FedEx Chief Says Uber Is No Threat to Package Delivery Service

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Fedex airplane lifting off
Hong Kong, China - August 18, 2012: FedEx Boeing 777 leaving Hong Kong International Airport. FedEx is a famous logistics services company, based in the United States.
fedex delivery
London, England – Sept 4th, 2014: A pedestrian passes behind a FedEx Express delivery van parked in front of retail and other business premises in the Soho District of London.

It is understandable why the CEO of Federal Express (NYSE:FDX) is not exactly bullish on the package delivery potential of Uber. First of all, there is a huge amount of self-interest involved. FedEx, after all, is the 800 pound gorilla of the US parcel delivery market. Along with UPS, FedEx rules the roost in this space. Any upstart, whether it is Uber or Roadie, is sure to be looked at with a lot of suspicion and skepticism.

However, just as the old saying goes: critics may start out dismissing you; eventually they would start laughing at you; finally, they would start fearing you. While it is obviously too early for Uber and other shared economy mobile app-based startups to pose a threat to FedEx and other established parcel delivery players, the threat is still there nevertheless. There is something threatening about simply whipping out your mobile phone and giving a package to somebody who shows up because they are on their way from Point A to Point B. Point B is where you want your package to go.

This makes the parcel delivery industry democratic. It opens up a wide array of competitors and can drastically reduce delivery pricing. However, it is not a slam dunk. There are all sorts of legal liability issues. What if somebody is shipping drugs? What if the person picking up your package gets into an accident? There are all sorts of land mines standing in the way between the promise of shared economy producing effective delivery services and the reality as it stands.

Regardless, the FedEx CEO thinks that Uber is a terrific ride-sharing program, but it is not ready for prime time as far as package delivery is concerned. He is making a big deal of the fact that package delivery operates in a completely different model than ride-sharing. This is true. Mass package delivery where a company moves millions of packages every single day requires a huge infrastructure footprint as well as dedicated transport resources. We are talking of jet airplanes. We are talking of cargo airplanes and boats. Still, the point in time in the future can come where the distributed network of mobile-based drivers can become so interwoven and so redundant that package delivery would become a natural add-on service.

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