SWOT Analysis of FedEx: Strengths & Weaknesses 2021

NameFedEx Corporation
HeadquartersMemphis, Tennessee, USA
CEOFrederick Wallace Smith
RevenuesUS$ 84 billion, 2021
ProfitUS$ 5.23 billion, 2021
CompetitorsUnited Parcel Service (UPS), DHL International, Royal Mail, Deutsche Post, Amazon, Uber Freight

Headquartered in Memphis, Tennessee, United States of America, FedEx Corporation is a courier and transport company. It was established by Fredrick Wallace Smith in 1971 in Little Rock Arkansas. The company has the fourth-largest fleet in terms of fleet size and employs more than 289,000 people. Today we are performing a SWOT Analysis to identify where the company stands in 2021.

FedEx Strengths 2021:

  • Strong household name and reputation.

    FedEx is a trusted name in the global transport industry and has a reputation of delivering with speed, reliability and quality. The FedEx brand has become a house-hold name, “If you need it there by a certain time, ‘FedEx it!” The company employs significant resources, unique marketing techniques and effective sales tactics, to promote and protect that standing. The company characterizes its brand name and association with service excellence by sponsoring high profile events such as: NBA, NFL, PGA, and auto racing. According to Forbes (2019 ranking), the company was ranked 35 in Top Regarded Companies, ranked 51 in Worlds Best Employers and ranked 89 in Worlds Most Valuable Brands.
  • Strong global distribution capabilities.

    The Company provides delivery services to any United States address and also delivers to over 220 countries and territories across the globe. The company is divided into five headquarters: North America, Latin America, Asia, Europe, Middle East/ Africa and Caribbean. The company also has strategically located 16 hubs to provide better worldwide services.
  • Wide range of transportation services.

    The Company offers a wide range of services (including transportation, ecommerce & business services) which allows them the capabilities to target a larger global customer base. Services are divided into four main business segments operating independently but managed by one umbrella FedEx Corporation. The business segments are: (a) FedEx Express (US and International air-and-ground network for time sensitive shipments), (b) FedEx Ground (small package and low cost shipping for B2B & residential shipments), (c) FedEx Freight involves Less-Than-Truckload (LTL) freight  including real time estimations on duties/ taxes & custom clearance solutions, (d) FedEx Services provide businesses with finishing documentation services and technology support.
  • Competitive Prices.

    Majority of the customers consider price as the primary reason for selecting transport services. FedEx exploits economies of scale to offer high quality services at competitive prices.
  • Smart Acquisitions & Partnerships.

    The Company has acquired a number of companies including ecommerce platform ShopRunner Inc in 2020 that helps connect brands to online shoppers. Flying Cargo Group was also acquired in 2019 to expand into Israel and its surrounding countries.

FedEx Weaknesses 2021:

  • Dependence on American Market

    The Company heavily relies on its revenues from the United States market and not on 220 countries collectively.

  • High Operating Cost.

    Costs of purchasing new aircrafts, their maintenance, recruiting human resource contributes significantly in operating cost. The Operating Margin for Year 2021 is reported to be 7%.

  • Reputational Risk.

    The Company has over 140,000 delivery vans and has a large number of drivers. A number of driver bad behavior issues have been reported in print and social media in the last a few years. Bad behavior issues can cause reduction in value of the brand and company needs to manage this risk.

  • Demand Fluctuation.

    Seasonal fluctuation in demand sometimes causes unutilized resources and sometimes the company finds difficult to cope up with demand especially during Christmas season.

FedEx Opportunities 2021:

  • Expand into New Markets.

    The Company is in a position to leverage its brand and expand into new markets across Asia, Africa and Latin America. Ernst & Young (EY) predicts Europe becoming most important market for sub-Saharan African exports. African population and economic growth forecast also incentivize the company to expand its operations across African continent.  
  • Post Covid-19 Ecommerce.

    The Company may focus on its experience in Ecommerce and provide one shop solution to new markets with increased demand due to Covid-19 pandemic. Electronic retail revenues are projected to increase to US$ 5.4 Trillion and FedEx has opportunity to improve its revenues.

  • Diversification.

    The Company has is well positioned to diversify into strategic niches and improve its competitive advantages through acquisition of innovative logistics startups and regional companies.
  • Advanced Technologies.

    The Company has the existing base to employ advanced technologies including Artificial Intelligence, drones and robotics in its operations.  

FedEx Threats 2021:

  • Increased Competition.

    The Company is facing cut throat competition from UPS. FedEx has superiority in airlifted and time sensitive packages but UPS is far ahead in ground based packages. Players like Amazon, who had traditionally utilized FedEx services have now established their on delivery network.  

  • Volatile Fuel Prices.

    The Company is prone to volatile fuel pricing as even one dollar increase in price of fuel greatly impacts on the operating costs.

  • Seasonal Workers.

    The Company has to employ seasonal temporary workers to meet peak demands especially during Christmas. Temporary workers have zero loyalties for the company which sometimes causes customers non-satisfaction and ultimate movement towards competition.  

  • Ecological Threats.

    Large fleet of aircrafts and vehicles is a cause of concern due to Green House Gas (GHG) emissions. New global regulations may force FedEx to limit or replace all of its aircrafts and motor vehicles. The company is aiming for carbon neutral operations by Year 2040.

  • International Politics.

    he recent global politics between United States and France may impact FedEx business interests in Europe. Similarly, the political tensions between United States and China may adversely impact FedEx global growth plans. In 2019, Chinese authorities had initiated an investigation into FedEx for diverting Huawei Technologies packages to United States.

SWOT Analysis of FedEx Conclusion:

FedEx Corporation provides B2C and B2B services worldwide with an extensive portfolio of transportation, e-commerce, and business services. The company is consistently ranked among the most admired and trusted employers. The company observes the highest ethical and professional standards and is committed to connecting people responsibly and resourcefully. The company has already set the goal of going carbon neutral by 2040. Though, the company is highly reliant on American operations for revenues but has the opportunity to acquire various companies operating in new markets and also establishing new operations with advanced technologies. 

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  • References:

    1. Baertlein, L. (2021) FedEx labor shortfall hits quarterly profit, earning forecast . Reuters
    2. Brien, M. (2021) Amazon Surpasses FedEx in Parcel Volume. Multichannelmerchant.
    3. Dunn, N. H. (2021) FedEx earnings beat estimates on ‘unprecedented’ holiday shipping season CNBC.
    4. Fortune 500. Fortune.
    5. Gibert, A. C. (2021) A FedEx driver claimed he would not deliver to homes with BLM flags. Now he’s out of a job USA Today.
    6. KGW Staff (2021) Here’s why delivery for FedEx packages is delayed in Portland. KGW
    7. Klyce, J. (2021) FedEx touts ‘record’ Q4 and full-year results, eclipses $80B in revenue. BizJournals [online]
    8. Mazareanu, E. (2021) FedEx Express total vehicle fleet 2016-2021. Statista

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