How UPS will deliver millions more packages than FedEx today

December 20, 2012
December 20, 2012

This article has been corrected.

Holiday season in the United States is show time for United Parcel Service (UPS) and FedEx—respectively, the world’s number one package deliverer and largest cargo airline. With online retailers already posting huge numbers for the season, both shipping magnates are expecting big numbers for the holiday season. FedEx CEO Frederick Wallace Smith revealed Wednesday that Dec. 17 was its busiest day ever, handling 19.8 million shipments.

That number still pales in comparison to the 28 million packages that UPS will deliver on Thursday, Dec. 20, its own busiest day of the year. On an average day, UPS handles 15.8 million packages. FedEx, by contrast, averages north of 9 million packages per day.

The scale difference also shows up clearly in the financials. In their last reported fiscal years, FedEx raked in $42.7 billion in revenue (for the year ending May 2012) compared to the $53.1 billion UPS boasted (for the year ending Dec. 31).

The two companies, rivaled only by German Deutsche Post in Europe, are the largest carriers of lightweight packages in the world—as opposed to freight carriers like shipping company Maersk and railroad company Union Pacific. UPS, founded in 1907 as a means of coordinating neighborhood shipments and merchant distribution, has a much longer history with merchants than does the 40-year-old FedEx, which was founded initially as an air freight transportation service.

Interestingly, there are places where the difference in scale doesn’t line up. Though it takes in far more revenue, UPS’s air fleet is smaller: 230 jet aircraft and 301 chartered aircraft. FedEx boasts 660 aircraft. More aircraft also means bigger expenditures on things like fuel and repairs. Then again, those numbers are reflected in the company’s international business: in the last annual reporting period, FedEx saw 30.1% of its revenue generated internationally (up nearly 8% over the last 10 years). UPS has grown more slowly during that time period to see 25.9% of its revenue generated outside the US.

UPS has a plan to change that, with its likely (but lengthy) acquisition of European shipper TNT Express. In the works since March, the agreement appears to be moving forward with new amendments from the European Commission. The bigger battle, however, will be fought in Asia, as both carriers attempt to tap a budding Chinese consumer market. Both companies were given the okay from the Chinese government in September to provide express-package delivery service to some parts of China, giving them inroads into the rapidly growing parcel delivery market. For now, FedEx can distribute goods to eight cities; UPS, which has a smaller presence in China, has access to five. Clearly, they want more.

Given the difficulties they’ve already faced accessing this new market, it’s too soon to tell how UPS and FedEx will duke out their battle in Asia. For now, it’s clear UPS’s scale on the ground is unmatchable; its employees are sorting packages like mad on what will likely be its busiest day ever.

Correction (Dec. 21, 10:30 a.m. ET): FedEx handles more than 9 million packages on an average day (not 3.4) and made $42.7 billion in revenue last fiscal year (not $26.5 billion). This article has been corrected to reflect the accurate figures.

Photo illustration above by Ritchie King. Photo by AP / Charles Rex Arbogast.

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