FedEx, UPS Focus on International Arena
FedEx, a division of FDX Corp., will introduce a service in September that lets U.S. customers ship packages to more than 150 countries in a shorter amount of time than its current service. UPS, on the other hand, will offer a money-back guarantee on all ground deliveries from the United States to Canada sent via UPS standard service.
According to FedEx, its new service -- called FedEx International Next Flight -- is different from its current offering, FedEx International First. While International First can deliver packages to eight major cities in Europe by 8 a.m. the next business day, International Next Flight is open to 150 countries and guarantees that a courier will be at a destination to pick up the package in less than an hour from the time the customer calls to schedule a pickup. After that, the shipment will be placed on the next available flight. Packages can't exceed 70 pounds and the cost for the service starts at $185.
FedEx has teamed with World Courier to offer the service. International Next Flight is a highly specialized service "for companies who need to get packages delivered immediately," said Carla Boyd, a FedEx spokeswoman. "If banks or financial institutions, for example, need to deliver important documents overseas or if hi-tech or manufacturing companies need parts and components delivered immediately, this service is for them."
As for UPS, its money-back guarantee service to Canada is part of a larger series of shipping guarantees introduced this year to ensure delivery of international UPS shipments to and from the United States. In February, it began guaranteeing all of its international air services to and from the United States. Guaranteed ground deliveries from Canada into the United States began in March. And the company recently began allowing its customers track their international shipments online -- in 16 languages -- at www.ups.com.
While both companies say these new services are in response to customers' needs, experts said that's only a small part of the story. They're also taking their products off shore to compete with other big players in the U.S.-to-international market such as DHL and TNT Express.
"Since FedEx and UPS have matured on shore, saturating virtually every city and state in the U.S., they have decided to take their core product lines, services and capabilities and aggressively enter them into new geographic markets in Asia and Europe," said Douglas W. Rockel, an analyst at ING Baring Furman Selz LLC, New York, an investment brokerage house.
However, Rockel said, only recently have the two companies started seeing some profit.
"Five years ago, these companies were losing a lot of money internationally. They were eating the up-front start-up costs to penetrate these new markets, put in capacity and develop their networks," he said. "But now they are reaping the rewards."
Indeed, UPS's second-quarter profits jumped 34.7 percent, and the gain is attributed to a boost in international volume.