In the dynamic and highly competitive world of global logistics and courier services, a strategic assessment of strengths, weaknesses, opportunities, and threats is paramount. FedEx is one of the world’s leading courier and delivery companies.
A SWOT analysis for FedEx will allow us to dissect FedEx’s internal capabilities and external market conditions, providing a blueprint for informed decision-making.
In this article, we delve into the SWOT analysis for FedEx!
I’ll try to uncover the factors that shape its strategies, drive its successes, and prepare it to tackle the challenges of a rapidly changing business environment. From its strengths as a logistics giant to the vulnerabilities it addresses, and the opportunities it seizes to the threats it must guard against, this analysis offers a holistic view of FedEx’s strategic positioning.
Before we begin, here is a quick overview of the company!
Frederick W. Smith | |
Memphis, Tennessee, US | |
E-commerce, Services, and Transportation | |
US$90.16 Billion | |
5,00,000+ | |
FedEx |
FedEx SWOT analysis: Shipping Smart!
Let us begin our detailed SWOT analysis for FedEx. If you wish to learn more about SWOT as a tool and why it is important, you can check out our article:
Strengths Of FedEx
International Presence
The most fantastic aspect of FedEx is that there is a high chance that if you are reading this article, you have access to services offered by FedEx. This company has established itself as an internationally present brand. Today, you can find the services of FedEx in more than 220 countries. Now, this is remarkable. Scaling to this level and providing services in more than 220 countries is no easy task. However, FedEx has made it possible with its workforce.
Here are some stats on FedEx that I pulled from its website!
- FedEx Express stations: 1,950
- Air Express hubs: 13
- FedEx Ground hubs: 40
- FedEx Ground operating facilities: >600
- FedEx Freight service centers: ~400
- FedEx Office locations: 2,200
These numbers speak for themselves and prove why FedEx is able to handle operations across the globe.
Strong Brand Reputation
Strong Brand Reputation
If you talk about booking a cab, you may instantly think of Uber! Similarly, when people think of freight services or cargo deliveries, FedEx is the name that pops up. The company has a great brand reputation. This strong reputation can be attributed to the trust FedEx has earned over the years through its services.
FedEx has been awarded multiple awards over the years that have added value to its reputation. Some of the awards are
- The Five Star Award
- Bravo Zulu
- Purple Promise Award
- The Humanitarian Award
- Service Award
- Quality Driven Management Cup
Timely Service Across The Network
Now you know that FedEx has a global presence and it is a reputed brand. One major aspect is that it delivers on time in any part of the world. Yes, which transport service is useful if the shipment is not delivered on time? FedEx has an amazing track record of delivering shipments on time.
In order to enhance the customer’s experience, FedEx also provides an estimated delivery time on each shipment. Yes, there may be exceptions. But, overall the deliveries are on time. This adds immense value to the brand’s commitment.
Affordable Price Range
The price range provided by FedEx would depend on a lot of factors. It would depend on your shipment size, dimension, delivery location, and much more. However, if we compare the prices offered by FedEx, they are affordable to the masses and even corporates.
The charges offered by FedEx for ground shipping are the cheapest as of today. In Express shipping, the charges may be a little higher but FedEx compensates it with timely delivery compared to its competitors.
Hence, delivering on time and that too at affordable rates is a big strength for FedEx.
Effective Marketing Strategies
FedEx has used a couple of strategies for the promotion of its services. One of the strategies implemented by the company was to associate with movies. One famous movie was “Cast Away”. Tom Hanks was a FedEx employee in the film. And we all know that the film was well received by the audience.
The other marketing strategies included using slogans that laid emphasis that the highest priority given by FedEx is for customers. It has used slogans like “Our Most Important Package is Yours”, “Be Absolutely Sure”, “Relax, it’s FedEx”, and “When There is No Time”. All these slogans and marketing strategies instilled a sense of trust in FedEx over the years.
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Profitable Partnerships And Acquisitions
FedEx has grown into a full-fledged brand in the transportation and delivery niche. Adding to all this, the company did not have a narrow mindset. The company focused on acquiring new companies or partnering with some entity to strengthen itself.
Here are some of the notable acquisitions and partnerships that have contributed to FedEx’s profitability over the years:
- TNT Express (2016)
One of the most significant acquisitions by FedEx was the purchase of TNT Express in 2016 for approximately $4.8 billion. - Kinko’s (now FedEx Office)
FedEx acquired Kinko’s, a chain of document and business services stores, in 2004 for $2.4 billion. This acquisition allowed FedEx to provide a wide range of printing and office services to its customers.
Investing In Electric Transportation
In the current era, the transportation industry is dynamic. Moreover, the rise of electric vehicles is on the rise as well. FedEx is constantly evolving and experimenting to further improve its services. Hence, FedEx is investing in electric vehicles for its services.
FedEx started with 20 electric trucks from Tesla as a start. In the year 2022, it further increased its fleet by adding 150 more electric vehicles from BrightDrop. FedEx is planning to transform its entire “parcel and pickup” delivery vehicles into electric vehicles by 2040.
Multiple Revenue Streams
One of the greatest strengths of any business is to generate multiple revenue streams. This is what FedEx has done. The company has been able to offer multiple transportation services. This helps the company to manage finances even if certain services fluctuate in profit margins.
FedEx Express
FedEx Express invented express transportation and remains the industry’s global leader, providing rapid, reliable, time-definite delivery to more than 220 countries and territories.
FedEx Ground
FedEx Ground provides low-cost, day-certain service to any business address in the U.S. and Canada, as well as residential delivery to 100% of U.S. residences through its FedEx Home Delivery.
FedEx Freight
FedEx Freight is a leading North American provider of less-than-truckload (LTL) freight services across all lengths of haul to businesses and residences.
FedEx Services
FedEx Services provides sales, marketing, information technology, communications, customer service, technical support, billing and collection services.
FedEx Logistics
Integrated logistics solutions, providing air and ocean cargo transportation.
FedEx Office
FedEx Office provides copying, digital printing, professional finishing, signs, computer rental, and corporate print solutions.
FedEx Dataworks
Data insights generated by the FedEx network to build digital solutions
High Brand Valuation
FedEx has been in the business for decades. Since it started its operations, FedEx has seen its ups and downs like any other business. However, FedEx has been able to outperform its competitors in many aspects and maintain its leadership.
As of today, FedEx has a market cap or net worth of $65.07 billion. The enterprise value is $96.55 billion. These numbers are massive and quite impressive.
Leveraging Advanced Technologies
Technology is advancing at a rapid rate. This calls for measures by companies to leverage these technologies and advance in their domains. FedEx has been investing a lot in using and adapting new technologies to improve its services. It has implemented artificial intelligence and data analytics at a large scale to enhance its existing capabilities.
Weaknesses Of FedEx
Shipment Transportation Damage
Now you rely on FedEx for transporting your shipments and even corporate shipments. But, one major thing that FedEx has to care about is the safety of the shipments. No one would want the timely delivery of their shipments at the cost of damage. This is one weakness that FedEx has to sort out internally and even compensate for many times.
This becomes a bigger weakness and pain point when shipments are transported to a different country altogether. Moreover, FedEx is quite active in partnerships with corporates to transport their shipments. Such shipments are expensive, bulky, and may even contain fragile items. Hence, this becomes a challenging task to pull off the transportation without damage. However, as we say that FedEx is readily available for its customers, it has a policy to claim for damaged or missing packages.
Heavy Reliance On The U.S. Market
You may be wondering why this is a weakness when I have already mentioned that FedEx is providing its services in more than 220 countries as of today. So, it is absolutely true that 220 countries have FedEx. However, the majority of the revenue still comes from the U.S. market. Now, there is no issue with relying on one particular market. But, whenever the economy or currency fluctuates for the U.S., the profit margins of FedEx are heavily impacted.
Where the U.S. market is providing immense profits to FedEx, the same market becomes volatile under some circumstances for FedEx.
Rigid Claim Policies For Customers
We just talked about how customers can claim if the package is missing or damaged during transit under FedEx. Now, this may seem amazing to hear. However, as per recent reports, the claim policy is a little rigid. It is not that flexible. Hence, customers may find it tough to process the claim in many situations. Now, FedEx does not leverage on this. FedEx is trying to align all its partners and revise its claim policy. But as of today, the claim policy is a little frustrating for some customer segments.
Also, understand the claim policy from this perspective.
If you are the shipper, you can contact Customer Service and speak to a live person. If they do not provide prompt, satisfactory assistance, then ask to speak to someone in Customer Support. These are the people who can recommend payment of a claim or tell you why not. If you are the recipient, then your claim is with the shipper, not FedEx.
Drivers Are Solely Responsible For Carrying The Brand Image
The strength of FedEx is the vast number of vehicles they have. And all these vehicles have drivers to deliver the shipments. There have been many instances where misconduct of FedEx drivers has been reported either violating the traffic rules or maybe not being polite with the customer. A brand like FedEx which is operating in more than 220 countries can simply develop a negative perception due to misconduct by any random driver in any random market region. Hence, this is one major weak point for FedEx. It is quite challenging to control this at the granular level.
Opportunities For FedEx
Expand into non-US markets. Asia Is One Great Market!
FedEx is already present in Asian countries. However, as we discussed the majority of the business comes from the U.S. FedEx can research and think about expanding in the Asian market. Countries like China or India have massive transportation on a daily basis. They have customers from different segments. FedEx can leverage this and try to expand it further than what they are currently performing.
The Asian market has a strong presence from DHL rather than FedEx as of today.
Provide Supply Chain And Logistics As Outsource Business
Let’s say you have 10 years of experience in web development. What you can possibly do with it? You can easily offer web development services to clients who are looking to develop websites of any niche.
Similarly, FedEx has decades of experience in managing logistics and supply chains. FedEx can offer its services and resources as an outsource business for other businesses. FedEx needs no additional resources apart from a few minute additions to cater to the business. This can open new revenue streams as well.
Invest In Blockchain For Package Deliveries
Blockchain is a great technology as a digital ledger to store information. As of now, the package tracking and delivery are precise.
But the improvement scope comes with blockchain. Here is how!
Let’s say you are based in Atlanta in the USA, and the clothes manufacturer is in New Delhi, India. Think of all the various actions required to fulfill your purchase. The order is received by the manufacturer, which is then picked, packed, and made ready for shipping. FedEx collects the package, and transports it first by ground and then by air to the United States. Once it gets to Atlanta, it is
transported by ground again — that is, the last-mile delivery to you.
A blockchain ledger could record and store all of this information — the price you paid, the date the manufacturer should ship your purchase, the actual shipment date, the expected date of arrival, the final time and date of arrival, and a variety of other data points.
With blockchain, every player in this scenario would have access to the same digital records. That’s you, the manufacturer, the FedEx ground and air services, the delivery driver, and so forth. Not everyone needs or will be given, all the data in the blockchain — only the parts they need — but the blockchain
ledger acts as a single source of truth for all data pertaining to this transaction.
Leverage The Growth Of Healthcare Logistics
The healthcare industry is growing at a rapid rate. Moreover, the globalization of healthcare services has allowed people to receive premium health services. This requires the transportation of pharmaceuticals, medicines, medical equipment, and more. This is where FedEx can pitch in and leverage this growth. Moreover, with a brand like FedEx, people would be able to receive all medical resources on time and with accuracy. FedEx is already into healthcare logistics. However, there is still a large scope to increase its share considering how massive FedEx is.
Focus On Sustainable And EcoFriendly Operations
Operating in more than 220 countries requires a lot of vehicles and cargo equipment. This obviously would require a lot of fuel that would eventually cause a massive carbon footprint. FedEx has been improving a lot and still has a lot of opportunities to reduce its carbon footprint.
FedEx also has a carbon calculator. It shows the customers how much carbon emissions it will take if they deliver the package in a particular time or number of days. This helps the customers to allow a new delivery date if the package is not urgent for them.
Threats To FedEx
Intense Competition In This Domain
FedEx is a global brand. But it has to endure a lot of challenges on a daily basis. The main challenge is to outperform and compete with its direct competitors. There are many businesses that are into transportation and package deliveries. However, only a few of them stand in the same league as FedEx.
There are companies like DHL or UPS that are also internationally operating and doing quite well within this market. They also hold a large chunk of market share. There is constant competition on pricing, marketing strategies, discount offers, taxation, and much more.
Currency Fluctuations
One threat that arises is the currency fluctuations happening in the international market. FedEx is operating in more than 220 countries that involve transactions in multiple currencies. If any currency fluctuates it can either positively or negatively impact the profit margins of the company. In most cases, when currency fluctuations arise, it results in low-profit margins despite keeping everything under control.
This is one factor that FedEx cannot directly control at its end. Hence, FedEx has this one threat because it is not practical to switch or introduce new prices in a short span of time when currency fluctuations are against its interests.
Cybersecurity Risks
FedEx handles customer data on a daily basis. This data is huge and provides opportunities for analytics and consumer insights. However, the same data needs to be protected from cybersecurity hacks.
There have been instances of cybersecurity attacks at FedEx. The company even got a wave of cybersecurity attacks that were meant to spoil the image of the company in the eyes of its customers.
There is a high possibility of cybersecurity breaches with FedEx and any other company too. All companies deal in digital data that is prone to be breached. A company like FedEx has the threat of data breach as it contains sensitive data of millions of customers like their names, addresses, bank details, and much more.
Volatile Fuel Prices
FedEx is not completely relying on electric transport for now. That time is a little far for all of us. So, fuel remains the primary source that will allow transportation and package deliveries. Fluctuations in fuel prices can have a notable effect on FedEx’s operational expenses because the company heavily depends on fuel to operate its extensive fleet of aircraft and vehicles. Abrupt rises in fuel costs can adversely affect profitability should FedEx be unable to transfer these expenses to its customers.