The intent of this paper is reexamine the current market tendencies and conditions for FedEx.
There are legion ways that a company can go a success or go a failure. The market tendencies and conditions are merely of those grounds. Team A has analyzed the market tendencies and conditions by reexamining FedEx’s operating construction. rivals. the impact of authorities ordinances. monetary value snap of demand.
along with a supply and demand analysis. History OF FEDEXFedEx Corporation is responsible for the way of FedEx which is comprised of FedEx Express. FedEx Ground. FedEx Freight. FedEx Office. FedEx Custom Critical.
FedEx Trade Networks. and FedEx Services. FedEx started in 1998 and wanted to spread out their express bringing service so that they could diversify their portfolio finally to vie in the market on a planetary graduated table. In 2000. FedEx acquired a new subordinate called Tower Group International who is a leader in the concern of international logistics and trade information engineering.
Through this acquisition. FedEx has become the largest-volume imposts entry filer in North America and a leader in planetary ocean and air lading distribution and trade facilitation. In January 2001. FedEx Global Logistics realigned to streamline the organisation to further better their client service across the board. They bought out American Freightways and Viking Freight altering them to FedEx Freight embracing the Eastern two tierces of the United States. In 2004 FedEx acquired Parcel Direct who is a taking package consolidator.
which became SmartPost. This helped FedEx in its confederation with the U. S Postal Service and provided clients with proved cost effectual solutions for low weight and clip sensitive cargos within the United States. FEDEX OPERATING MarketFedEx created a new market less than 40 old ages ago by supplying clients with the following twenty-four hours just-in-time bringing services.
FedEx presently operates in more than 200 states doing it a planetary market. FedEx is one of the most dependable transportation companies that has the capableness to transport any bundle of any size locally or internationally. In 2009 FedEx expanded their planetary capablenesss by escalating their cargo send oning presence in multiple states. Harmonizing to Wikinvest. the new enlargement should profit FedEx’s clients by: Enhanced planetary cargo forwarding services and end-to-end multimodal solutions ; Direct entree to local forces with industry experience and local expertness to run into client demands ; Expanded regional entree to services.
including international direct distribution. and supply concatenation visibleness. on-line FedEx trade tools such as WorldTariff® . and trade and imposts consultative services ; and Increased entree to the FedEx planetary web and seamless support across other FedEx runing companies in markets ( Wikinvest. 2009 ) .
Market STRUCTUREFedEx is traveling quickly into cargo transit which is less expensive than the usual land services. FedEx is spread outing into other foreign markets at a rapid gait offering printing. photocopying. Internet entree. and other business- centre services. FedEx is presently the leader in express transportation having 49 % of the market portion by volume in the U.
S. FedEx is presently come ining the in land transportation field in which UPS dominates presently. FedEx’s success to day of the month can be attributed to ache acquisitions and simple strategic visions that have made them a universe leader in the industry. They continue to spread out their FedEx Freight. and are now concentrating on their regional cargo acquisition which is suspected to increase gross over the long-haul.
Once clients realize that they can utilize FedEx for their regional demands FedEx hopes to increase their gross non merely nationally but regionally every bit good. GOVERNMENT REGULATIONSLimits to a company can set even more limitations on a consumer. FedEx has limitations on transporting out merchandise to assist protect the company from having punishments that could be the company 1000s of dollars. FedEx ( 2010 ) ordinances province. “ NOTE: We are required by jurisprudence to describe improperly declared or undeclared cargos of unsafe goods to the U. S.
Department of Transportation. Punishments for such cargos may include mulcts up to $ 500. 000 and five old ages in gaol. The DOT/FAA requires every shipper to hold job-specific unsafe goods developing prior to offering a unsafe goods cargo to FedEx or another air carrier” ( para 12 ) . Air traffic control needs specific certification to let a FedEx consumer to transport packages anyplace in the authorised states. The authorities ordinances will qualify that many of the consumers that use FedEx must make full out the appropriate paperss and do certain that the consumers assume all liability for the bundle.
With the Dangerous Goods ordinances in topographic point. the proper certification has to be in topographic point to do certain FedEx cargos are in the right packaging. FedEx ( 2010 ) stated in its policy that “ Shippers of unsafe goods. whether prepared under IATA/ICAO or 49CFR. must follow with all FedEx Express ( FX ) fluctuations listed in the current edition of the International Air Transport Association duty.
All bundles incorporating unsafe goods must follow with the International Air Transport Association ( IATA ) unsafe goods ordinances. The lone exclusion is for a U. S. district or commonwealth such as Puerto Rico.
Shippers may utilize 49CFR when prepared by Air as limited by the trade goods FedEx Express accepts prepared under these ordinances. The shipper is responsible for following with all wadding demands and appropriate marker and labeling of the bundle. certification. conformity with all applicable federal. province and local Torahs. ordinances.
regulations and regulations. The policies and processs in topographic point for transporting out unsafe merchandises aid to protect the FedEx Company from any misdemeanors that may be imposed by the authorities. Impact OF GOVERNMENT REGULATIONSThere are authorities ordinances that affect all sorts of organisations. For FedEx.
it seems that the most authorities ordinances they have to stay by are for export cargos out of the United States. Exports from the United States are controlled by Export Administration Regulations ( EAR ) . International Trafficking in Arms Regulations ( ITAR ) and ordinances from other authorities bureaus ( OGA ) . such as the Drug Enforcement Administration and the Department of Commerce. Additionally.
every other state has its ain set of regulations and ordinances for importing that must be considered ( FedEx. 2010 ) . Government ordinances are ever altering in the transportation concern ; each state including the USA has their ain set regulations. The impact of these regulations can set great strain on the FedEx Corporation by non leting certain points to be shipped within a certain state. For each state there is one common tendency and that is to maintain their ain people safe. every bit good as take away money from local concerns.
In the transportation industry it is altering all of the clip. largely because the universe has changed in the manner we all do concern with one another. The universe has become more of a planetary concern. instead than a domestic concern. More and more companies have built stronger relationships with people outside of their ain authorities. With this fast altering tendency.
local authoritiess need to do the alteration themselves to procure a stronger hereafter. IMPACT OF NEW COMPANIESFedEx plans to spread out their international web and is banking extremely on this international transportation web. This will be the company a great trade at first and their success will depend on how rapidly they can pull clients to this expanded web. The costs are associated with the economic system and fuel monetary values have cut into their net incomes every bit good as wages for their employees. The runing income of the organisation has continued to fall because of the current province of the economic system.
The net incomes of FedEx come in rhythms and depend mostly on the strength of the U. S. and universe economic systems. The better the economic system the better net income they will do through high bundle volumes. A batch of concerns use FedEx as an index of instead or non the economic system is bouncing or if it is decelerating.
This is mostly in portion because of the logistical advantage that FedEx has throughout the universe. RivalDelivery of merchandises all over the universe can make ferocious competition among freight bearers. FedEx’s rivals are United Parcel Service. DHL.
and the United States Postal Service. FedEx is invariably in competition with the three companies to hold express bringing service. air cargo service. and freight forwarding services for all consumers.
UPS and FedEx are chief rivals with each other for services from industries to consumers. UPS offer transportation services near to FedEx by offering cargos from state to state with planetary trailing. Global trailing will be good to people looking to transport bundles from Missouri to London England. Tracking the merchandises from the point of bead off to arrival aid maintain companies in concern by offering timely bringing. FedEx offers price reductions that can non be matched by the rivals but the rivals will look to do a different offer that FedEx might non offer.
FedEx must look at the rivals pricing to do certain the monetary value can be matched or better to maintain consumers coming to FedEx. In today’s market holding the best possible client service is what will go on to turn the hereafter of the FedEx organisation. FedEx needs to remain consistent in the manner concern is handled on a day-to-day footing. FedEx is a planetary leader in bundle bringing. and as I said the current market is altering.
Customers want to transport and have their personal bundles at a faster. cheaper rate. Delivery of merchandises all over the universe can make ferocious competition among freight bearers. FedEx is invariably in competition with the three companies to hold express bringing service. air cargo service.
and freight forwarding services for all consumers. UPS and FedEx are chief rivals with each other for services from makers to consumers. FedEx offers price reductions that can non be matched by the rivals. nevertheless the rivals listed supra are going more strategic to capitalise on market portion that FedEx was is unable to take advantage of. Monetary valuesThe gross revenues have declined for FedEx and reduced gross by 6.
5 % from $ 37. 953 billion to $ 35. 497 billion. The lone section that made money was its land section and their operating income and net income fell from $ 747 million to $ 98 million that represented 64 % and 91 % in diminutions for FedEx. The economic system has continued to hold a negative consequence on FedEx and its land section has continued to maintain them afloat with additions in runing income from $ 196 million to $ 209 million.
FedEx has become the world’s largest transit company in the United States every bit good as over 220 states around the universe. They have international trade lines or express package services throughout the universe and have grown by more than 14 % over the past eight old ages. This growing accounts for 63 % of the company’s gross which is an addition of 23 % from eight old ages ago. FedEx continues to get smaller bearers and negotiates contract with others so that they can cover a big web of emerging markets. In 2009 FedEx earned $ 1.
977 billion in gross and owns and operates more than 1. 700 storefront concern centres around the universe. Since the current province of the economic system FedEx’s book value will fall by $ 2. 22 a portion. For now they have stopped spread outing and went from adding 300 hundred shops in 2008 to adding merely 70 shops in 2009.
The hereafter remains unpredictable and will be disputing for the organisation to stay profitable but FedEx is optimistic because of FedEx’s huge portfolio in different sections that will transport them through the current worsening market. The U. S economic system continues to germinate and FedEx continues to stand for the debut of new forces that will impact their competitory advantage and beginnings of supply and demand through their logistical system. These forces will impact all industry criterions from traditional sectors like agribusiness. to fabricating. to information sectors.
FedEx logistics and supply concatenation direction tools allow concerns and clients to concentrate on their nucleus competences. This consequences in FedEx being more involved in little concern acquisitions and spurring on more competition with other concerns while utilizing FedEx as their resource. This will besides assist maintain the monetary values of goods down because of this competition. Cost STRUCTUREThe cost construction of FedEx can be defined by how many bundles are sold at a given clip. FedEx employees are dependent on location of occupation with in the state and within the FedEx constitution.
FedEx animal trainers start out at income from about $ 10. 000 to $ 25. 000. FedEx’s incline agents and truck driver’s salary norm anyplace from $ 30. 000 to $ 40.
000 a twelvemonth. Ramp agents are employees who work in an airdrome and aid burden and unload planes. The location of occupations can besides make a lower wage rate or a higher wage rate. FedEx cost construction keeps altering with the alteration of the current economic system rewards may increase of lessening with the demand of cargos traveling in and out of the FedEx installations.
Employees who work for FedEx receive benefits for employment with a full clip position. About. com ( 2010 ) provinces. “ FedEx company benefits include wellness and life insurance.
disablement insurance. 401 ( K ) . stock purchase program. educational aid. and a big assortment of extra employment benefits” ( para 4 ) .
Wage AND BENEFITSIn late 2009. FedEx instituted a hiring freezing to extinguish a batch of the compensation benefits to its employees. The parttime employees were no longer allowed to work over 30 hours a hebdomad and the full-time employees were merely allowed to work overtime one time a month at the upper limit. FedEx Freight reduced their wages down 7. 5 to 10 % .
And because FedEx believes so much in their employees and knows they are nil without them. even the executives took a wage cut. CEO Frederick W. Smith took a 20 % base salary cut in 2009 screening that he believes the cut dorsums are merely impermanent. But because of these cut dorsums FedEx has been able to go on turning in new countries and remain the successful package transporting company that we have today.
FIXED AND VARIABLE COSTSBesides the hiring freezing. pension program freezing. and pay cuts. FedEx has besides put a freezing on the purchase of new vehicles and aeroplanes. every bit good as the gap of the new FedEx Office locations. There are certain variable costs that FedEx can non truly command.
like the cost of fuel. By doing other cost film editing. FedEx is slightly prolonging control on the effects that the economic system has had on the industry. FedEx expects these cuts to salvage the company $ 200 million through 2009 and $ 600 million by 2010 ( “ FedEx cuts cost despite growing in net incomes. ” 2009 ) .
PRICE ELASTICITY OF DEMANDFedEx’s demand of service is based on the demand of consumers for the bringing of the merchandises all over the universe. QuickMBA. com ( 2010 ) is defined as. “ The monetary value snap of demand measures the reactivity of measure demand to a alteration in monetary value.
with all other factors held changeless. ” ( para 1 ) . The more that consumers demand the service of FedEx the more competitory the pricing will go with the rivals of FedEx. When the demand of FedEx decreases the monetary value of the services offered by FedEx will increase the monetary values to cover the fixed cost of the company. The monetary value of FedEx services are affected by the demand of the services of FedEx consumers. In 2008 FedEx’s net incomes fell two quarters in a row because of the surging fuel costs and the economic system traveling into recession reduced the demand for U.
S. bundle transportation. With lower demand for express bundle transporting the net incomes will ensue in a limited growing if any. TechnologyTechnology is the hereafter that all concern is tilting more and more on the importance of engineering. FedEx is committed to be the first on the market with new engineering which will assist streamline the overall day-to-day procedure.
FedEx developed a engineering centre to give clip and research for increased engineering demands. These are a few illustration of what the FedEx civilization has come up with. ( Retrieved 3-1-10 )Installing computing machines in bringing vehicles. supplying sophisticated mechanization for corporate mailing services and developing tracking capablenesss and package.
In 1994. we were the first to offer package-status trailing for improved client service via fedex. com. Offering transportation for improved client service and convenience via fedex. comPioneering the usage of radio engineering for transporting over 25 old ages ago with the debut of the Digital Assisted Dispatch System ( DADS ) . FedEx is presently take downing its stock lists and costs because of the recent diminution in the U.
S. economic system where stock list to gross revenues have declined by about 20 % in the past 18 old ages. FedEx hopes that their recent technological inventions will assist them stay profitable through the current economic conditions. They have served as a uninterrupted trial bed of inventions and have adapted and demonstrated the utility of their engineering. FedEx has pioneered technological inventions and applications like the “ hub -and- spoke” logistical system pioneered by Fred Smith.
There are many other engineerings that have helped them go a universe leader like COSMOS. DADS. and Super Tracker which have helped them systematically employ new engineerings both internally and among its clients. ProductivenessIt is clear that FedEx wants to remain in front of rivals such as UPS. USPS.
and DHL. In today’s market it is about holding the best people. the best engineering. and holding the strongest client service attitude. With these three key elements FedEx will go on to turn the concern in the now. but more significantly is strengthen the hereafter concern.
FedEx has identified the importance of employee relationship. which in the short and long tally improves overall client service. If the employees are happy with FedEx than overall productiveness will increase. “ The Employee Loyalty Index ( ELI ) at FedEx Express complements i4cp’s core focal point of leveraging human capital as a driver for increased market public presentation.
The ELI is a tool that gauges multiple indexs of employee trueness – and other critical factors that drive this commitment- on an on-going footing. The information is so used to develop proactive procedures and forward-thinking enterprises. The index is non designed to merely mensurate trueness for truenesss sake. but to move on the premiss that loyal employees help to construct client trueness.
and. in bend. greater net incomes. ” ( Retrieved 3-1-2010 )Because of the diminution in transporting tendencies in late 2008 and 2009. FedEx had to do cuts within the company during the financial 2010 twelvemonth which ended May 31. 2009.
The company chose to stop dead the pension programs for their employees for a one twelvemonth period and reduced the company fit benefits every bit good. The corporate grosss declined 6 % to $ 35. 5 billion in the 2010 financial terminal period. However. the gross diminution was slightly offset by the cost control attempts and portion additions in the package market ( FedEx.
2010 ) . Even with the economic system aching the transportation concern. FedEx was able to avoid major layoffs with other cost control attempts. The operating consequences were drastically affected by the planetary recession and the devastation of good will related to acquisitions of Kinko’s. Inc. and Watkins Motor Lines ( FedEx.
2010 ) . Supply AND Demand ANALYSISBecause of the changeless addition in globalisation with companies. there is a planetary tendency where concerns across national boundaries to capture new markets and outsource of production. Because of these additions in planetary companies.
there is a demand for planetary transit. which FedEx supplies. With increasing rising prices and competition. concerns need to cut down operating costs internally and externally. One of the major countries of decrease is the logistics of the goods. hence the demand for a more efficient logistics company that provides the just-in-time bringing.
FedEx. The well-known FedEx Corporation has a fiscal portfolio of over $ 1. 9 billion in 2009 with over 2. 4 million cargos in over 230 states. The demand for first-class client service with a nice monetary value point for transporting just-in-time to clients is something that FedEx can successfully provide. The demand for first-class client service with a nice monetary value point for transporting just-in-time to clients is something that FedEx can successfully provide.
For the demand of first-class client service is precisely why this tendency will go on to alter at a high rate. To keep a strong turning company. a company needs nucleus clients. and strong concern relationships. For FedEx to accomplish this demand with their customer’s. the overall service will ever be bettering.
With FedEx being the top grade of the logistics industry keeping an up to day of the month technological IT section will salvage the company money with tracking bundle and claim procedures. The company that stays in front of the competition by tracking how good the company is making in the industry will remain in front of the rivals. In today’s market holding the best possible client service is what will go on to turn the hereafter of the FedEx organisation. FedEx needs to remain consistent in the manner concern is handled on a day-to-day footing.
FedEx is a planetary leader in bundle bringing. and as I said the current market is altering. Customers want to transport and have their personal bundles at a faster rate. and with a cheaper rate.
Delivery of merchandises all over the universe can make ferocious competition among freight bearers. FedEx’s rivals are UPS. DHL. and the USPS.
FedEx is invariably in competition with the three companies to hold express bringing service. air cargo service. and freight forwarding services for all consumers. UPS and FedEx are chief rivals with each other for services from makers to consumers. FedEx provides many benefits to its clients.
The transportation industry. nevertheless. is one of utmost competition. Not merely are clients confronted with the pick of bearer. they are besides confronted with a pick of agencies of cargo.
It is farther complex. as the pricing scheme of the sector has companies. for case. who lead cost in one signifier of cargo such as land and follow in another signifier of cargo such as international bringing.
FedEx foresaw the importance of distinction early on ; as did most of the sector participants and FedEx realized that it was in the information concern. Customers are non merely concerned with the merchandise acquiring from point A to B. but are besides interested in the cognition of where the lading originated from. its present whereabouts. finish.
estimated clip of reaching. monetary value and cost of cargo. All these elements are merely every bit of import to some concerns and consumers as having a safe bringing. To back up this demand.
and distinguish itself from rivals. FedEx created state-of-the-art engineering for clients to track and formalize cargos. Cargos are virtually traceable from their beginning to their finish all with the convenience of the personal computing machine. Additionally.
FedEx has forecasted the of import strategic tendency of a continuously planetary transportation market. The distinction of merchandises is a uninterrupted procedure in this competitory industry as inventions are frequently rapidly imitated. FedEx strives to develop inventions and listens to customer’s wants and demands. The company has invested extensively in planetary substructure.
FedEx connects some of the most of import countries of the universe that make up 90 % of the world’s gross domestic merchandise. some of the new hubs were built in the Philippines at Subic bay and in Europe at Charles de Gaulle. in Paris. A peculiar accent has been placed on deriving a strong presence in the Asiatic market. States such as China.
which had been preponderantly exporting states. are now big importers of goods from all parts of the World. Since 1984 they have expanded service to over 300 metropoliss within China. As FedEx continues to better their substructure. they offer greater and greater chances for companies to cut down their environmental footmark. In add-on.
they provide leading with intercrossed electric vehicles to be developed for industry use. and have about two hundred intercrossed vehicles in their fleet ; they are the largest commercial intercrossed fleet in North America. They know that economic growing. if ill managed. can damage the societal cloth of a community. Because of this.
they straight invest in many of the communities that are portion of our international web. every bit good as geting acquisitions with other concerns. FedEx has $ 38 billion in one-year grosss and over 290. 000 employees and contractors worldwide.
Through strict research and appraisals FedEx goes above and beyond the normal conveyance industry and found that they could make a positive and profound difference by supplying entree to communities around the universe. linking markets and thoughts with people and that this. in bend. improved their quality of life. A strong correlativity exists between entree.
economic growing. and criterions of life. FedEx provides and will go on to supply the efficiency necessary to link those who are demanding merchandises with the sourcing and fabrication entities. FedEx services enable states to spread out their economic systems. offers chances for their enterprisers to impact the universe. and it’s a accelerator for positive things.
As the range of FedEx concern continues to exceed boundary lines. they know it’s of import to understand the societal and political worlds of each state. and the lone manner to make this lawfully is by conveying people from those states as your embassadors to hold a duologue with policy shapers. FedEx prides itself in holding local people lead our operations around the universe. They find that this allows for a stronger connexion and committedness ; FedEx wants to be a portion of the societal cloth and hence hire people who understand their civilizations and want to make the right thing.
This attack contributes to their repute. By puting in engineering in these states and developing our people at that place to go high tech. it gives FedEx greater security and more overall efficiency in the motion of goods and services. There are direct benefits here with imposts and policy shapers giving the company a licence to run in a given community.
but it besides allows FedEx to present on promises and develop trust in that part over clip. A amalgamation at this clip would non be out of the equation. particularly if it would give FedEx an advantage in the market. They continue to keep 90 % of the market and will non necessitate to do a big amalgamation with another company but will go on to do acquisitions with smaller concerns. The effects of the concern operations in relation to issues must be examined from a manager’s position in order to guarantee proper execution. However along with the ability to analyze these issues must come the duty to cover with them efficaciously.
Social and environmental issues must besides be scrutinized in every degree of the organisation. which would connote that the duty of the effects of concern activities could be included in the normal determination devising processs of the company’s directors. When decently executed and inspected. these factors make up a big part of the standard that determines the respectability of a corporation. its directors and its employees.
In conformity with ethical criterions. every director in a corporation is responsible to those whom his or her actions affect. Consequently. since managers’ determinations can act upon so many diverse facets of non merely the concern itself. but of society as a whole. it is critical that management’s current degree of answerability and duty be exhaustively examined.
Fed Ex continues to germinate in their diverseness and continues to better their ethical criterions so that they can stay a universe leader. ISSUES AND OPPORTUNITIESAs with any major organisation or company you will ever be chances and or distraction that will take topographic point and FedEx is no different. Some of the issues FedEx faces is transporting planetary. and guaranting the bundles are delivered to the proper location. Global sourcing is really complex and FedEx needs to use all ethical behaviour in which this big company does concern between different states. In the transportation concern locally or globally FedEx needs to guarantee its sellers.
transportation clients and having clients the best possible service. The biggest chance for FedEx is the client trueness ; the client has so many different options to turn to for their transportation demands. It is non merely about the clients FedEx has now. but constructing a stronger new client relationship The chance can turn into a positive client dealing by deliver non merely the bundles. but besides every bit great service. “ The requirement for growing is new clients.
and new clients need some reassurance to assist shorten their spring of religion. At the same clip. clients aren’t every bit loyal as they used to be. because they have so many options” ( Retrieved 02-21-2010 ) .
DecisionFedEx has expanded their portfolio through their smart concern acquisitions of companies that would hold a positive contact on the company. They have achieved their end of going a planetary company and today is the prime supplier of transportation and information services worldwide. FedEx has a motto of “ operate independently. vie jointly.
and manage collaboratively. ” This motto is derived from the manner they operate by runing independently so each company can concentrate entirely on presenting the best service for its specific market. FedEx competes under its sure FedEx streamer that ensures that all the companies benefit from one of the world’s most recognized trade names. FedEx. MentionsFedEx. ( 2010 ) .
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