FedEx Express: Global Strategy, Competitors & Competitive Edge
This paper provides a strategic analysis of FedEx Express, the flagship division of FedEx Corporation. It examines the company's origins, current global expansion efforts in emerging markets such as China, India, and South America, and the oligopolistic structure of the global courier industry. The paper identifies FedEx's major competitors — UPS, DHL, and TNT — and compares their market positions. It also explores FedEx's core competencies, including brand strength, economies of scale and scope, and cost management strategies. Finally, the paper addresses key challenges facing the company, including fuel cost volatility, leadership succession, and the financial demands of international infrastructure investment.
- Introduction to FedEx and Global Expansion: FedEx origins, market position, and emerging-market growth
- FedEx Express Industry Overview: Industry structure, cost drivers, and competitive dynamics
- Major Competitors: UPS, DHL, and TNT profiles and market positions
- Products and Services: FedEx Express divisions and service offerings
- Core Competencies and Competitive Advantages: Brand strength, cost control, and economies of scale
- Challenges Facing FedEx: Fuel costs, leadership succession, and expansion risks
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What makes this paper effective
- Grounds claims in specific, cited evidence — for example, citing exact revenue figures for UPS and FedEx and naming particular cities receiving new aircraft capacity, which adds credibility and precision.
- Balances external analysis (industry structure, competitors) with internal analysis (core competencies, cost controls), giving readers a rounded strategic picture.
- Uses concrete operational examples — such as the Shenzhen two-hour scheduling advantage — to illustrate abstract competitive concepts like economies of scope.
Key academic technique demonstrated
The paper demonstrates applied strategic analysis by linking industry-level conditions (oligopoly structure, globalization trends, fuel costs) directly to firm-level decisions (aircraft purchases, casual labor policies, market entry moves). Rather than describing strategy in the abstract, the author consistently anchors each strategic concept to a specific FedEx action or outcome, which is the hallmark of effective business case writing.
Structure breakdown
The paper opens with a company overview and current expansion activity, then narrows into industry-level analysis before examining competitors. It pivots to products and internal competencies, and closes with forward-looking challenges. This outside-in then inside-out structure mirrors a standard strategic audit framework and guides the reader logically from market context to firm capability to future risk.
Introduction to FedEx and Global Expansion
FedEx was founded by Fred Smith after his tour in Vietnam, and he continued to run the company as the only CEO FedEx had ever known. The company began by offering overnight courier services — an industry that had not previously existed. Today, that unit is known as FedEx Express and it remains the largest division within the corporation. Notable competitors include UPS, DHL, and TNT. In most Western markets, the industry is relatively concentrated, with these companies and a few local carriers — such as Purolator in Canada — dominating the business. In the developing world, there may be more competitors and the industry may be less concentrated. FedEx remains a strong player in the overnight delivery industry.
Today, industry growth is concentrated in emerging markets. As such, most of the notable moves from FedEx Express have been directed at these regions. Recent moves in China, for example, have included opening a third station in Suzhou, a wealthy and historic city near Shanghai (Berman, 2011), and opening its largest operations station in the country in the Pudong area of Shanghai (Lopez, 2011).
FedEx is also expanding in India, having completed a major acquisition of AFL and Unifreight India (FedEx, 2011). The company launched a new service in India to help capture a larger share of that growing market (Ashby, 2011). Additionally, the company is expanding in Brazil and the Southern Cone region of South America, including Argentina and Chile (FedEx, 2007). These expansions, along with those in Europe, point to the company's commitment to take advantage of the opportunities presented by globalization and to spur further globalization by providing better market access between expanding economies and mature ones.
FedEx Express Industry Overview
The global courier market is expanding, in large part due to the long-run trend of globalization. Technology has aided in this boom, as FedEx has benefited from increased sending of documents and of items purchased over the Internet. Some of the company's major customers — from Apple Computer to semiconductor manufacturers in the Philippines — are information technology firms. FedEx has been gaining market share in the United States in recent years, particularly after DHL exited the U.S. market. The company gained market share in 2009, for example, despite a decline in revenue (Reuters, 2009). The company has been adding aircraft capacity in the form of Boeing 777s to help expand its international presence. Recent aircraft purchases have been earmarked for Shanghai, Hong Kong, Osaka, Shenzhen, London, Seoul, Dubai, and Delhi (Jackman, 2011).
The industry is characterized by oligopoly conditions at the global level, with only four worldwide carriers. Numerous minor and local carriers also provide competition. Economies of both scale and scope are key drivers of business. Economies of scale allow the company to achieve a lower per-unit (package or kilogram) cost. Economies of scope allow FedEx to deliver a higher level of service than its competitors. In particular, being able to operate stations in areas where competitors cannot do so profitably gives FedEx a significant competitive advantage. High volume levels also allow FedEx to offer better service. A good example of this is Shenzhen: because FedEx is able to fly a 777 nonstop from Shenzhen to Memphis, it can depart two hours later than competitor planes — competitors may need to run a shuttle to Hong Kong before beginning their trans-Pacific journey. As a result, manufacturers can get an additional two hours of productive work on a given workday (Jackman, 2011). This improves the bottom line of FedEx customers and, in turn, helps FedEx grow its market share.
On the cost side, fuel costs are the single largest cost component for FedEx, followed closely by labor. A third major cost is fleet maintenance and aircraft acquisition. If these three costs can be managed effectively, FedEx can remain profitable. The company hedges its fuel costs and maintains a degree of flexibility in its labor costs by starting many workers as casual employees. FedEx buys some aircraft and leases others, providing additional flexibility with respect to aircraft capacity.
Major Competitors
The largest FedEx competitors are UPS, DHL, and TNT. United Parcel Service (UPS) is a U.S.-based company that competes with several FedEx business units, including overnight delivery. UPS is the other major player in the American market and maintains a large overseas network as well. It is publicly traded. Because of its larger ground business, UPS has higher revenues ($49.5 billion versus $39.3 billion) and higher net income ($3.4 billion versus $1.4 billion) than FedEx (MSN Moneycentral, 2011). DHL is owned by Deutsche Post. This company exited the U.S. market several years ago but retains a strong presence in both Europe and the developing world. TNT is the smallest of the four major global carriers. TNT recently split off its Express division into a separate company. TNT Express earned €7 billion in revenue in its most recent reporting year and posted a profit of €180 million (TNT 2010 Annual Report).
Works Cited
Ashby, A. (2011). FedEx Express launches new delivery service in India. Memphis Business Journal. Retrieved October 15, 2011 from http://www.bizjournals.com/memphis/news/2011/10/04/FedEx-express-launches-new-delivery.html
Berman, J. (2011). FedEx Express expands in Suzhou, China. Logistics Management. Retrieved October 15, 2011 from http://www.logisticsmgmt.com/article/FedEx_express_expands_in_suzhou_china/
FedEx. (2007). FedEx Express responds to growth of Brazil, South Cone with greater access for local markets. FedEx Brazil. Retrieved October 15, 2011 from
FedEx. (2011). FedEx earns top ten spot on Fortune's World Most Admired Companies List. FedEx Press Release. Retrieved October 15, 2011 from
FedEx. (2011). FedEx Express completes acquisition of AFL Pvt Ltd. businesses. FedEx Press Release. Retrieved October 15, 2011 from http://whattheythink.com/news/49448-FedEx-express-completes-acquisition-afl-pvt-ltd-businesses/
FedEx.com. (2011). Retrieved October 15, 2011 from http://www.FedEx.com/
Jackman, F. (2011). FedEx using 777s to capture international market share. Aviation Week. Retrieved October 15, 2011 from
Lopez, E. (2011). FedEx Express opens largest operation station in Pudong Sanlin, China. Manila Bulletin. Retrieved October 15, 2011 from http://www.mb.com.ph/node/333991/FedEx-expre
MSN Moneycentral. (2011). FedEx and UPS. Retrieved October 15, 2011 from and
Reuters. (2009). FedEx profit drops 75%, more than estimated. New York Times. Retrieved October 15, 2011 from
TNT 2010 Annual Report. Retrieved October 15, 2011 from http://www.tnt.com/content/dam/corporate/archive/Images/TNT-Express-Report-2010_tcm177-540070.pdf
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