FedEx Corporation ("FedEx") provides a broad portfolio of transportation,
e-commerce and business services with companies that operate independently and
compete collectively under the respected FedEx brand. These companies are included
in four reportable business segments:
? FedEx Express: Federal Express Corporation ("FedEx Express") is
the worlds largest express transportation company, offering time-certain delivery
within one to three business days and serving markets that comprise more than
90% of the worlds gross domestic product. The FedEx Express segment also includes
FedEx Trade Networks,?Inc. ("FedEx Trade Networks"), which provides
international trade services, specializing in customs brokerage and global cargo
distribution.
? FedEx Ground: FedEx Ground Package System,?Inc. ("FedEx Ground")
is North Americas second largest provider of small-package ground delivery
service. FedEx Ground provides low-cost residential delivery to nearly 100%
of U.S. residences through its FedEx Home Delivery service. The FedEx Ground
segment also includes FedEx Supply Chain Services,?Inc. ("FedEx Supply
Chain Services"), which offers supply chain solutions.
? FedEx Freight: FedEx Freight Corporation ("FedEx Freight") is a
leading U.S. provider of regional next-day and second-day and interregional
less-than-truckload ("LTL") freight services. The FedEx Freight segment
also includes FedEx Custom Critical,?Inc. ("FedEx Custom Critical"),
North Americas largest time-specific, critical shipment carrier, and Caribbean
Transportation Services,?Inc., the leading provider of airfreight forwarding
services between the United States and Puerto Rico.
? FedEx Kinkos: FedEx Kinkos Office and Print Services,?Inc. ("FedEx
Kinkos") is a leading provider of document solutions and business services,
including copying and printing services, signs and graphics, videoconferencing,
high-speed wireless and wired Internet access and computer usage. FedEx Kinkos
offers retail access to the full range of FedEx day-definite ground shipping
and time-definite global express shipping services at all of its U.S. locations.
We believe that sales and marketing activities, as well as the information
systems that support the extensive automation of our package delivery services,
are functions that are best coordinated across subsidiary lines. Through the
use of advanced information systems that connect the FedEx companies, we make
it convenient for customers to use the full range of FedEx services. We believe
that seamless information integration is critical to obtain business synergies
from multiple operating units. For example, our Web site, fedex.com, provides
a single point of contact for our customers to access FedEx Express, FedEx Ground
and FedEx Freight shipment tracking, customer service and invoicing information.
We manage our business as a portfolio?in the best interest of FedEx as a whole,
not a particular operating company. As a result, we base decisions on capital
investment, expansion of delivery and information technology networks, and service
additions or enhancements on achieving the highest overall long-term return
on capital. For each FedEx company, we focus on making appropriate investments
in the technology and transportation assets necessary to optimize our earnings
performance and cash flow. As an example of our commitment to managing collaboratively,
certain of our incentive compensation programs are now tied in part to the performance
of FedEx as a whole.
Competition
The express package and freight markets are both highly competitive and sensitive
to price and service. The ability to compete effectively depends upon price,
frequency and capacity of scheduled service, ability to track packages, extent
of geographic coverage, reliability and innovative service offerings. Competitors
in these markets include other package delivery concerns, principally United
Parcel Service,?Inc. ("UPS"), DHL (which acquired Airborne Express),
passenger airlines offering express package services, regional express delivery
concerns, airfreight forwarders and the U.S. Postal Service. FedEx Expresss
principal competitors in the international market are DHL, UPS, foreign postal
authorities such as Deutsche Poste and TNT Post Group, passenger airlines and
all-cargo airlines.