FedEx UPS Presentation
- 1. The Battle for Value, 2004: FedEx Corp. vs. The United Parcel Service, Inc. Presented by Gerald Onukwaghu Prashant Rajopadhye Miguel Edwards
- 2. The Battle for Value, 2005: FedEx vs. UPS FedEx will produce superior financial returns for shareowners by providing high value-added supply chain, transportation, business, and related information services through focused operating companies competing collectively, and managed collaboratively, under the respected FedEx brand. FedEx Mission Statement Excerpt
- 3. The Battle for Value, 2005: FedEx vs. UPS We serve the evolving distribution, logistics, and commerce needs of our customer worldwide, offering excellence and value in all we do. We sustain a financially strong company, with broad employee ownership, that provides a long-term competitive return to our shareowners. UPS Mission Statement
- 4. The Battle for Value, 2005: FedEx vs. UPS FedEx History Business model conceived by Fred Smith in an undergraduate term paper. Invests $4 million of his own capital and raises and addition $91 million. Launches in 1971 By 2003 50,000 Delivery Trucks 625 Cargo Planes 217,000 Employees Handles 2 billion packages $22.5 Billion with 37% margins
- 5. The Battle for Value, 2005: FedEx vs. UPS UPS History Started in 1907 by 19 year-old Jim Casey then called American Messenger Company. Became Unite Parcel Service of America in 1929 and began shipping packages on commercial airliners. By 2003 88,000 Ground Trucks 583 Planes 360,000 Employees $2.9 Billion in profits on $33.4 Billion
- 6. The Battle for Value, 2005: FedEx vs. UPS Head-to-Head $2.9 billion $830 million Net Income $33.4 billion $22.5 billion Revenues $28.9 billion $15.4 billion Assets 13 million 5.4 million Packages Shipped Daily 360,000 216,500 Employees 583 625 Aircraft 88,000 50,000 Ground Vehicles UPS FedEx
- 7. The Battle for Value, 2005: FedEx vs. UPS FedEx - UPS 2003 Financials
- 8. The Battle for Value, 2005: FedEx vs. UPS The Competition Price competition Operational Reengineering Information Technology Service Expansion Logistic Services
- 9. The Battle for Value, 2005: FedEx vs. UPS The European Market In 1992, FedEx sold operations to DHL after sustaining an estimated $1 Billion in losses since 1984. FedEx continues to deliver throughout Europe, however, leveraging local partners. UPS enters the European market place in 1988. Acquires 10 local providers. Announces $1 Billion of investments in that market Targets to grow European business to 1/3 of total operations.
- 10. The Battle for Value, 2005: FedEx vs. UPS The Breaking Into China Economist suggest China will be the worlds largest economy by 2039. Chinese air cargo is growing at a steady rate of 30%. Import/Export shipping market is estimated at $1 Billion. Intra-China Shipping estimated at $800 Million. In 2004, the US and China strike an new transportation accord. Five times the number of in/outbound flights Permitted to establish hubs Access to all airports
- 11. The Battle for Value, 2005: FedEx vs. UPS The Breaking Into China (cont.) FedEx and UPS already serving China FedEx maintained a larger presence in China Direct flights to Beijing, Shenzhen, and Shanghai 11 weekly flights, twice as many as UPS Served 220 Chinese cities. FedEx volumes grew by more that 50% between 2003 and 2004 UPS was active in China since 1988 Direct flights to Beijing and Shanghai 6 weekly 747 flights Served 200 Chinese cities UPS reported 60% growth in shipments since 2001.
- 12. Timeline of Competitive Developments
- 13. The Battle for Value, 2005: FedEx vs. UPS Enabling Factors Ditto Cost reduction through economies of scale, IT, Business Process Re-engineering Hub & spoke distribution pattern Innovative, entrepreneurial, operational leader Deregulation In airline industry In trucking industry Efficiency, Low-cost provider Operations – Malcolm Balbridge National Quality Award for service Leader in logistics & supply chain management Customer logistical management Technology Innovations Customer ordering Package Tracking Process Monitoring UPS FedEx
- 14. The Battle for Value, 2005: FedEx vs. UPS Inhibiting Factors Union Problems, large wage increases Ditto Domestic express market reached maturity UPS FedEx
- 24. The Battle for Value, 2005: FedEx vs. UPS Conclusion Questions