As the holiday season approaches, FedEx and UPS have assured Wall Street and consumers they are prepared. Indeed, both companies have made investments in new facilities, hired more temporary holiday workers and have worked with retailers to help them avoid a recurrence of a pre-Christmas shipping logjam. Short-term, it appears FedEx and UPS have their domestic strategy in place.
What about international plans for 2015 and beyond?
UPS’ recent Investor Day gave us a hint of things to come. Its International division is growing and now represents 23% of total revenue versus 14% in 2000. A key to continued growth in this region appears to be emerging markets and the company is looking at possible targeted acquisitions in these countries.
Another important component for continued international growth is global B2C. UPS appears to have achieved success with its 2012 acquisition of Kiala and has integrated it into its UPS Access Points service. Plans are underway to expand this service in the Americas along with its My Choice service in both the Americas and Europe. Not only that, but it looks as if it’s most recent acquisition, i-Parcel, is expected to benefit its cross-border e-commerce from the US and UK, to over 100 countries.
Meanwhile, in its November roadshow presentation, FedEx also notes the importance of its international division, which represented 45% of FedEx Express’s total revenue for the fiscal year ending May 30, 2014. FedEx Express, is the company’s largest division and represents 59% of the company’s overall revenue. A financial stumble in recent years has resulted in the company taking steps towards improving this important segment. Indeed, the company plans are to grow its time-definite services, International Priority and International First services. Meanwhile it intends to set about transitioning international deferred shipments out of the FedEx Express air network on certain lanes by utilizing its freight forwarding group, FedEx Trade Networks. It also is looking to leverage FedEx Trade Networks along with its Supply Chain group for vertical specific capabilities, particularly within healthcare.
Emerging markets are also on FedEx’s mind thanks to its recent acquisition in Africa and those in 2012 in Mexico, Brazil and Poland. The company is now looking to “integrate and achieve synergies” on its acquisitions along with leveraging its European expansion for “greater densities” and lower costs.
Expansion and integration, e-commerce and industry-specific solutions such as those for healthcare are all strategic initiatives for these two companies. While the US domestic market still represents a large revenue percentage for them, opportunities in the global supply chain continue to increase and present new challenges. How well they orchestrate these initiatives in an evolving global environment will be evident on their financial ledger.
