Air Transport World

World -- Class Speed.(FedEx)

Despite a troubled beginning, FedEx is doing well in the worldwide market

There is a tendency to think of Federal Express's entry into the worlwide express-package market as a disaster. And a 10-year $1.2 billion loss to the bottom line doesn't exactly help dispel that tendency.

In fact, FedEx did blunder badly going into the intra-European market, which it entered in 1984, thinking that what made it the No. I air-expressdelivery company in the U.S. would work for a European network.

"We went over to Europe and decided to do an intra-European service in the traditional fashion," said Theodore Weise, FedEx's new president and CEO. "It just didn't work. We were not as competitive as the local alternatives. When you look at taking a package from Germany to France, we didn't add a tremendous amount of value in the way we were trying to do it. So we shut it down."

After backing out of the European intracontinental market, FedEx concentrated on building intercontinental networks, primarily in Asia, then in Europe, the Middle East and Latin America.

Now, it has two major hubs for its international networks: Subic Bay in the Philippines for its intraAsia AsiaOne network, and Paris for its Europe/Middle East/Africa region. It announced plans last October to open a major hub in Miami for Latin America and the Caribbean late next year (ATW, 2/98). Dubai is becoming a major hub for feed into its Around The World flightuintroduced last year although its only westbound service is through the Paris hub.

Around the World connects FedEx's key global and regional hubs, cutting delivery times worldwide and virtually ensuring express delivery within 48 hr. The Around the World flight starts in Indianapolis, goes east to Paris, Dubai, Mumbai, Bangkok, Subic Bay, Anchorage and back to Indianapolis.

While its AsiaOne network is hubbed at Subic Bay, FedEx's primary Asia-North America network is through Japan. with one of its most significant international moves being the acquisition of Flying Tigers. "The ability to visualize that there was a lot of intrinsic value in Flying Tigers that wasn't being realized, and that acquisition, is what gave FedEx a huge lead relative to anyone else," said Brian Clancy, a principal with Arlington, Va-based MergeGlobal. "That acquisition gave them a whole portfolio of route authorities, particularly in and out of Tokyo. Collectively, the Tiger authorities have provided the foundation for the expansion of their international system, particularly in the Asian markets. FedEx is basically setting the pace in terms of establishing the world's largest time-definite, global line-haul system," he said. …

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