Sunday, December 14, 2014

The birth of Federal Express

On the first night of service in 1973, one pilot euphemistically stated to Fedex founder Fred Smith that the plane would not need to make a second trip that night. FedEx handled 186 packages to 25 cities. Their choice of cities reflected travel time, demand for just-in-time deliveries, and ease of implementation: The small propeller aircraft had to travel to Memphis, TN, and back to its origin before the business day. The first cities to receive service were medium-sized blue-collar cities, rather than larger paperwork cities, like New York and Washington. The implementation of FedEx required mailroom staff to sort out packages by destination. At the time, expediting a package required working with an airfreight broker. The ability to send express packages in bulk, rather than as single items changing hands at multiple airfreight terminals, was a great cost savings. While suburbanization was in full swing, businesses were still concentrated in the city. With the rapid increase of rural factories, and exurban office and industrial parks at the end of the 20th century, FedEx would have required many more trucks just to cover the ground territory. Demand for Fedex's services would grow exponentially as more cities were added. For executives of blue-collar firms, reducing the amount of parts in inventory helped the bottom line. Fedex now represents a nimble operation, which synergistically incorporates related services such as ground shipping, Kinko’s copy and print shop services, and a state-of-the art customs brokerage operation. Because of its focus on industrial shipments- things that can’t be sent by wire, the fax machine and email were not able to put FedEx out of business. These diverse factors, present in 1973, helped to contribute to the nascent FedEx’s growth success. Source:

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