Between 1969 and 1971, Fred Smith secured $90 million in financing to launch Federal Express

(now known as FedEx), a service that originally provided overnight and second-day delivery to 22 major cities in the United States. FedEx began delivery in 1973, and the company enjoyed immediate success. FedEx was the first major air transport firm to implement a “hub and spoke”

system, whereby all packages were flown to a central location (Memphis) each night and redistributed by air to final destinations in the predawn hours. The airline shift from parcels to passengers and the strike at UPS in 1974 all contributed to the firm’s early market share gains.

FedEx went public in 1978.

By the late 1980s, FedEx had begun to move internationally, purchasing Tiger International

(also known as Flying Tigers) and carriers in Japan and Italy. In 1989, FedEx doubled its international volume. In 1995, FedEx created Latin American and Caribbean divisions and became the first U.S. express carrier to offer direct flights to China.

In 1996, FedEx introduced the first Internet-based shipping management system, known as interNetShip. Another UPS strike in 1997 sent 850,000 packages a day to FedEx, creating more opportunities for the firm. In 1998, FedEx averted a pilot strike of its own, prompting the company to outsource more of its flights.

In 2000, Federal Express adopted its nickname FedEx as its official company name. FedEx acquired Kinko’s in early 2004 in an effort to serve a broader array of shipping and office-related needs, particularly those of small-business owners; stores were renamed FedEx Office in 2008.

In 2007, FedEx acquired its Chinese partner DTW Group and launched the first 1-day guaranteed service in the country later in the year. FedEx expanded its presence in Mexico in 2011 with its acquisition of Servicios Nacionales Mupa, S.A. de C.V.

Today, FedEx provides transportation, e-commerce, and supply chain management operations, including worldwide express delivery, ground small-parcel delivery, small quantity freight delivery, and supply chain management services. FedEx remains the world’s leading express delivery company, with more than 60,000 drop-off locations, 690 aircraft, and about 50,000 vehicles, delivering over 3.5 million packages to about 220 countries and territories and from about 2,000 FedEx Office shops every business day. FedEx has even partnered with the U.S. Postal Service to provide air transportation for postal express shipments, an arrangement that allows FedEx to utilize post offices as critical package drop-off locations.

Founder Fred Smith remains the CEO and owns approximately 6% of FedEx shares. Smith is known as a popular and cagey leader, both inside and outside of the company.

Case Challenges
1. The Internet has alleviated the need for overnight delivery of many documents.
How has FedEx survived and even prospered in the midst of this key technological change?
2. Should FedEx be partnering with a key competitor and protected government entity, the U.S. Postal Service? Why or why not?
3. Do FedEx and UPS offer the same delivery services, or has each chosen to focus on different forms of delivery and or customer needs? Explain.