Which package delivery company, Fedex, UPS or DHL has the best economic model for continued success? Here’s a brief analysis of each company.
FedEx is an international shipping and delivery service company that was founded in 1971. It has over 290,000 employees worldwide.
2014 proved to be a rough year for FedEx. Annual earnings were adversely affected by harsher than usual winter weather and high package volumes during the holiday season.
The increase in e-commerce related packages led to a bad mix that impacted margin growth. Declining fuel prices also led to a decrease in fuel surcharge revenue, which in turn led to FedEx missing expectations for profits.
Fedex’s main competitors are:
- United Parcel Service
Fedex’s Position in the Courier Marketplace
The company provides a variety of services to customers, handling nearly 2.4 million packages a day. FedEx provides around the clock services to its customers all over the world inAsia, Europe, the Middle East, Africa, Latin America, and North America.
It has its own fleet of airplanes and trucks for shipping purposes, all branded with the FedEx logo. FedEx offers a superior distribution channel in terms of the sender’s ability to track the package as soon as it leaves a location.
Generally, FedEx has adopted a premium pricing strategy for the quality services given customers. Although freight rates have shown ample increases, the company has kept its rates fairly consistent. This is due to the economy of scale inherent in large shipments.
In some countries, it has kept flexible pricing, such as in China. The company employs this strategy in order to establish itself in new marketplaces. Prices will vary according to the type of service used.
FedEx has used various slogans to advertise the brand and popularize its services. Some of its slogans that became popular are “Our Most Important Package is Yours”, “Be Absolutely Sure”, “Relax, it’s FedEx”, and “Brown Bailout”. Its present slogan is “The World On Time”.
FedEx has used sports as a promotional platform. In 1989, the company signed a deal with the Orange Bowl and became its title sponsor. It also sponsored the basketball team FedEx Forum and The Heineken Cup for Rugby. In 2007, FedEx became a title sponsor for PGA Tour. FedEx also contracted to sponsor NASCAR as well.
As of 2012, FedEx has 49% of the market for shipping services in the United States.
UPS (United Parcel Service)
UPS is also an international shipping and delivery service company. It was founded in 1907 and has over 398,000 employees worldwide. UPS is the world’s largest package delivery company.
UPS has a broad range of logistics capabilities. The company has a broad yet balanced presence throughout the world: North America, Europe, the Middle East, Asia-Pacific, Africa and Latin America. It uses the latest technologies to create a competitive advantage in nearly all its markets. UPS has invested substantially in creating user-friendly platforms and tracking tools for its customers.
UPS offers customized programs to an array of industries including industrial manufacturing, retail, professional and consumer services, aerospace, automotive, healthcare, and high-tech.
UPS has invested heavily in enhancing its European market as well as monitoring emerging markets, as it anticipates much of the company’s future growth will come from emerging markets.
In the past ten years UPS has established a large market presence in three leading emerging markets: China, Poland, and Turkey. In addition, it is also focusing on the Middle East, Latin America, Africa, and the rest of Eastern Europe.
UPS offers support for retailers across their chains from sourcing to distribution and returns. Leveraging e-commerce, UPS offers UPS My Choice, a service enabling receivers to have control of shipments. This system aids 22 million customers in keeping an eye on their package delivery status with a system of alerts.
Recently, UPS has broadened coverage for UPS My Choice to 15 more countries and territories in the Americas and Europe. UPS My Choice contains an added feature in which the customers can divert parcels to UPS Access Point locations. These locations can include UPS Stores or other local businesses for easy pickup or delivery.
DHL (Dalsey, Hillblom and Lynn)
DHL is a leading courier company engaged in the transportation of the documents, and packages. The company was founded in 1969 and has over 275,000 employees.
DHL Services and Attributes
- DHL operates in more than 220 countries and regions • The company has strong brand recognition • The company is active in central procurement and e-procurement.
- DHL provides freight services
- The company has a strong financial position.
- Government operated cargo companies are its avid competitors • The advertisement and promotion practices of the brand are not active • There have been economic disasters in some countries and the company has had to deal with financial fallout DHL Target Markets Market economies of developing countries are DHL’s biggest target markets.
All three companies offer similar services. FedEx appears to have a greater presence and market share in the United States, as does UPS, but UPS has a very strong international network of services. DHL has all but disappeared from the United States, although it started in San Francisco, California, but it also has a strong international presence, especially in war-torn regions like the Middle East. It seems that UPS is the winner because it offers ample services to customers domestically and internationally.