Forward march
With the rise of e-commerce, FedEx decided it would be more cost-effective to buy rather than build its expertise to handle customer demand. On the logistics and customs brokerage side, however, the company has taken a more gradual, organic approach – one that has begun to bear fruit in the last few years, with the rapid growth of forwarding services in the FedEx Trade Networks division.
“I think the way we looked at it was not ‘we want to be in the freight forwarding business,’ it’s our customers who want us to handle things on the ocean as well as in the air,” Smith said. “And they want us to handle air cargo shipments – the heavier part of the shipment universe – as well as the door-to-door packages and freight pallets that we were handling.”
Years ago, FedEx had outsourced its customs brokerage business to Fritz Cos., but after Fritz was purchased by UPS in 2001, FedEx decided to take this business in house. While UPS Supply Chain Solutions and DHL Global Forwarding grew rapidly by purchasing several forwarding businesses, FedEx chose to build a logistics network from scratch.
“We bundle heavier airfreight shipments and seafreight, as well as the customs brokerage capabilities, and FedEx Trade Networks is enormous in that area,” Smith said. “It’s growing because they also sell our Express, Ground and Freight services as well. Hopefully it’s a two-plus-two-plus-two equals twelve situation.”
UPS and DHL still have much larger global logistics networks, but FedEx today offers forwarding services to 95 percent of the world’s GDP, Bronzcek said. “Just a few years back we only had 40 or 50 [FTN] office sites around the world. Now we have 140 in 27 countries.”