Presentation on theme: "Essential Trade Infrastructure: Express Delivery Services March 15, 2002 Scott Hallford Vice President, Government Affairs FedEx Express."— Presentation transcript:
1 Essential Trade Infrastructure: Express Delivery Services March 15, 2002 Scott HallfordVice President,Government AffairsFedEx Express
2 History of FedEx (the world’s largest all-cargo fleet) 1973 – Began operations as firstintegrated air/ground express carrierDelivered 186 packages to 25 U.S.cities using 14 Falcon jets.Today, FedEx connects more than 211countries in less than hours, &delivers 3.3 million packages dailyusing 667 dedicated aircraft(the world’s largest all-cargo fleet)
3 Growth of the Express Delivery Industry Increase in high-tech & high-valueadded products as a % of all economicactivityRapid globalization in the marketplaceFast-cycle logisticsEmergence of the Internet &e-commerceIn 2000, Worldwide B2B eCommerce is $226 billion (North America $159B, AsiaPacific $36B, Europe $26B, Latin America $3B, and Africa/Middle East $2B)By 2004, worldwide B2B eCommerce will grow to approximately $2.8 trillion(North America $1,601B, Asia Pacific $301B, Europe $797B, Latin America$58B, and Africa/Middle East $18B
4 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 itemsthroughout the supply of the service
5 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?
6 Express Delivery Industry Industry has becomethe leading facilitatorof trans-continentaltradeInternational air cargoaccounts for about 2percent of the tonnagemoved, but over 40percent of the totalvalue of those goodsFor every $1 spent onexpress transportation,companies can save$1.50 in warehousing& inventory costs1. Express growth has averaged 24% since 1992 and is expected to grow at 13% peryear through 20192 Air Cargo increased 5.7% in 1999 and is expected to grow an average 6.4% per yearthrough 2019 (from billion RTKs (Revenue-Tonne Kilometers) to over 470 billionRTKs in 20193. The Express portion of the Air Cargo has an overall share of 9.2% in 1999 and isexpected to expand to 31% in 2019 of total air cargo.REMEMBER AIR CARGO ISSUE!!!!!!
7 U.S. Experience – Memphis Approx. 53,000 direct and indirectjobsSince early 1980s, over 130 foreign-owned firms from 22 countriesemploying 17,250 workersCompanies such as Nike, AppleComputer and Disney establishedbased on proximity to FedExIn 1981, the FedEx Superhub in Memphis, TN opened.FedEx is the largest PRIVATE employer in the State of TN
8 U.S. Experience – Memphis From , company relocationsand expansions generated- 10,000 new jobs- Over 12 million square feet of new space- Over USD 710 million in new investmentEconomic impact on the surroundingregion from is estimatedat USD 90 billionMemphis hub sorts approx 1.2 million packages per night.At CDG, FedEx created approximately 4,300 direct and indirect jobs.At Subic Bay, FedEx created over 600 direct jobs.
9 What Does a Modern Economy Need? business need - Consolidate & Philips Semiconductors, Inc.business need - Consolidate ¢ralize international supply chain- Customers frustrated due toconsistently late shipments- No visibility of goods in transit due tomulti-carrier network- Growing pipeline of inventory due toextended transit time
10 Philips Semiconductors, Inc Source plants spread over 17 countriesEach plant had different shippingoperation requiring Philips tomanage a network of 30 airlines, 6customs brokers & 8 freight carriersFragmented supply chain meant a 2week total transit timeCustomer demanded faster serviceSupply chain management not equipped to handle shortened cycletime efficiently & had numerous costly attributes
11 Philips Semiconductors, Inc Information about product in transitincomplete & delivery schedulesunpredictableCustomers demanded more speed &reliabilityBegan stocking buffer supplies inadditional depots near customersadding inventory
12 Philips Semiconductors, Inc What other industry could respond to this???The FedEx Solution:One-stop transportation, warehousing & distribution network with extensive international capability
13 Philips Order Management System Philips Results:Product cycle time (ordering andprocessing time) reduced from3 weeks to under 5 daysIntegrated information systems providedvisibility of goods in transitWeb-based tracking improved customersatisfactionOverall global customer responsetime(ordering, processing and deliverytime) reduced from 2 weeks to less than5 days
14 Today’s Marketplace – Global SMEs want to reachnew marketsMultinationals want toensure efficiencyExplosion ofe-commerce- Internet-enabledcommerce in US toreach USD 3 trillion in2004 (both B2B andB2C)SME Example: Let’s take a look at a typical e-commerce SME-related transaction. You may be in the market for a rare bottle of Cabernet for a special planned celebration. As you don’t have time to shop around for that particular vintage, you go online and complete the process by the click of a button. You log on to the computer, pick a search engine, and find a number of websites specializing in fine wines. You make your choice and place the order. This convenience was unavailable just a few years ago. At this point, you’ve just been dealing with the communications aspect of the transaction; however, you need the wine immediately – that’s where we come in. At the end of the stream of electronic transmissions, there must be a real transaction – physical delivery – a rapid and dependable movement of the product from the seller to buyer. The Internet has raised customer expectations by allowing goods and services to be offered in real-time on a global basis. The expectations include a hassle-free experience that will provide a complete solution from selection, order entry, confirmation, payment, and delivery. SMEs are realizing that express transportation is as important as an appealing product and website.Multinationals want to ensure efficiency: Want fast, time definite, and information intensive service to ship goods and components throughout the world. Express delivery offers such service, providing the just-in-time needs that multi-nationals require.
15 FedEx Hub-and-Spoke System FedEx collects & transports shipmentsfrom the door of the shipper to sortinghubs located in the U.S., Europe & AsiaShipments are unloaded, sorted &transloaded w/in 4 hours onto outboundplanes for a time definite, customs-cleared, delivery to the door of therecipient as early as 8:am the nextbusiness day“Hub-and-Spokes” package distributionsystem pioneered by FedExHub locations:U.S. - MEM, AWF, OAK, EWR, IND, ANCEurope - CDGAsia - SFS
16 Allows overnight intra-Asian delivery Connects 19 Asian destinations Known as FedEx AsiaOne NetworkAllows overnight intra-Asian deliveryConnects 19 Asian destinationsServes more than 31 countries &territories in Asia PacificLinks Asia with 211 countries- Links North & South America through ANC hub- Links Europe through Paris hub- Links Middle East & India through Dubia& Mumbai
17 Benefits of the Express Delivery Industry in ASEAN In 1999, approx. $50 billion ineconomic benefits generated fromexports, imports, transportation andemployment30 billion in export benefits20 billion in import benefitsApprox. 350,000 jobs createdRepresents approximately 6.5% of the cumulative Gross Domestic Products of the ASEAN member economies.These figures represent the total of direct, indirect, and induced economic benefits relating to exports, imports, transportation and employment
18 Creating the Express Delivery Infrastructure GATS commitments in express deliveryservices- Remove barriers and limit new barriers- Certainty of existing market conditionsTrade facilitation- Partnership in infrastructure developmentThe GATS negotiations provide a critical opportunity to create an efficient express delivery infrastructure around the world. As I have stated today, the importance of this infrastructure cannot be underestimated, given the growth of e-commerce and just-in-time manufacturing.Express delivery services are not the same as bicycle messenger services, local or personal courier services, or traditional mail services. All of these have different characteristics, different prices, and different customer bases. FedEx would like WTO Members to have the opportunity to make commitments for only those services for which it feels comfortable, without endangering its own domestic priorities.Virtually all Members are familiar with companies like FedEx operating in their markets. However, existing market access is inconsistent and unpredictable. The key to developing a reliable infrastructure is to ensure that relevant commitments are in place for the removal of existing barriers to efficiency and for the prevention of new barriers. Such commitments would provide certainty of market conditions and enable strong competition on the basis of a level playing field. The creation and preservation of this framework provides a building block for new investment (both foreign and domestic) that requires this infrastructure to compete globally.Finally, FedEx supports new rules on trade facilitation, in particular rules aimed at creating more efficient and consistent disciplines applicable to cross-border delivery on an expedited basis. FedEx does recognize, however, that rules in and of themselves are not beneficial unless they translate into practical facilitation on the ground. FedEx is interested in continuing and expanding its work with relevant authorities in training and capacity building projects in order to ensure that the mutual benefits of trade facilitation are realized.