Monday, December 17, 2012

[Corporate focus: FedEx] Four weeks of pay for every year restructuring; textbook customer marketing from Youtube happenchance etcetera.

The Memphis, Tennessee based company FedEx (NYSE: FDX) has been making the headlines. The news includes plans to reduce staff through buyouts, a classic example of how to do customer service after a Youtube video sent customers the wrong message and plans to increase the FedEx Ground distribution centers.

Positioned as the second largest package carrier in the market

FedEx (NYSE: FDX), founded by its CEO, Fred Smith, provides a broad array of services including e-commerce, transportation and business services as it competes to seamlessly deliver packages without delays. The company operates through four major segments – FedEx Express, FedEx Ground, FedEx Freight and FedEx Services. It is now placed at #109 on the S&P500 which position Bank of New York Mellon Corp (NYSE: BK) lost on November, 29th, 2012.

The company employs roughly 146,000 persons worldwide, with two-thirds in the U.S and is placed second worldwide, after USPS, in the market for package shipping, whether online or offline. Due to the dynamics of the market situation, where it is necessary for FedEx to move towards easier means of reaching the customer, it has had to partner with several companies which include Planet Soho, an ecosystem for small businesses to flourish. In partnership with Planet Soho, it offers customers discount rates that are close to 30%, online and at more than 1,900 FedEx Office retail locations across the U.S and Canada when a customer makes use of the Planet Soho Membership Card. In partnership with American Express, FedEx is also re-launching the invite-only My FedEx Rewards and My FedEx Office rewards programs. These two programs are powered by LoyaltyEdge from American Express. The LoyaltyEdge service will help FedEx enhance and expand its customer loyalty service programs.

Although along with UPS, it intends increasing its shipping rates starting January 7, 2013 for ground and home delivery, by an average of 4.9%, these increase is reflected in the major distribution center expansions that are being undertaken across the U.S especially in Roseville, California and Hagerstown, Washington county, Maryland. It proposes building a new 200,000-square-foot distribution center at Roseville in order to boost its package volume capacity and increase speed and service capabilities of the FedEx Ground network.

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FedEx employees work extremely hard to make sure packages arrive on time. The company has forecasted that a record high of 280 million shipments will move through the global FedEx networks during the weeks between Thanksgiving and Christmas. On “Green Monday”, December 10, an estimated 10 million packages must have been delivered by FedEx.

Service delivery doesn’t come without some drama.

American football is at the heart of the American Sports scene. FedEx is also part of the action. She is the Official Delivery Service Sponsor of the NFL, Super Bowl and Pro Bowl, FedEx is proud to sponsor the 10th annual Air & Ground NFL Players of the Week program. FedEx also hosts a Golf tournament, the PGA Tour FedEx cup championship. FedEx is on record at the American Red Cross site to be amongst the Fortune500 companies that actively supported the Red Cross during rescue operations post-Hurricane Sandy that rocked the East coast states of America.

According, a Redwood City man was accused of a failed attempt to ship three kilos of methamphetamine and 100 grams of cocaine through a FedEx store in Redwood City, both packages worth around $250, 000. Although the man pleaded not guilty, the case is amongst many that underscore the challenges package shippers face in their line of business. Theft is also an ill wind that afflicts package delivery such that it is often wise for households to be alert for when a package will be delivered to their homes. It is often the case that packages delivered on the front steps can be taken in a matter of seconds. Whose fault is it? Package delivery companies do all they can not to be sued for carelessness or missing packages. According to, Ismail Aliyev, a former FedEx driver in Utah was fired for federal trucking violations, that an Iowa court had found him guilty. Ismail sued FedEx though because he claimed his sack was because of his “Russian accent.”

How would a company amongst the Fortune500 handle a Youtube video of a FedEx courier tossing a customer’s package over a fence?

This video which initially caused a public uproar eventually was used by FedEx for excellent customer service and crisis management.
FedEx handling of the Youtube video event was a textbook example of crisis management. The handling of the public uproar over the video made it to emerge as one of the most admired companies in the U.S in a survey conducted by Forbes.

To cap the corporate focus, starting next year, FedEx (NYSE: FDX) will be offering its employees the opportunity of up to two years’ pay to leave the company. Employees who volunteer for the program will receive four weeks of pay for every year of service. This is part of a restructuring effort to cut down operating expenses through staff restructuring. After the restructuring announcement, it was reported that company shares rose 65 cents to $88.78 in afternoon trading of that day.

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