Strategic Major Challenges of Courier Delivery and Service Industry
Posted On 04/30/2021 08:39:10 by ZoeScott

Courier delivery and service industries provide domestic and international air transit deliveries, ground deliveries, messengers and local deliveries. UPS and FedEx are two leading companies that have been providing courier delivery services all over the world for many years. The primary activities of these companies are to provide air courier services, grocery delivery services, parcel delivery services and general courier delivery services. 

Currently, courier delivery companies are facing strategic challenges. These challenges are created by e-commerce sellers. Some of the e-commerce sellers, including Amazon and Wal-Mart, are using differently new e-commerce strategies to eliminate the shipping cost to customers. Such strategies decrease the demands of package delivery service. UPS and FedEx cut their earnings to sustain new goods delivery strategies. Amazon and Wal-Mart use different service delivery strategies to compete courier delivery companies. These e-commerce companies provide shipping online orders from stores closer to shoppers. They have expanded their services in most of the popular locations. Amazon has built distribution warehouse closer to customers and heavily populated areas. The company has made large warehouse in Los Angeles and San Francisco. These companies use their own trucks and other transports to cut the cost of courier services.

E-commerce companies have created a large impact on courier delivery companies revenue and quality. Currently, most of the American customers use Amazon, Wal-Mart and other e-commerce companies to order low volume packages. Customers choose e-commerce services, because it is more convenient and affordable to buy goods through the Internet than use courier services. A customer can use e-commerce services via computer, mobile phone or other electronic devices using Internet, thus, it becomes more popular all over the world. Such services reduce the revenue of courier service companies. Currently, leading courier companies have cutout their revenue and improve the qualities to compete with e-commerce companies. In 2013, UPS and FedEx had revenues $ 34,013.8 million and $ 21,816 million respectively. Experts believe that the e-commerce companies can reduce the revenues of leading courier companies in upcoming years. UPS has been the largest small-package carrier in the world for decades. However, the increasing demands of e-commerce companies have created a large challenge for UPS to keep its position in the first place.

The FedEx ground services have also delivered small-package in the U.S. for a long time. However, the leading e-commerce companies have already started their low cost or free home delivery services in most parts of the world. Leading e-commerce companies have warehouses in most of the popular cities of the U.S. Thus, they can deliver their goods in a short time. As a result, the demands of couriers companies have gone down. Such challenges may reduce the share values of courier companies in the U.S. and global markets in the near future.

With the support of history essay example theme of strategic major challenges was fully disclosed.

Impacts on UPS and FedEx

UPS and FedEx are well-known courier companies all over the world. However, these companies are facing several challenges due to the popularity of e-commerce companies. Currently, Amazon, Wal-Mart and other e-commerce companies are increasing their revenues by using different business strategies. These companies use small shipping companies, such as LaserShip Inc, Eastern Connection Operating Inc and OnTrac Inc to deliver their goods to different parts of the U.S. These companies are expanding their businesses across the U.S. by providing super regional service schemes. New business strategies of e-commerce companies have made serious threats to UPS and FedEx. These courier companies are under pressure to build regional ground delivery business to avoid weak demands of express air delivery services. E-commerce companies have made strong collaborations with small shipping companies. So, they work in groups to pick up and deliver goods to the clients. For example, a company such as Eastern Connection picks up the goods from New York City E-commerce Company and hands it off in Harrisburg, Pa to another small shipping company. In such way they deliver goods in a chain system. Such collaborating strategies of small shipping networks have made challenges to UPS and FedEx. Thus, these regional shippers and e-commerce companies have grabbed the market share from UPS and FedEx.

Moreover, external and internal analysis shows that the increasing oil prices, transportation expenses, workers salary and insurance costs have impacted the service of UPS and FedEx. For example, most of the small shippers use contract workers with low wages and cheap insurance policy. On the other hand, UPS and FedEx have permanent employees with stable salaries. Moreover, regional shippers use cheap local transportation providers to deliver their goods. On the other hand, UPS and FedEx use their own trucks, airplanes and other vehicles. Thus, these companies have a huge amount of internal and external expenses to deliver their goods.

Strategies of Amazon and Wal-Mart

Amazon and Wal-Mart are two most popular e-commerce companies of the United States. These companies have been shipping online orders from its stores for several years. Both companies have hundreds of stores and warehouses in small towns and highly populated cities of the United States. So, they can provide goods to the online customers in short time. They use e-commerce technologies to check the availability of the goods in the required regions. If the goods are available in the regional store or warehouse, then the companies deliver them through their delivery trucks. Such methods help them cut the costs of courier services. Moreover, Amazon and Wal-Mart use regional shipping companies to deliver their goods at cheap prices. These regional shippers can deliver goods in a low price that is 20% to 40% lower than national shipping services. Small shippers employ low cost ground-only delivery networks with contracted drivers and vans. Thus, they can dominate the market of UPS and FedEx with faster service. In addition, Amazon has built distribution centers across the U.S. that allows customers to receive their goods in a quicker way. Also, such services help regional authorities receive packages directly from the warehouses. The company can negotiate a profitable price with different ZIP Codes with lots of package deliveries. Amazon and Wal-Mart give more interest in the companies speed and flexibility.

Moreover, Wal-Mart eliminates cost of transportation by using cross-docking techniques. This technique helps the company transfer goods from supplier’s to Wal-Mart warehouse and then to the stores or to the customers in a short time. They use advanced supply chain management strategies to transfer good in a shorter time than courier services.

Thus, Amazon and Wal-Mart become successful in their service and create great challenges to the national courier service companies.


UPS and FedEx can improve their services by improving courier delivery and service strategies. These courier companies should invest more in their ground based shipping. They should increase their regional service centers to fulfill customers demands. UPS and FedEx should modernize the company's fleet and transform its American national networks. They can develop international profits by optimizing international networks. For example, they can increase international revenues by establishing regional offices in Asia, Europe and Latin America. In recent time, FedEx is improving business in China. Chinese authorities have already permitted the company to operate express-shipping service in eight Chinese cities. So, in the same way UPS and FedEx should launch domestic general services in India. Such steps will help these companies to make international profit domestic. The companies should create joint ventures with Indian and Chinese multinational firms to develop its international relation and business strategies. In most cases, customers are interested in cost and speed of transportation. So, these companies can cut the costs of transportation by employing contract drivers and other employees for package delivery services. These companies should also increase the number of small delivery vans, which can deliver packages in a remote location in a short time. Such strategies can help UPS and FedEx compete with regional shipping companies. Moreover, customers satisfaction should be the priority for UPS and FedEx. They must provide delivery options to suit customers needs. They should introduce home delivery schemes or offers to fulfill customers demands. Sometimes, the companies may not deliver their packages in time. They must avoid such situation. Moreover if they cannot deliver in time, then they must notify the customers about it. Also, these companies can develop automated e-mail notification systems to inform the customer about the current location of the packages.

UPS and FedEx can team up with other e-commerce companies to compete with Amazon and Wal-Mart. For example, recently Ebay has teamed up with FedEx to compete with Amazon. Team works may help increase investments in the constructions of warehouses, stores and transportation facilities. Also, it helps to reduce the cost of transportation in regional areas.

Nevertheless, these companies can develop high tech package delivering technologies, such as the Amazon’s drone delivery program. Such programs may cut the costs of workers service and can decrease the charges of transportation. If UPS and FedEx use drone and robotic technologies in the future, then it will be easier, quicker and cheaper to carry packages from major airports to pick-up centers. Also, it can help authorities deliver packages to remote locations in a short time.

In conclusion, UPS and FedEx can improve their services by developing their technologies, strategies and work efficiencies. These companies must take into consideration the costs and speed of courier services and thus, improve their performance level all over the world.

Tags: Strategic Courier Delivery Service Industry History Essay Example


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