Essay on "flows of freight have of late"

Essay 42 pages (13147 words) Sources: 42

[EXCERPT] . . . .

He supplemented a $4 million dollar inheritance from his family with over $91 million he had acquired in venture capital to get the business off the ground. His ideas proved to be rather costly indeed; an entire system had to be created as a prerequisite before the company's first day of business. In 1977 the company profits hit $8 million on sales of $110 million. The firm also had some 30,000 strong customers, including the U.S. Air Force and IBM. The company later went public in 1978 at the New York Stock Exchange (NYSE). By the late 1980's FedEx was a well established firm and was growing exponentially at 40% per year. Building of smaller scientific instruments and consumer electronics brought about smaller and valuable packages that required express shipment. While FedEx was the undisputed leader in overnight shipping industry in the United States, DHL Worldwide Courier built a similar service globally, and thus the two became major competitors. Increased competition from the German courier put more pressure on the FedEx market niche; however, FedEx's lead was quite large and its reputation excellent. Expanding to global markets was tougher than the company had expected. In 1994, the company linked about 200 countries and territories globally (FedEx Corporation - Company Profile, Information, Business Description, History, Background Information on FedEx Corporation, n.d).

Currently operating in 211 countries and territories globally, FedEx Express is the largest express shipping company in the world. FedEx Ground transports small packages by ground and is the second largest provider of those services in the whole of North America. FedEx Freight offers regional freight deliveries on LTLs. FedEx Custom Critical provides clients who require very critically timed packages or shipments. Finally, FedEx Trade Networks offers a variety of customs brokerage, consulting, and information technology services. Every business day in the U.S., FedEx ships over five million packages and processes roughly 100 million transactions. Thus basically the company utilizes its ground vehicles, planes, and information technologies to speed up shipments so that individuals and companies can transport time-sensitive packages across huge distances in a virtually seamless manner (FedEx Corporation - Company Profile, Information, Business Description, History, Background Information on FedEx Corporation, n.d).

In May 2014, FedEx expanded its operations by completing the process of acquiring businesses owned by Supaswift (Pty) Ltd. In seven African countries for $36 million in cash. This greatly expanded FedEx's international service offerings. In the previous year it had completed the acquisitions of several companies to boost its global standing as a reliable worldwide courier. These companies included: TATEX, a French transportation firm for $55 million; Rapidao Cometa Logistica e Transporte S.A., a Brazilian logistics and transportation firm for $398 million; Servicios Nacionales Mupa, S.A. de C.V. (MultiPack), a Mexican package delivery firm for $128 million; and Opek Sp. z o.o., a Polish express package delivery firm for $54 million (FedEx Annual Report 2014, n.d).

The operations of FedEx are largely capital intensive, featuring huge investments in technology, aircraft, vehicles, facilities, sorting equipment, and package handling. The timing and amount of capital injections depend of a variety of factors including: anticipated volume growth, prior contractual agreements, global and local economic conditions, geographical expansion of services, new or improved services, actions of regulatory agencies, and availability of sufficient financing (FedEx Annual Report 2014, n.d). The third quarter consolidated results that the firm released, reported the following: Revenue of $11.7 billion which was up by 4% from a similar period in the last financial year; Operating income had shot up by 50% to $961 million; Net income had also increased to $580 million up 53% from that of $378 million. The statement released reported growth in all 3 transportation segments, due to fuel benefits, huge benefits from profit improvement programs that were being implemented, and a decrease in pension expenses (FedEx Corp. Reports Strong Third Quarter Earnings Growth, n.d.).

Part 2

International logistics connect producers and their final consumers by organizing them through corridors and gateways across the world. Global logistics therefore contribute heavily to increasing trading opportunities. International trade brings together the partnership and cooperation among global community members; this enables the global economy to grow faster. Thus, creating a global logistics system makes international trade simple and rapid. In recent years there has been an acknowledgment that satisfying client demands in processes such as developing, manufacturing, and delivering goods to them is of critical importance to any company. The idea of logistics is the thread that links all these important processes and offers a basis for the creation of systems that will deliver value, cost-effectively, to clients. Nowadays, it is much easier for people to communicate, travel, exchange ideas and do business from all corners of the globe; this phenomenon is referred to as globalization. This phenomenon has further grown due to the exponential evolution in information, communication, and transport technologies. Globalization has also been influenced by logistics internationalization, trade liberalization, and financial market deregulation (?epinskis & Masteika, 2011). Globalization has improved access for both clients and logistics firms such as FedEx. Access is crucial to nations. Countries stagnate or thrive based on their degree of access to inputs that supply their economies, in addition to the degree of access to markets for the goods they produce. The value of access is evident in many important events and trends in history such as invasions, colonization and explorations, and etc., which have been mainly driven by countries' in a continuous search of access. Fortunately, nowadays access is basically provided by economic, technological, and diplomatic processes. Access has served many powerful nations well, and is now acting to destroy national "economic" borders. Access not only powers the economic growth of singular nations; it also propels forward the phenomenon of globalization, which is rapidly changing the way people do business. By virtually removing time and space and increasing available information, access acts both as a catalyst and the force behind the rapid integration of the world economy. For the first time in history, all countries -including third world countries - have within their reach the ability to engage in productive activities that involve any other nation in the world. This in turn provides an opportunity to eliminate world poverty (FedEx Corporation and SRI international, n.d).

Unlike any other time in history, individuals and companies now have the ability to "shop the world," in that they can buy goods from almost every corner of the world. Proliferation of online shopping platforms such as eBay, supported by access to shipment and logistics firms such as FedEx, means that physical goods are now being increasingly transported across international borders. Increasing direct connections to various international and domestic destinations is enabling the formation of a unified world economy and revolutionizing the roles of countries in the global supply chain. Access is allowing nations to open up frontiers the way railroads opened up America's Wild West. The causal link between access and internal national growth is the same for all countries. Countries are now more closely linked than ever, both economically and physically via the access generated by open skies and markets (FedEx Corporation and SRI international, n.d).

Trade liberalization has catalyzed a period of exponential global growth. In the same way, "open skies" increases both access and benefits to be acquired from this access. Until the last decade of the 20th century, restrictive pacts and agreements governed almost the entire international airspace, and aviation relationships, and there were virtually no open skies agreements of any sort. However, since that point many countries around the globe have replaced restrictive regulations with liberalization, hugely increasing competition, and enabling cargo and passenger airlines to grow into new markets and geographical destinations (FedEx Corporation and SRI international, n.d).

Discussion Question

I cannot recall the first time I heard the word "globalization." The word generally means the processes that increase the movement of individuals, technology, culture, information, and ideologies across the globe or world. The novels I read, the songs I hear, and almost any other kinds of media I interact with, all have some aspect of globalization and the spread of cultures and influences around the world. The fashions, technologies, and emigration of peoples are basically daily proofs of globalization. However, on a more personal note, globalization affects almost every aspect of my day-to-day life. For instance, I use my personal computer to do assignments; I also use a phone and a tablet almost every other day. It is highly probable that the phone (an iPhone) was built somewhere in China and not the U.S. Apple Corporation. This is a very good example of outsourcing for cheaper manufacturing costs and it's an example of the benefits that Apple and by extension the U.S. has gained from access to cheap labor and also a fine example of how globalization works.

The fact nations are able to trade more freely with one another helps create a lot of products and services that can be available for consumers. Most of the available products and services were unimaginable before… READ MORE

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