Airborne Express Case Study 1

The $45billion US domestic delivery market could be categorized into 2 segments. These consisted of letters weighing 0 to 2

One of the key decisions of Airborne Express was to target regularly shipping business customers and purposely passing over residential deliveries and infrequent shippers. Ray Berry, vice president of Field Services Administration, commented this selection of customers: “ Since we can’t be all things to all people, we pick our kind of customer deliberately.” And it

a) Economies of scale—the top three carriers (Federal Express, UPS, and Airborne Express) serve slightly more than 85% of the domestic express mail market. All three carriers deliver a high volume of packages, and thus, are able to spread fixed costs over more units. Also, each carrier has integrated technological systems that improved operational efficiency. In addition, intensive training programs of employees increase service and delivery efficiency.

For over two centuries, people relied on the United States Postal Service (USPS) as a way to receive their letter and packages from people around the country. It is their only way where a person can obtain a parcel when there are no technologies to assist them. Nowadays, in the modern world, there are different kinds of ways where one can receive a package or a letter, from an email or other companies. This results in the USPS decreasing its values. In order for the USPS to keep up with the fast-paced society, it should consider changing their ways of working.

The Post Office Department known as the United States Postal Services (USPS) (Annual Report, 2009) today, is a dominate player in the mail delivery arena and has been existence since 1776. The Post Office was originally a governmental agency, but due to mismanagement by Congress, was reorganized in 1971 and no longer a part of the presidential cabinet; but became an independent establishment of the executive branch of the Government. To date, the USPS maintains a monopoly on the day-to-day delivery of mail but competitors do share the market on some of the other types of deliveries; shares the market on some of the other types of deliveries (i.e. express

Royal  Mail  is  the  largest  provider  of  postal  services  in  the  United  Kingdom  and   one  of  the  largest  postal  service  providers  in  the  world.  This  paper  analyzes

FedEx has two major customers who consist of businesses and individual customers. These business customers have accounts with FedEx to arrive at their location to pick up packages daily or weekly. Two-thirds of FedEx’s business comes from these customers so FedEx curves their operations to satisfy this clientele. Since FedEx’s competition is trying to acquire some of this clientele they have begun to operate and market to this clientele more effectively. Individual customers are also in FedEx’s internal environment. These customers represent one-third of their business. With increased competition from competitors FedEx has marketed to this market substantially. They have created boxes that are prepaid for shipment as long as the contents fit into the box. This has effectively increased business amongst individual customers for FedEx.

For the US Express Mail industry, the overall threat of new entry is very low. The following list and explanation captures the difficulty an entrepreneur might face in trying to penetrate the express mail market:

In the past there was no thing as overnight express delivery for packages or freight. Then the top 3 competitors in the delivery service industry that held 85% of the market were Airborne Express (AE), United Parcel Service (UPS) and Federal Express (FedEx) and, the remaining market share was among six second-tier companies. In the past few years, the express mail businesses had grown extremely fast due to the ability to provide and fulfill overnight shipping accompanied by next-morning delivery services for both individuals and businesses customers. By 1996, this segment of the expedited shipment delivery had grown to a $16-17 billion dollar industry business in the US alone.

The United States Postal Service (USPS) has been served as government institute since 1971. During the nineteenth century, the USPS contributed to many people in several ways across the United Stated. The twentieth century brought significant growth to the USPS, including different size of package delivery service and airmail. Over the past decade, however, it has to compete with electronic mail and various package delivery companies and it causes to have bad result. The USPS faced with decreasing of total mail volume. The loss of income has induced the USPS to consider changing their system of service such as shortage of delivery days.

In our constant evolving society,new advancements are always on the rise. There have been several essential technological developments in our society which had allowed us to progress, one of them being the mail carrier service we call the USPS today. Although the United States Postal Service has been replaced by several companies such as Fedex and the UPS, we should not discount the USPS for allowing their line of work to surface.

FedEx’s new product Courier Pak makes sense because of its’ high profit margin and potential to generate new volume. Out of the 3 services that Fed Ex provides, CP yields the highest profit margin at 66% while Priority-One is at 55% and SAS is only at 27%. In addition to this, the company believes that it will be able to boost up sale of CP from 1300 to 6000 packages per day. This shows that CP is the most profitable and huge potential for growth.

For one aspect of the market, the United States Postal Service is a monopoly, since by law it is the only company that can legally deliver a piece of mail in the entire United States. It is the only single dominant firm, which means it controls 100% of the physical mail delivery market. The main barrier in place is the U.S. Constitution giving Congress the ability to regulate the Post Office and who can control mail delivery. Finally in this aspect product and service differentiation does not matter a whole lot, since it is a relatively flat cost to mail a letter.

The express mail industry can easily be considered an inherently tough industry to operate within given the myriad of factors that come into play, such as unions, government regulations, cost of technological advancement, and international borders to name a few. Despite this, the industry could be seen as offering opportunities, which could be seized by attracting customers based on the quality of the service being offered. Consequently, this also encouraged mimicking between

E-mailing could possibly have a small effect on this industry, but this is not an option for most deliverable items, as well as legal documents. Depending on the urgency of a package being delivered, regular mailing systems propose a small threat on this industry. It obviously costs less, but it doesn’t compare at all to the convenience of express delivery services.