International Freight Network for FedEx Research Paper

Excerpt from Research Paper :

FedEx uses a hub and spoke system to move freight around the world. It has its main hub in Memphis, which is the 2nd-largest airport in the world for cargo movements (ACI, 2014). Several other FedEx hubs feature in the top cargo traffic rankings -- Anchorage, Pudong, Dubai, and Miami. 65% of average daily package volume is domestic U.S. shipments, hence why Memphis is the main focal point in the system (2015 FedEx Annual Report, p.21).

International operations are divided into two types -- international domestic and international export, reflecting the destination. International domestic would be, for example, a package going from Vancouver to Toronto. Export would be anything that crosses a border. The breakdown of average daily volume for international shipments are international domestic 58.8% and international export 41.2% (2015 FedEx Annual Report, p.21).

The international system is still based on the hub-and-spoke network. There are several international hubs around the world. These include Pudong (Shanghai), Dubai, Guangzhou, Osaka, Paris and Incheon (Won, 2016; FedEx, 2014). From these hubs, packages are gathered by the different stations in the region, and then all shipped to the hub, usually via air. In the more established regions, this means using FedEx company planes, but there are partners to cover a lot of the world's outlying areas.

Canada represents a somewhat unique system in FedEx in that it does not run a hub-and-spoke. There are mini versions of the hub-and-spoke, such as all Alberta flows run through a small hub in Calgary, but the general pattern of traffic flows is east-west in Canada, with large aircraft making a Vancouver-Calgary-Toronto run each night, Toronto being the main hub in the country. This allows packages sent within Western Canada, or Eastern Canada, to remain in those regions. This is a variant of how U.S. West Coast flows go through Oakland and Northeast flows through Newark without ever passing through Memphis.

In other countries, the system is the traditional hub-and-spoke. In China, with two major hubs, flows are diverted to one or the other. The other major Asian hubs are in the major markets of South Korea and Japan, allowing to international domestic flows to remain in those countries. Flows between Asian countries where one country is not among the three largest are less common, but they do occur. Such shipments will typically flow through the main North Pacific hub in Osaka.

In other parts of the world, FedEx does not have the same market strength that it has in Asia and North America, and thus everything is serviced through a handful of regional hubs, including Paris and Dubai. In the EU, there are no border restrictions so a centralized main hub at CDG is sufficient to meet the company's needs in the entire EU. The short flight distances from Paris make shipping within Europe using these hubs easier. As in the U.S., smaller local hubs with dozens of routes are then used to service each metropolitan area. In Europe, trucks are likely to be used for anything within a few hours of Paris.

The massive Dubai hub was built…

Sources Used in Document:

References

2015 FedEx Annual Report. Retrieved May 15, 2016 from http://about.van.FedEx.com/newsroom/global-english/FedEx-to-build-new-logistics-hub-in-shanghai/

ACI (2014). Preliminary world airport traffic rankings for 2014. Airports Council International. Retrieved May 15, 2016 from http://www.aci.aero/News/Releases/Most-Recent/2015/03/26/ACI--World-releases-preliminary-world-airport-traffic-and-rankings-for-2014 -- DXB-becomes-busiest-airport-for-international-passenger-traffic

Berman, J. (2014). UPS, FedEx receive more licenses for domestic express package services in China. Logistics Management. Retrieved May 15, 2016 from http://www.logisticsmgmt.com/article/ups_FedEx_receive_more_licenses_for_domestic_express_package_services_in_ch

FedEx. (2012). FedEx Express opens new facility in Dubai to meet increased shipping demand. FedEx. Retrieved May 15, 2016 from http://about.van.FedEx.com/newsroom/meisa-english/FedEx-express-opens-new-facility-in-dubai-to-meet-increased-shipping-demand/

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