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FedEx: how to revolutionize shipping after 10 years of loss

Country: the USA 🇺🇸
Valuation: $73 billion
Business model: transporting

Frederick W. Smith created the world largest service of express shipping. However, at first, it didn’t appear to be lucrative at all: the startup experienced enormous losses. After all, Federal Express managed to revolutionize the logistics industry across the world and reached the valuation of $70 billion.

Idea
Federal Express provides customers and businesses worldwide with a wide range of transportation, e-commerce and business services. Frederick Smith invented express delivery and made a company the global leader of the industry. The corporation provides fast, reliable, time-definite shipping to over 220 countries. FedEx aims to reach carbon-neutral operations.

Background
Fred was very passionate about his idea though it wasn’t profitable at first. In the early years the startup wasted millions of dollars. However, Fred didn’t lose hope and was committed to following his goal. At some point expenses crossed the line and seemed absolutely insane. In the first two years, FedEx lost $29 million which made investors worry about the feasibility of the project.

The company spent $1 million a month on refueling of the aircraft. Eventually, Frederick had to look for a new source of funding. He set off to Las-Vegas to try his luck in gambling. Thus, Fred won $27,000 and the project sustained its development.

In the 1970-s the idea of fast delivery was a true revolution but nobody wanted to collaborate with an unknown company. In the first month, the service shipped 7 packages every day. In doing so, FedEx always delivered goods by plane.

Only in 1979, the startup made a little profit. The company gradually started to purchase competitors abroad. This way Federal Expeess began to deliver goods to Canada, and then to Europe and Asia.

In the 1980s, the startup was well established. Its growth rate amounted to around 40 percent a year, and competitors couldn’t catch up. In 1983, the company’s revenue reached $1 billion.

Long-awaited success
In 2004, the company became the first worldwide project to invest in hybrid-electric commercial vehicles. In 2010, Federal Express launched the first e-trucks for American parcel delivery service. Today the company reached zero-emission delivery vehicles that operate in London and Paris. In 2021, the net income of Federal Express exceeded $60 billion.

What do you think about FedEx’s path? Comment in the chat! 💬


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