Fed Ex vs UPS Case Analysis Essay examples

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

United Parcel Service, a logistics company has established itself through its strong corporate culture, continuous ability to innovate, and its far-reaching global network. The company has maintained a competitive advantage over the years by implementing continuous growth strategies—the first was geographic expansion, next the early adaptation of electronic tracking technologies, and then came a series of acquisitions. Although UPS is financially strong and is able to maintain its role in the courier and delivery industry—it is vital that UPS continue to act strategically as to strive for long-term success. UPS is heavily dependent on the U.S. economy and it is important that it find greater and more profitable ventures

As the world’s largest package delivery company and a leading global provider of specialized transportation and logistics services, UPS, continues to develop the frontiers of logistics, supply chain management and e-commerce combing the flow of goods, information and funds. This past October UPS Logistics Solutions was voted #1 logistics provider by Logistics Solutions. When conducting an industry analysis, it is important to explain the competitive forces model (CFM) of UPS. The first component of competitive forces model are the customers. Their customers consist of business organizations, and the general public. The second CFM component is competition. UPS have a lot of competition in its field, but the most competitive company is FedEx. Since FedEx provides the same services as UPS; both are neck to neck in competition, but UPS has an established history, and because of that, they have more loyal customers, and they are worldly known. They have established them-selves as the elite, with their commercial on television. Showing how they can deliver from one place to another with same day delivery and

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.

In this report we focus on the two main competitors in the package delivery industry: Federal Express Corporation (FedEx) and United Parcel Service of America, Inc.

In the US Express Mail industry, the buyers fit into two segments: businesses and individuals. Express Mail has become the industry standard in some industries such as banking, consulting and financial services since the items inside the package had a high ratio of value to weight. Businesses needed to be able to track the packages and be assured that it arrives on time. That being said, businesses were often high-volume buyers since the shipping managers identified which firm to deal with and concentrate the high-volume of shipments to that firm for a particular project or for the time being. Sales representatives from the firms had to negotiate with stingy shipping managers who sometimes demanded the upwards of 50% or more discounts. The existence of many large volume buyers meant that the buyer power is high. Similarly, individuals also held high buyer power since the Big Three and other second-tier postal services offered largely undifferentiated services.

The evolution of the express mail industry had become a quick on-time shipping and delivery of packages. The service had become effective, reliable, and prompt, which most of the top companies could deliver on these guaranteed promises 96-99% of the time. But, delivery services were only a portion of the services being offered to their customers. Carriers had mastered information management that they shared with their customers. Customers were now able to fill out labels, track the route of their package, and assisted in billing using both via carrier provided software or the Internet.

By 1976, at a volume of 1,300 packages per day, FedEx’s Courier Pack service was only fulfilling one tenth of a percent of the “emergency rush” market, which totaled 870,000 packages delivered per day. By comparison, at 13,400 deliveries per day, the company’s Priority One “emergency rush” service accounted for one percent of the total market. Clearly both services have potential to gain more share of the rush delivery market, but the Courier Pack’s untapped potential is nearly limitless. Surely, the remaining 98 percent or so of customers using competing services for emergency rush delivery, including Emery Air Freight and USPS Express Service, are not familiar with Fed Ex’s less expensive, and more consistent Courier Pack service, and would switch brands with heightened awareness gained through careful marketing.

The US express mail industry is highly consolidated. 85% of the market is served by 3 service providers. There are six second tier players who serve the remaining 15%. FedEx and UPS lead the industry in services and innovation. The following trends have been observed in this Industry.

UPS is a global package delivery business that specializes in not only managing the movement of goods, but the information and funds that moves with those goods in more than 200 countries and territories worldwide. UPS’s target market is primarily U.S. companies that ship business to business via ground delivery and whose delivery time is not

United Parcel Service (UPS), is the world’s largest express package delivery firm that handled more than 4.7 billion packages and documents in 2015. This global transportation and logistics service provider operates in more than 220 countries, and offers an array of supply chain management solutions (UPS Fact Sheet, n.d.). The firm has diversified its products and/or services to include freight forwarding and logistics services via air, ground, rail, and sea. U.S. Domestic Package operations, International Package operations, and Supply Chain and Freight operations are the three operating segments UPS. Through technology advancements UPS delivers online package tracking, e-commerce services, and specialized

DHL 31%, USPS 8%, FedEx 27%, and Amazon 3%. From these numbers Amazon is a very small player in the shipping department. Every competitor, expect DHL, are currently shipping the excess freight that Amazon cannot maintain. With Amazon 's move to acquire more of the market, these competitors need to be on the lookout because portions of their market share can be taken away. These major shipping firms only provide shipping services not offering household products like Amazon. With Amazon starting by semi-supplementing their shipping avenues, Amazon has the potential to grow even larger. The market cap numbers are not a good basis to judge market share on since FedEx and UPS have the majority of the market in the shipping industry. FedEx and UPS are the major competitors against Amazon and its new shipping department. FedEx and UPS had the most recent annual net income of $50.3 billion and $58.3 billion respectively. They represent the majority of packages delivery from individuals, businesses, and online retailers.

UPS has been in the package delivery business for 95 years, providing services to businesses and consumers worldwide in more than 200 countries. In 1994, UPS began to investigate the potential of e-commerce and started an internal group focused on enabling e-commerce. UPS redefined its core business and found ways to change its structure and processes, forming new businesses to take advantage of new opportunities. UPS was interested in finding ways to leverage their extensive infrastructure and expertise in basic transportation of goods, services, and

1. From the point of view of the industry incumbents, is the express mail industry attractive? How has Airborne survived, and recently prospered, in its industry? Is its success attributable to its capabilities, its position, or industry attractiveness?

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.