Fedex vs Ups

Corporate Finance (FNCE 5209)

Prof. Norman Moore

THE BATTLE FOR VALUE, 2004:

FEDEX CORP. VS. UNITED PARCEL SERVICE, INC.

Feb 15th, 2010

BY

George Dedousis

Michael Rosenberger

Pramod Terdale

Mohammad Yaqoob

Executive Summary:

As the U.S. package delivery business segment matured, International segment became the battle ground for the two package delivery giants – FedEx and UPS. FedEx is considered to be the innovative, entrepreneurial, inventor of customer logistical management, and an operational leader. UPS, on the other hand, is considered to be big, bureaucratic, and industry follower, although UPS is shedding this negative image with newer innovations.

FedEx Corp. started in 1971, by the end of 2003; it had nearly $15.4 billion in assets, net income of $830 million on revenues of about $22.5 billion and shipped more than 5.4 million packages daily.

UPS, Inc. founded in 1907, by the end of 2003; it had $28.9 billion in assets, net income of $2.9 billion on revenues of $33.4 billion, and with excellent (AAA) bond rating.

The struggle to deliver value and dominate the package delivery market between FedEx and UPS has reached titanic proportions and clearly evident from their respective expenditures. Between 1992 and 2003, capital expenditures for FedEx and UPS rose at an annualized rate of 34.64% and 36.78%, respectively. Currently both companies are matching each other’s investments in capital almost exactly.

Placing ourselves in the center of the battle of giants and using the data provided in the Exhibits 1 through 11, we try to answer the following questions in this case analysis.

1: Who is creating more value and how?

2: Who is destroying the value?

Case Analysis Detail:

We start with analyzing both companies using the data provided in the exhibits 1 through 11. Using exhibits 2 and 3, graphing the data, comparison shows UPS activity ratios are...