FedEx Will Keep
Delivering to the World on Time
Competitive Analysis Project
A quick overview of our companies
FedEx (FDX)
• Memphis, TN
• 280,000 employees
• Fred Smith
UPS (UPS)
• Atlanta, GA
• 410,000 employees
• Scott Davis
FedEx and UPS make 64% of their
industry’s revenue
Market Share by Revenue
Air Freight Industry 2010
U T Worldwide
3%
Others 3%
EIW 4%
CH Robinson
7%
UPS
37%
USPS - 19%
FedEx
27%
FedEx UPS
Market Capitalization
(Industry Avg: 11.9B)
30 B
72 B
Closing Price
$93.95
$73.18
EPS (2010)
$3.78
$3.56
Porter’s Five Forces
New Entrants:
Low Power
• High Fixed Costs
Suppliers:
Low Power
• Easy to buy
from various
companies
Industry Rivals:
High Power
• Equal competitive power
Substitutes:
Low Power
• High switching costs
• Commodity
Customers:
High Power
• Low cost to
switch
companies
FedEx understands that it’s success
lies in its opportunities
Strengths
FedEx
• High P/E Ratio
• EPS
• Largest Air Fleet
UPS
• Company Size
• Highest Profit
Margin
Opportunities
• New markets
• Sustainability to reduce costs
Weaknesses
FedEx
• High Operating
Expenses
• Undifferentiated
Product
UPS
• Lower
performing
stocks
• Undifferentiated
Product
Threats
• Rising oil prices
• Lower demand for document sending
“A successful shipping company is
adaptable, technologically advanced, able
to grow financially, market itself well, and
reach out to a global customer base”
ADAPTABLE
TECHNOLOGICAL
FINANCIAL GROWTH
MARKETABLE
GLOBALIZED
Current events affect shipping industry
Rising
Oil
Prices
2009 Recession:
FedEx suffered more
BP Oil Spill Lowers
Stock Prices
Recession has impacted UPS
ROS (%)
ATO
EM
ROE (%)
2010
7.0
x
1.47
x
4.17
=
42.09
2009
5.0
x
1.42
x
4.15
=
28.96
2008
5.8
x
1.61
x
4.70
=
44.29
ROS for FedEx plummets due to
increased expenses
ROS (%)
ATO
EM
ROE (%)
2010
3.41
x 1.39
x 1.80
2009
0.27
x 1.45
x 1.77
=
0.70
2008
3.00
x
x 1.77
=
7.70
1.48
= 8.57
UPS has higher EM than FDX
ROS (%)
FEDEX
0.27
UPS
5.0
ATO
x 1.45
x
1.42
EM
ROE (%)
x
1.77
=
0.70
x
4.15
=
28.96
UPS is more dependent on debt than FDX
FedEx EM
UPS EM
2010
1.80
4.17
2009
1.77
4.15
2008
1.77
4.70
Ratios that are inconsistent with
Industry
FedEx
UPS
Industry
Average
Profit
Margin(%)
2.39
8.34
3.45
ROE(%)
8.57
42.09
12.89
P/E
24.67
20.42
24.5
FedEx aims to achieve full customer
satisfaction
UPS
- In-store copy machines
FedEx
- Purchased Kinkos  FedEx Office
- Print Online & Have it Shipped
ADAPTABLE
TECHNOLOGICAL
FINANCIAL GROWTH
MARKETABLE
GLOBALIZED
FedEx leads technologically
FedEx
UPS
• Innovative solutions to real
world problems
• SenseAware technology:
Medical package tracking
• More intuitive web
experience
• Large-business oriented
• “It just works”
• Quantum View Tracking
system
• Very basic web presence
ADAPTABLE
TECHNOLOGICAL
FINANCIAL GROWTH
MARKETABLE
GLOBALIZED
FedEx has greater opportunities to
grow
P/E Ratio
FedEx
UPS
24.67
20.42
Amount spent on 3106 M
Oil (2010)
Electric fleet
2972 M
FedEx has the largest electric Hybrids only
fleet in the industry
Doing business with the environment
in mind
• Similar objectives
– Technology
– Fuel efficiency
• Differing objectives
– Carbon neutral option (UPS)
– Energy (FedEx)
ADAPTABLE
TECHNOLOGICAL
FINANCIAL GROWTH
MARKETABLE
GLOBALIZED
UPS competes with FedEx to
differentiate their similar products
• Speed
• Convenience
• Reliability
• FedEx offers lower
prices than UPS
• Kinkos/UPS Store
• FedEx distributes
business items
more effectively
Product
Place
Price
Promotion
• UPS focuses on
mass marketing
• FedEx uses
Segmentation
UPS’ We Heart Logistics commercials
reach people everywhere
UPS
• “That’s Logistics” ad music
• Global interaction
• Use of NCAA famous coaches
FedEx
• Use relatable people in commercials to show how
their products meet customers’ needs
FedEx uses Market Segmentation to
differentiate itself from competitors
• Goal: Operate
independently yet
compete
collectively.
• Better serve
customer needs
• Each segment can
better concentrate
on its own market
FedEx provides relatively greater value
Time
8:00 AM
8:30 AM
10:30 AM
3:00 PM
End of Day
FedEx
Shipping Rates and Delivery Times
1 day
2 days
4 days
5 days
6 days
$ 120.49
$ 108.06
$ 86.08
$ 70.00
$ 77.00 $ 62.60 $ 45.95 $ 33.30 $ 16.21
$ 38.79 $ 30.36 $ 12.10
UPS
Rates based on a 5 lb package shipped from MA to CA
ADAPTABLE
TECHNOLOGICAL
FINANCIAL GROWTH
MARKETABLE
GLOBALIZED
Competition arises as companies try
to globalize
FedEx
UPS
• 23% of revenue from
international shipments
• Dominant carrier in Asia
• 664 jets, 62 on order
• 20% of revenue from
international shipments
• Dominant carrier in Europe
• 311 jets, 22 on order
FedEx Will Keep Delivering the World
on Time
FedEx
• Increasing
internationally
• Using innovation to
grow
UPS
• Holds greater market
share