Packing In Customers
A funny thing happened on the way to a paperless society: The Internet, with its online auctions and e-retail shopping, has created a worldwide demand for shipping that is driving a nice international business for package delivery services.
Four shippers alone--UPS, FedEx, DHL International and the U.S. Postal Service--divide more than $100 billion in revenue among them.
These entities are putting so many uniformed employees on the ground, aircraft in the sky and trucks on the road that an international trade war over delivery services seems to have taken on the appearance of true battle.
Competition among the major parcel handlers, who employ some of the largest workforces in the world, is frenzied. The big package delivery companies are swallowing up smaller companies and expanding into an array of logistical, supply-chain and other services.
UPS not only moves cars but also sets up warehouses stocked with car parts to make overnight delivery to dealers easier. Instead of transporting lobsters from the Maine coast, UPS set up a lobster farm at its Louisville, Kentucky, hub for faster delivery to restaurants.
With the exception of the government-run postal service, the delivery companies seem to be mimicking one another. It goes like this: When UPS buys Mail Boxes Etc., FedEx follows up and purchases Kinko’s. Needing an air force to counter its bigger competitors, DHL acquires Airborne Inc., then gets Danzas Air and Ocean from its German parent Deutsche Post World Net.
Here is a breakdown of the four key players:
UPS--Revenue in 2004: $36.6 billion. The Atlanta-based giant has 384,000 employees. It owns 268 jet aircraft and charters an additional 301 planes. Operates in more than 200 countries and dominates business in the U.S. Handles 14.1 million packages and documents a day, delivering to 7.9 million daily customers. Owns 88,000 cars, vans, tractor-trailers and motorcycles. Fighting to hold on to market share in the U.S. while it expands operations internationally.
DHL International--Revenue in 2004: $32 billion. The one-time San Francisco-based company is now owned by Deutsche Post, which has a monopoly on Germany’s mail delivery. Most of its revenue is generated outside the U.S., but it is rapidly expanding and building up its name in the U.S., with a $1.2 billion investment plan. Has 170,000 employees worldwide. Operates a fleet of 420 aircraft. Deutsche Post says its U.S. operations are losing money but could break even by 2006.
FedEx--Revenue in 2004: $24.7 billion. The Memphis, Tennessee-based company has 250,000 employees and contractors. Operates in more than 220 countries and territories. Has 671 aircraft and more than 71,000 motorized vehicles. Handles 6 million parcels daily. Has a big contract with the U.S. Postal Service. Is putting up a strong challenge to UPS in ground transportation.
U.S. Postal Service--Revenue in 2004: $69 billion. Employs 707,000 career employees and 101,000 substitute, relief and replacement workers. Owns 212,000 motor vehicles but contracts with commercial air carriers. Most of its revenue derives from a monopoly on mail delivery in the U.S. Counting only priority and overnight mail and package delivery, the services that most frequently throw it into competition with private firms, USPS takes in $7.4 billion a year.
Workforce Management, May 2005, p. 43 -- Subscribe Now!