Factors Driving the Efficiency of FEDEX Global Delivery Network

FEDEX is a leading global shipping company with a network that reaches and serves customers across 22 countries. The company was incorporated in Delaware in 1997. A  distinguished global network with the world’s largest all-cargo airline is the man strength of FEDEX. The FEDEX global network includes 670 aircraft, 5,000 hubs and facilities, and 180,000 motorized vehicles which pick up and deliver more than 14 million shipments per day. FEDEX employs more than 425,000 people who are called team members. The Chairman and CEO of FEDEX is Frederick W Smith who has attributed the outstanding success of the company in fiscal 2018 to the dedication of his team members.

The competitive strength of FEDEX has grown driven by its focus on technology and providing outstanding customer experience. Every team member at FEDEX is dedicated to the ‘Purple Promise’. The Purple Promise is summed up in a very simple statement – “I will make every FedEx experience outstanding”. In 2018, the company achieved solid financial growth and has set ambitious targets for 2020. The success of FEDEX globally is based upon its strong operational efficiency. The position and operational performance of FEDEX continues to grow stronger. Its worldwide growth is driven by careful planning, a strong business structure and several more factors including a large delivery network as well as dedicated staff and focus on customer experience. Have a look at the factors that make the global delivery network of FEDEX efficient.

FEDEX Boeing 777

A Modernized Fleet to Support Superior Connectivity Worldwide : –

One important reason behind the growth and success of Fedex is its Aircraft fleet modernization strategy. The company is replacing the older models with new aircraft models. It has replaced its old MD11 with new Boeing 777F.  The new Boeing 777F burns 18 percent less fuel per pound of payload and produces 18 percent less emissions in comparison to the MD-11. This will reduce emissions, save fuel and improve operational flexibility as well as operating margins. Fedex is also buying 50 Cessna Sky-Courier 408 aircrafts and plans to buy 50 more. These are expected to be delivered between 2021 and 2024. It has also placed orders for 30 ATR 72-600F aircrafts and plans to buy 20 more which are expected to be delivered between 2021 and 2026.

Fedex Aircraft fleet modernization program has proved effective at helping the company save fuel and minimize emissions. Last year, the company saved 89.3 million gallons of jet fuel, and avoided more than 860,000 metric tons of CO2 e (carbon dioxide equivalent) emissions. Last year, FEDEX also flew a Boeing 777F on biofuel only.

FEDEX also plans to purchase customized 30 ATR 72-600F turboprop freighters with large cargo doors. The company partnered with ATR for the development of this new aircraft with special features to grow its business. It ordered 50 newly designed Cessna SkyCourier C-408 twin turboprops to serve the smaller markets. The volume capacity of these aircrafts is nearly double the volume capacity of the single-engine Cessnas in use at FEDEX currently. The larger cargo doors of the C-408 allow for seamless freight movement throughout the air network of FEDEX connecting with its larger jet transports.

Best Pilots onboard : –

The shortage of good and qualified aviators is expected to grow in the coming years due to several factors. Apart from growing costs of education, industry expansion and retirement of pilots in large numbers are together anticipated to cause a severe shortage of pilots in the future. FEDEX Express has launched an innovative training programme to address this shortage. Launched in fy18, this programme has been named ‘Purple Runway’. The programme is basically designed to help Pilots find a new career path. The flying feeder planes like the ATR 72 600F and Cessna SkyCourier C-408 aircraft that FEDEX Express is buying will help the pilots train and gain the required flight hours they need to advance their careers. The company is also partnering with educational institutions to promote aviation careers. The company will rollout a collaborative program with select institutions like Delta State University in Cleveland, Mississippi. FEDEX funded student scholarships will also be a part of the Purple Runway Program.

Technological innovation : –

FEDEX  is growing its focus on technological innovation to improve its market penetration. To remain competitive in the shipping industry, it is important that the company remains on the cutting edge of technology. FEDEX has become a part of the Blockchain in Transportation Alliance (BiTA) to explore the potential of Blockchain in logistics sector. Blockchain is being touted as  game changing technology which can significantly alter the logistics sector. The company plans to use drones to deliver aircraft parts and inspect aircraft and runways at its Memphis World Hub.

Successful e-commerce deliveries rely upon both virtual and physical networks. Customers’ expectations have grown with growing ecommerce network globally. Apart from convenience, the customers also expect higher security. To address the growing needs and expectations of the customers, the company is improving its technological capabilities as well as retail footprint. The Fedex delivery manager makes it easier for its consumers including individual consumers and businesses to track and handle shipments. The service has been made available across 42 countries. The new FedEx Returns Technology  makes it easier for the etailers to manage returns. This technology allows customers to initiate returns online, view return status, and receive early credits for returns at FedEx Office locations.

FEDEX also continues to extend its retail locations to make it convenient and secure for the customers to pick up their package. There are at least 11000 pickup locations in US and at least 8000 of them at well known retailers like Walgreens. The company is also placing 500 FEDEX offices within Walmart stores which will bring at least 80% of the US people in close proximity of a FEDEX hold location.

Specialty Services : –

Global marketplace has grown highly competitive and customers now increasingly seek specialized logistics and e-commerce solutions. For example, healthcare businesses, customs clearance, or e-commerce fulfilment require temperature controlled shipping. To address the special needs of its customers, the company has grown its range of services including  air cargo and ocean freight services; inventory warehousing and distribution; e-commerce fulfilment; customs brokerage and trade facilitation; secure payment technology; and forward logistics and 3D printing. E-commerce has grown worldwide at a rapid pace. To support e-commerce providers, the company has recently acquired global e-commerce transportation solutions provider P2P. P2P offers low cost delivery options in more than 200 countries. In these companies, it has managed strong relationships with private, postal, retail, and clearance providers.

READ: FEDEX SWOT; FEDEX PESTEL; FEDEX MARKETING MIX;

Safety Standards : –

Safety is one of the highest priorities of FEDEX. The company has equipped nearly all its linehaul tractors with advanced safety features like telematics, collision mitigation, lane-departure warning, and roll-over stability. Moreover, FEDEX has ordered 20 fully electric Tesla Semi Trucks equipped with surround cameras, automatic emergency braking, and lane-departure warning. In this way, FEDEX is making logistics securer with advanced safety features.

Sources :-

FEDEX Annual Report.

Abhijeet Pratap

I have studied Marketing and English Literature and like to write on topics in Business management, Marketing, literature, latest technologies and other areas. I also like to spend my time learning coding.