In 1973, Frederick Smith began a company in Memphis which would revolutionize the way that American companies sent packages. Federal Express became a powerful force in moving packages and letters overnight from any point in the continental United States to any other point. Taking full advantage of airline deregulation in 1978, the company's shortened name, Fed Ex, has become synonymous with overnight delivery in much the same way that Xerox is synonymous with photocopying.
The company's mission is to provide high-quality express delivery of packages or documents. Initially, the company focused on parcels weighing less than 70 pounds, which was the minimum weight the traditional freight forwarders would handle. Until Federal Express, these smaller packages were sent by airline couriers. Smith brought his company into the marketplace at a time when there was increasing demand for moving these smaller packages as companies which manufactured electronic components and similar items were faced with shipping packages of less weight than previously.
Smith also drastically changed the way in which packages were handled and shipped in that Federal Express controlled a parcel's entire movement, instead of relying on freight forwarders. A Federal Express truck picks up the parcel at the shipper's facility and transports it to the airport where it is placed directly on a Federal Express aircraft. The airplanes are all routed through Memphis where they are transferred to planes going to airports close to their final destination. Packages are then unloaded from the Federal Express aircraft and placed on Federal Express trucks, which deliver them to the final destination.
From 1975 to 1980, express carriers increased their market share of freight from 3 percent to 7 percent, but during 1980 - 1985, their share increased to 24 percent. By 1988, express carriers, led by Federal Express, accounted for fully 41 percent of the market. T...