FedEx Corporation

Company Profile
Publication Date: 18 May 2010

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Europe, Middle East & Africa
119 Farringdon Road
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EC1R 3DA
United Kingdom

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245 5th Avenue
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New York, NY 10016
USA

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Australia

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e: apinfo@datamonitor.com

FedEx Corporation

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FedEx Corporation
TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................4
Key Facts...............................................................................................................4
SWOT Analysis.....................................................................................................5

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FedEx Corporation
Company Overview

COMPANY OVERVIEW
FedEx offers overnight courier services, freight services, logistics solutions, and business support
services. The company is one of the world's largest express transportation companies, delivering
small packages throughout the US as well as to 220 countries worldwide. FedEx is headquartered
in Memphis, Tennessee and employs about 280,000 people.
The company recorded revenues of $35,497 million during the financial year ended May 2009
(FY2009), a decrease of 6.5% compared to FY2008. The operating profit of the company was $747
million during FY2009, a decrease of 64% compared to FY2008. The net profit was $98 million in
FY2009, a decrease of 91.3% compared to FY2008.

KEY FACTS
Head Office

FedEx Corporation
942 South Shady Grove Road
Memphis
Tennessee 38120
USA

Phone

1 901 818 7500

Fax

1 901 395 2000

Web Address

http://www.fedex.com

Revenue / turnover 35,497.0

(USD Mn)
Financial Year End

May

Employees

280,000

New York Ticker

FDX

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FedEx Corporation
SWOT Analysis

SWOT ANALYSIS
FedEx offers overnight courier services, freight services, logistics solutions, and business support
services. It operates the world's largest express transportation company. FedEx has a strong brand
image. During 2009, the company was named the Fortune's sixth best admired company all over
the world. Strong brand image besides driving domestic revenues, facilitates international expansion.
However, the company is threatened from the growing popularity of internet, which could affect the
mail volumes, resulting in lower revenues for the group.
Strengths

Weaknesses

Strong brand image

Large scale of operations

Dependence on the US market

Weakening financial performance

Opportunities

Threats

International expansion
Expanding Chinese market
Growing global transportation services
industry

E-substitution
Intense competition

Strengths

Strong brand image

FedEx has a strong brand image. It is amongst the most recognized names in the globe express
delivery services segment. For instance, during 2009, the company was ranked seventh in FORTUNE
magazines Worlds Most Admired Companies list, the eighth consecutive year the company has
been ranked in the top ten on the list. In addition, FedEx continued to be rank highest in customer
satisfaction in the University of Michigan Business School National Quality Research Centers
American Customer Satisfaction Index in the express delivery category. More recently, in March
2010, the company was named as the top 20 worlds most admired companies, according to a survey
published in FORTUNE magazine. In its annual report on corporate reputation, FORTUNE magazine
listed FedEx as the 13th most admired company.
The company operates its four business segments under the FedEx brand name: FedEx Express,
FedEx Ground, FedEx Freight, and FedEx Services. FedEx promotes its brand through print and
broadcast advertising, corporate sponsorships, and special events. The company's advertising and
promotion expenses were $379 million in FY2009, $445 million in FY2008, and $406 million in 2007.

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FedEx Corporation
SWOT Analysis

The company's strong brand image drives its retail business. The strong brand image besides driving
domestic revenues, facilitates international expansion as well.
Large scale of operations
FedEx provides transportation, e-commerce, and business services.The company operates through
four business segments: FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services.
FedEx Express is one of the largest express transportation companies, engaged in packages and
freight deliveries throughout the US and to more than 220 countries worldwide. FedEx Express has
an integrated global network, comprising 57,000 drop-off locations, 654 aircraft, and 51,000 vehicles
and trailers. FedEx Ground Package Systems (FedEx Ground) serves customers in the North
American small-package market, focusing primarily on business and residential delivery of packages
weighing up to 150 pounds. FedEx Ground conducts its operations primarily through 22,500
owner-operated vehicles and 31,500 company-owned trailers.
FedEx Freight provides regional next-day and second-day and interregional less-than-truckload
(LTL) freight services. FedEx Freight operates approximately 59,000 vehicles across 480 service
centers. To provide FedEx Home Delivery service, FedEx Ground leverages its existing pickup
operation, and hub and linehaul network. FedEx Home Delivery's operations are often co-located
with existing FedEx Ground facilities to achieve further cost efficiencies.
FedEx Services is a provider of document solutions and business services. It offers access to
technology for copying and printing, professional finishing, document creation, internet access,
computer rentals, video conferencing and direct mail, web-based printing, and the full range of FedEx
day-definite ground shipping and time-definite global express shipping services.
FedEx's large scale of operations and ensuing benefits enable it to serve a broad customer base,
which improves its revenue generating capacity.

Weaknesses

Dependence on the US market

Although FedEx has expanded to other international regions, it still depends on the US market for
majority of its revenue. The company generated almost 73% of its revenue from the US market
during FY2009. This high dependence on the US could have a dampening effect on the company's
revenues if the economy and/or the company's sales in the US do not grow as expected. Furthermore,
the concentration of operations in this area increases the company's exposure to country specific
factors such as labor strikes, changes in economic conditions, and most importantly, increasing
competition from other players in the market.
Weakening financial performance

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FedEx Corporation
SWOT Analysis

FedEx has recorded weak financial performance in FY2009. The revenues of the company declined
by 6.5% from $37,953 million in FY2008 to $35,497 million in FY2009. In addition, there has been
a significant decline in revenues from its key segments in FY2009. For instance, the revenues from
the FedEx Express segment declined by 8.4% compared to FY2008. Similarly, the revenue from
the FedEx Freight segment and FedEx Services segment declined by 10.5% and 7.5%, respectively,
in FY2009.
The profitability position of the company also declined significantly. FedEx recorded an operating
profit of $747 million during FY2009, a decrease of 64% compared to FY2008. The net profit was
$98 million in FY2009, a decrease of 91.3% compared to FY2008. Further, the operating margin of
the company declined from 5.5% in FY2008 to 2.1% in FY2009; and net margin declined from 2.9%
in FY2008 to 0.3% in FY2009. The companys return on assets also declined from 4.4% in FY2008
to 0.4% in FY2009.
A continuation of this trend will reduce availability of resources to pursue growth plans and diminish
investor confidence.

Opportunities

International expansion
FedEx has been taking initiatives to expand its international presence, especially in key markets
such as China, India, and Europe. During 2007, the company made several acquisitions in these
markets, in order to generate long-term growth, productivity, and profitability. For instance, FedEx
Express acquired its Indian service provider, Prakash Air Freight (PAFEX), for $30 million. PAFEX,
a privately-held company, was one of the largest domestic express companies operating in India,
with more than 384 offices and depots serving nearly 4,400 destinations.
In addition, the company has started next-morning domestic delivery service in China, which is
available in more than 40 cities and counties throughout the country. The new China domestic service
is supported by a money-back guarantee and real-time package status tracking. Further, FedEx
Express has launched a dedicated direct flight between Manchester in the UK and the US.
The company's expansion initiatives will enable the company to expand its global reach and reduce
its business risks related to the US market.
Expanding Chinese market
FedEx has been increasingly focusing on the Chinese market, one of the key growth markets in
Asia. China has continued to dominate the Asian region in terms of activity and growth. According
to Datamonitor, the Chinese air express market is expected to grow at about 34%, thrice the global
average of about 11% during 2005-20. Moreover, it is predicted that China would become the sixth

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FedEx Corporation
SWOT Analysis

largest express market in 2010. In addition, according to the American Institute of Aeronautics and
Astronautics' forecast, China's air cargo is expected grow at an average 11.2% per year until 2020.
The company has significant operations in China. It operates an Asia Pacific hub at the Guangzhou
Baiyun International Airport in Southern China to leverage the fast-growing China and Asia Pacific
markets. Further, In 2007, FedEx signed a lease with Hangzhou Xiaoshan International Airport
opening its Chinese transfer centre in the city, which can sort up to 9,000 packages per hour. Further
in 2007, the company purchased Tianjin Datian W. Group's (DTW Group) 50% share of the
FedEx-DTW International, a priority express joint venture; and also the DTW Group's domestic
express network in China for approximately $400 million in cash. Moreover, the FedEx transfer
centre in Guangzhou Baiyu Airport was opened in 2009. It is the companys largest facility outside
the US.
The company, with its increased focus, is well positioned to benefit from the growing Chinese market.
Growing global transportation services industry
The transportation services industry, primarily comprising of freight transportation by road, rail, air,
and marine, witnessed stronger growth during 2004-08. This industry generated total revenues of
$2,965.6 billion in 2008, representing a compound annual growth rate (CAGR) of 6.3% for the period
spanning 2004-08. In 2013, the industry is forecast to have a value of $3,252.1 billion, an increase
of 9.7% since 2008. The transportation services industry's production volumes increased at a CAGR
of 5.7% 2004-08, to reach a total of 25,396.3 billion freight tone kilometers (FTK) in 2008. In 2013,
the industry is forecast to have a volume of 29,279.5 billion FTK, an increase of 15.3% since 2008.
FedEx offers freight and logistics services. An expanding end market is likely to drive the demand
for the company's services.

Threats

E-substitution
FedEx faces its biggest ever threat from the growing popularity of internet. In recent years, electronic
email has more or less replaced the postal letter as a means of communication. Advances such as
free email services, wireless broadband, and text messaging (SMS) are adversely affecting traditional
mail services, especially in urban areas. The postal mail business delivers information such as letters
and bank statements as well as printed matter such as direct mail and periodicals, which can now
be accessed faster through the internet (for instance, electronic banking). Further, the first-class
mail volumes have also been affected by the telephone, fax machine, and other electronic
communications. If substitution of traditional mail by digital alternatives continues, mail volumes will
decrease, resulting in lower revenues for the company.
Intense competition

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FedEx Corporation
SWOT Analysis

FedEx competes with many companies and services on a local, regional, and international level.
The transportation and business services markets are both highly competitive and sensitive to price
and service, especially in periods of little or no macro-economic growth. Some of the companys
competitors have more financial resources which enables them to raise capital more easily. The
competition has led to a very competitive pricing environment within the industry. If the pricing
environment becomes irrational, it could limit FedExs ability to maintain or increase prices (including
fuel surcharges in response to rising fuel costs) or to maintain or grow its market share. In addition,
maintaining a broad portfolio of services is important to keeping and attracting customers. If the
company competitors offer a broader range of services or more effectively bundle their services, it
could impede FedExs ability to maintain or grow its market share.

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