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Sunday, June 15, 2008

Perspective on Business Styles Contrasting UPS and Fed Ex

In case you missed the article in Forbes this month by Ruthie Ackerman titled "Big Brown's Logistics Business Flowing Black," I highly recommend it.  It does less to paint a picture of UPS's growth or improvement in finances than the title implies. 

However, it does provide in the background of the article some very good perspective on the two different business models employed by UPS and its sometimes rival Fed Ex.

Fed Ex's model is to be the perfectionists of delivering small packages overnight.  They work to integrate with other best in class partners for other services including logistics, warehousing, reverse logistics and more.

UPS on the other hand works to be a logistical jack of all trades providing both warehousing, logistics, reverse logistics and repair services to add value for its customers.

The differences between the two customers actually provide a good example to potential business partners that are looking to make the right choice between the two.

The different approaches tend to differentiate the two delivery companies, making UPS more attractive to companies looking to ship bigger, heavier shipments around the globe and those that want to outsource their supply chains, while FedEx does better with companies that ship small pieces that don't weigh as much, such as semiconductors. The strategy is likely taking market share from smaller competitors such as UTI, Kuehne + Nagel, Freight Expediters and Panalpina rather than from FedEx.


So if you are looking to ship important documents or even silicon wafers, fedex might be a good option, but if you want to send products to be bundled into baby gifts from Mexico to the US, and some of those bundles might end up in odd sizes, and shapes destined for retailers that need to pay up as well, the UPS may be your best bet.

If you are looking to ship truck loads or a large number of pallets at a time via ltl, then neither company may be a good bet for you, but knowing when to choose the right one for your job and having the confidence that you made the right choice, could definitely help you sleep better at night.