Milestones in the History of Logistics: FedEx

Nancy Anderson
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We in the United States now take for granted the ability to drop a parcel in a box on Monday and have it delivered to its recipient anywhere in the country on Tuesday. Before the founding of Federal Express in 1973, though, this wasn't possible.

FedEx, as it was first unofficially and is now officially known, represented a major leap forward in the delivery of time-sensitive materials. For as long as goods and information have been transported, there have been services developed to get them there sooner than they could by normal means, from the Pony Express of the 1860s to 20th-century air mail and air cargo. But even though shippers had been using air freight services for decades, Federal Express was the first to fully exploit its potential.

The idea behind FedEx was born in the mind of a Yale undergraduate named Frederick W. Smith. In 1965, he wrote a term paper in which he analyzed the inadequacies of the existing air freight system, which mostly used the point-to-point routes of passenger aircraft, and recommended a dedicated air freight service that could meet the needs of shippers of time-sensitive goods like medicines and computer parts.

Smith bought an Arkansas aviation services company in 1971 with the aim of creating that service. Two years later, he was able to institute it when he moved his company, renamed Federal Express, to Memphis International Airport. Memphis made improvements to its airport that allowed Smith to turn it into a hub for dedicated air freight routes that originally fanned out to 25 cities, using a fleet of 14 small French-made business jets.

The idea was simple yet operationally intricate: Pick up packages in the originating cities, fly them to Memphis, sort them overnight, and send them out to their destinations. This revolutionized the air freight industry. But it was not until 1977, when Congress deregulated commercial aviation, that FedEx really took off.

With bigger planes serving more cities, FedEx quickly became the dominant player in the air freight industry, reaching $1 billion in annual revenues by its 10th year of service, the first startup company to do so without mergers or acquisitions. As it has grown and expanded globally, FedEx has opened more hubs to sort regional and international shipments, but Memphis remains the nerve center of its overnight-delivery operation.

Today's FedEx is a total shipping solutions provider, with trucking, air freight, logistics management, customs entry, and office services subsidiaries. It even carries overnight mail for the United States Postal Service, which pioneered that service with Express Mail in 1980. But it remains best known for its air shipping service, which the world relies on "when it absolutely, positively has to be there overnight."

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By Sandy Smith

Sandy Smith is an award-winning writer and editor who has spent most of his career in public relations and corporate communications. His work has appeared in The Philadelphia Inquirer, the Philadelphia CityPaper, PGN, and a number of Web sites. Philly-area residents may also recognize him as "MarketStEl" of discussion-board fame. He has been a part of the great reserve army of freelance writers since January 2009 and is actively seeking opportunities wherever they may lie.


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