Essential Trade Infrastructure: Express Delivery Services March 15, 2002

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Essential Trade Infrastructure Express Delivery
ServicesMarch 15, 2002
Scott Hallford Vice President, Government Affair
s
FedEx Express
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History of FedEx

• 1973 Began operations as first
• integrated air/ground express carrier
• Delivered 186 packages to 25 U.S.
• cities using 14 Falcon jets.
• Today, FedEx connects more than 211
• countries in less than 24-48 hours,
• delivers 3.3 million packages daily
• using 667 dedicated aircraft
• (the worlds largest all-cargo fleet)

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Growth of the Express Delivery Industry

• Increase in high-tech high-value
• added products as a of all economic
• activity
• Rapid globalization in the marketplace
• Fast-cycle logistics
• Emergence of the Internet
• e-commerce

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Express Delivery

• Express delivery services consist of
• The expedited collection, transport,
• delivery,
• Of documents, printed matter, parcels,
• and/or other goods,
• While tracking the location of,
• maintaining control over, such items
• throughout the supply of the service

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Life Before FedEx

• Have you ever used express delivery?
• What was it like to get a letter,
• document or goods delivered rapidly,
• securely and on-time?

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Express Delivery Industry

• Express Delivery
• Industry has become
• the leading facilitator
• of trans-continental
• trade
• International air cargo
• accounts for about 2
• percent of the tonnage
• moved, but over 40
• percent of the total
• value of those goods
• For every 1 spent on
• express transportation,
• companies can save
• 1.50 in warehousing
• inventory costs

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U.S. Experience Memphis

• Approx. 53,000 direct and indirect
• jobs
• Since early 1980s, over 130 foreign-
• owned firms from 22 countries
• employing 17,250 workers
• Companies such as Nike, Apple
• Computer and Disney established
• based on proximity to FedEx

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U.S. Experience Memphis

• From 1995-2000, company relocations
• and expansions generated
• - 10,000 new jobs
• - Over 12 million square feet of new space
• - Over USD 710 million in new investment
• Economic impact on the surrounding
• region from 1995 - 2004 is estimated
• at USD 90 billion

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What Does a Modern Economy Need?

• Philips Semiconductors, Inc.
• business need - Consolidate
• centralize international supply chain
• - Customers frustrated due to
• consistently late shipments
• - No visibility of goods in transit due to
• multi-carrier network
• - Growing pipeline of inventory due to
• extended transit time

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Philips Semiconductors, Inc

• Source plants spread over 17 countries
• Each plant had different shipping
• operation requiring Philips to
• manage a network of 30 airlines, 6
• customs brokers 8 freight carriers
• Fragmented supply chain meant a 2
• week total transit time

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Philips Semiconductors, Inc

• Information about product in transit
• incomplete delivery schedules
• unpredictable
• Customers demanded more speed
• reliability
• Began stocking buffer supplies in
• additional depots near customers
• adding inventory

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Philips Semiconductors, Inc

• What other industry could respond to this???
• The FedEx Solution
• One-stop transportation, warehousing
  distribution network with extensive international
  capability
  

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Philips Order Management System
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Todays Marketplace Global

• SMEs want to reach
• new markets
• Multinationals want to
• ensure efficiency
• Explosion of
• e-commerce
• - Internet-enabled
• commerce in US to
• reach USD 3 trillion in
• 2004 (both B2B and
• B2C)

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FedEx Hub-and-Spoke System

• FedEx collects transports shipments
• from the door of the shipper to sorting
• hubs located in the U.S., Europe Asia
• Shipments are unloaded, sorted
• transloaded w/in 4 hours onto outbound
• planes for a time definite, customs-
• cleared, delivery to the door of the
• recipient as early as 8am the next
• business day

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Benefits of the Express Delivery Industry in
ASEAN

• In 1999, approx. 50 billion in
• economic benefits generated from
• exports, imports, transportation and
• employment
• 30 billion in export benefits
• 20 billion in import benefits
• Approx. 350,000 jobs created

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Creating the Express Delivery Infrastructure

• GATS commitments in express delivery
• services
• - Remove barriers and limit new barriers
• - Certainty of existing market conditions
• Trade facilitation
• - Partnership in infrastructure development