FedEx Express and UPS Airlines †Free Samples to Students

Question: Discuss about the FedEx Express and UPS Airlines. Answer: Introduction: Federal Express started functioning independently from April 17, 1973 and started seeing the face of humongous amounts of profit within 10 years of its start. This was the first firm to combine information technology and specialization of air carried products. The founder,Frederick W. Smith was instigated to promote a change in the delivery system of goods and provide faster and specialized service all over the world (Morrell, 2016). His very belief was that passenger flights and air cargo had to be built differently as they both had different requirement patterns. He also stressed on the fact that speed is more important than cost (Lakew, 2014). The concept of specialization has evolved from differentiated flight carriers flying to different countries to different freights carrying different products to now specialized branches of FedEx providing customized services. The firm has gained so much popularity all over the word now that in everyday language it has replaced the term ship to FedEx. The company also follows a risk taking concept and has been the first to launch many services for the first time, like expanding its services to continents of Asia and Europe as early as 1984 and initiating direct freight services to countries like Japan. It was also the first of such firms to start business with the help of the internet and promote online tracking of the parcels being delivered using FedEx.com. Later on to follow the concepts of innovated risk taking and specialization, FedEx has acquired several international companies across the world and utilized their strength in combination with theirs to provide faster and customized delivery options to its clients (Onghena, Meersman Voorde, 2014). Some of the most important acquisitions involve acquisition of Gelco Express International, American Freightways Corp., Bongo International and many more. Each of the firms acquired by Federal Express were performing the purpose of connectivity as well as specialization which was not possible by FedEx before the acquisitions. This also helped the firm to build a stronger infrastructure and technology base, one of the concepts mentioned previously. The second factor that makes it different and more accessible than its competitors is its capability to provide more options to its customers. The firm has formed FedEx Express and FedEx Ground to cater to needs of all kinds of clients, as the tw o components charge differently and are mostly used for different purposes. This not only helps the firm to organize its client base in two broad sections but also helps in performing functions differently. For example, in FedEx Express, all activities are carried out mechanically and it usually caters to larger volumes of goods and cargo as compared to FedEx Ground where everything is carried out mechanically and caters to smaller volumes of goods. According to "Boeing: World Air Cargo Forecast (WACF)", (2017), growth in the air cargo sector has been increasing till 2015 and has been relatively stagnant till then. However, after 2016 this industry has seen the face of growth and is expected to propel faster along the course of this year as well as the years to come. There are many factors that affect and impact the growth of air cargo. Economic factors involve increased or decreased trade among nations, especially outside the United States, as those countries are more influenced by political changes (Wensveen, 2011). The national income of countries so that the amount charged can be changed accordingly. Regional factors are also important because these influence economic conditions between countries. These include formation of regional trading associations amongst countries or political pacts leading to exchange of goods. To increase the total capacity of air freight carriers, which involves costs that can suppress growth. A lo t of research and development including more innovated technology can lead to growth too including the development of better temperature sensitive freights that can cater to both the time and temperature sensitive issues associated with certain products like medicines and food products. If the demand for freight and passenger is compared from the base level, it is noticeable that the prospect of growth in each of the industries is high. However, the freight industry being subject to one need, usually is a little dominated by the passenger carrying flight industry as people travel for business as well as for tourism purposes. It is also possible for passengers to carry their luggage and documents with themselves usually. However, with increased business and trade and increased technological advancements the air freight industry also has immense scope of both revenue generation and expansion. The air freight industry has very low costs associated with marketing, if any unlike the passenger flights. These companies also do not need to incur costs related to customization according to the needs of customers, (Doganis, 2009). Usually, the firms operating in the cargo industry are specialized and work as a monopolistic sector. This allows for greater co-operation than com petition and captures a bigger sector of the clients. Thus, to sum up it can be asserted that revenue generation is more for the freight industry than the passenger industry. References: Boeing: World Air Cargo Forecast (WACF). (2017).Boeing.com. Retrieved 12 April 2018, from https://www.boeing.com/commercial/market/cargo-forecast/ Doganis, R. (2009).Flying off course IV: airline economics and marketing. Routledge. Lakew, P. A. (2014). Economies of traffic density and scale in the integrated air cargo industry: The cost structures of FedEx Express and UPS Airlines.Journal of Air Transport Management,35, 29-38. Morrell, P. S. (2016).Moving boxes by air: the economics of international air cargo. Routledge. Onghena, E., Meersman, H., Van de Voorde, E. (2014). A translog cost function of the integrated air freight business: The case of FedEx and UPS.Transportation Research Part A: Policy and Practice,62, 81-97. Wensveen, J. (2011).Air transportation: A management perspective. Routledge.