of hapless net income public presentation that the industry was altering and that FedEx needed to do a move. At the really least, FedEx could hold made moves that would hold impacted other participants as good and badly harm the poorer capitalised houses ( e.g. get down a monetary value war )

Did non use advantages in sector – Partially related to the first point, FedEx did non force to do any impact on the sector. FedEx could hold utilised its web, for illustration, and worked with its providers and even purchasers to guarantee that the house still maintained good profitableness in the period of high fuel monetary values.

In add-on to the hapless public presentation of FedEx in the preceding several quarters, the development of the Internet market and the actions of rivals forced FedEx to reexamine its concern scheme and find the stairss necessary in order to convey the house back to profitableness and successful operations. In this regard, the actions of FedEx were unacceptable every bit good for a twosome of grounds:

Failure to gain technological alterations – For a house that was known to be reliant on engineering every bit good as at the head of technological promotions, the actions of FedEx were unacceptable as they showed hapless pro-activity and apprehension of the alterations go oning in the sector.

Reactionary moves to technological invention – Not merely did FedEx non gain technological alterations that would impact the sector, FedEx had to wait for other houses to take the first move in tapping the new engineering. This therefore made the state of affairs worse as it placed FedEx in a place that was far behind other rivals in footings of the usage and development of engineering.

3.2. Motivation for Strategic Enterprises

FedEx had three strategic enterprises following the reorganization in January 2000. For these actions, FedEx could be lauded as these addressed the concerns that FedEx faced following the several period of hapless public presentation and the developments in the Internet market. The strategic enterprises and the principle for prosecuting each are as follow:

A new stigmatization scheme that involved altering the Company ‘s name to FedEx Corporation, and widening the ‘FedEx ‘ trade name to four of its five subordinate companies – This is an first-class move for a twosome of grounds: ( 1 ) integrates the house and leverages the successes of the assorted divisions, ( 2 ) taps the trade name that clients are familiar with. This would let FedEx to leverage its advantages in the sector as seen in the five forces analysis. Although comparatively tardily, FedEx did gain the importance of incorporating their concerns and maximizing their place in the sector.

The demand for one point of entree to gross revenues, client services, and charge and mechanization systems – This once more touches on the integrating point although at a different facet. With an incorporate concern across its key activities, FedEx could supply clients with easy entree and dependable services, factors that are of import for the FedEx clients. Besides, this action gives FedEx the technological push that it needed in order to convey its engineering up to par with rivals, and place the house for possible promotions at a ulterior clip.

FedEx Home Delivery, a new, economical residential bringing service- This last action by FedEx touched on several of import factors related to the success of houses in the planetary express transit and logistics industry: ( 1 ) invention in merchandises and services, ( 2 ) purchase of strengths of related concerns, and ( 3 ) enlargement into new markets and chances. This residential service highlighted the invention required in the sector and besides the ability of FedEx to be able to be advanced in the bringing of merchandises and services to clients. This marked a farther strengthening of the capableness of FedEx. The 2nd point referred to the purchase of related concerns. This relied on complementary concerns leveraging each other ‘s strengths and besides highlighted the ability of FedEx to work together within the concern to prosecute a greater good for the house. Finally, this action besides showed that FedEx was still in the game as it pursued a new market and did non merely stay with the usual clients catered to.

Overall, the actions of FedEx were commendable in that these actions brought FedEx back into the game as one of the key participants in the sector holding fallen behind with their several one-fourth ‘s of hapless public presentation and comparative inaction and flexibleness in doing alterations.


The actions ( or inactivity ) of FedEx taking to the January 2000 reorganization were unacceptable sing the place of FedEx in the sector, and the earlier public presentation shown by the house in footings of being proactive, advanced, and technologically capable. However, the actions following the reorganization ( or as portion of the reorganization ) made up for the unacceptable actions prior to the reorganization. The strategic enterprises gave FedEx the platform to travel back to its old dynamism to trust on its nucleus competences in order to travel frontward in the sector and return to good fiscal and operational public presentation. The actions taken were consistent with the identified nucleus competences of FedEx, and were appropriate given the place of FedEx in the sector, and the likely actions of rivals based on the apprehension of the industry given by the analyses.


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