FedEx: International Logistics Operations

Abstract

International logistics is undergoing certain transformations due to technological advancements and other trends related to customers’ needs and preferences. Delivery companies now offer a wide range of services and try to satisfy their customers’ needs. FedEx, being one of the leaders in the market, provides numerous services and is constantly improving the quality of these services. However, a number of weaknesses related to customer service have been identified.

The company fails to develop appropriate relationships with some groups of customers. This paper includes an analysis of customer service peculiarities, recent trends in international logistics, as well as the way FedEx is trying to improve its services. The recommendations based on the analysis are given as well.

Introduction

Global trade reached unprecedented volumes at the beginning of the twentieth century. People purchase items irrespective of geographic or time limits as technology has transformed international logistics. Express delivery providers have become a part of the daily life of millions of individuals living on all continents (Mangan & Lalwani 2016).

FedEx, UPS, and DHL are world-leading delivery providers that operate globally (Herold & Lee 2017). These companies offer various services to businesses and individuals, including but not confined to express delivery of products, inventory management, and transportation (Klumpp & Heragu 2018). It has been acknowledged that customer service is central to gaining a competitive advantage and attracting more customers.

The quality of customer service affects companies in different ways. One of the benefits of high-quality customer service is its impact on customer satisfaction and loyalty (Mutalib, Razzaq & Hassan 2018). It is noteworthy that Zhou et al. (2018) found that customer service correlated with customer loyalty while customer satisfaction was the highest predictor of customer loyalty. Rushton, Croucher, and Baker (2014) applied the approach entailing the focus on the core product and product surround.

Customer service is a critical element as it represents approximately 80% of the effect the product has while constituting only 20% of the cost (Rushton, Croucher & Baker 2014). On the contrary, the low quality of customer service can result in negative outcomes for an organization (Sohn, Woo & Kim 2017). Decreasing sales are only one of the potential issues, as inappropriate customer service can result in reputational losses, the loss of a market share, and even bankruptcy in severe cases (Zhou et al. 2018). Therefore, it is critical for businesses to ensure the provision of high-quality customer service in order to remain competitive.

This paper includes a brief analysis of the role of customer service in international logistics operations with the focus on FedEx. The company has been one of the leading delivery providers in the international arena, but this segment is becoming highly competitive (Rai, Verlinde & Macharis 2018).

Therefore, it is important to identify the quality of customer service provided and possible ways to improve it. This paper includes an analysis of the major elements and peculiarities of customer service, its quality at FedEx, as well as certain recommendations regarding the improvement of customer service at FedEx with brief concluding remarks.

Customer Service in International Logistics and FedEx

Customer Value

Prior to examining the peculiarities of customer service at FedEx, it is important to consider the characteristics of customer service in international logistics. Express delivery providers introduce new services to create value for their customers, which translates into the creation of a competitive advantage (Manners-Bell 2016). Customer value in logistics entails four major elements: quality, time, service, and cost (Christopher 2016).

Clearly, customers expect to receive high-quality services that encompass functionality and proper performance (see Figure 1). Service expectations are associated with support and availability that can be manifested in customers’ ability to track the movement of the parcel and get timely responses from the customer support team (Merminod, Fenneteau & Pache 2020 and Chu, Wang & Lado 2016). Time may be regarded as one of the most valued components when it comes to express delivery companies (Klumpp & Heragu 2018). Finally, the transaction cost is an important aspect that can attract or avert customers, so companies try to cut costs.

Customer Service

All the components of customer value are equally important, but customer service is often the element that enables companies to generate new ideas and achieve a higher level of customer satisfaction (Cao, Ajjan & Hong 2018 and Murfield et al. 2017). When defining customer service in international logistics, researchers concentrate on such aspects as place and time (Daugherty, Bolumole & Grawe 2019). Customer service can be referred to as “the provision of time and place utility” (Christopher 2016: 48). In simple terms, the product is valuable if it is delivered to the required place and at a required time.

According to Lai and Cheng (2016), the different features of customer service have been analyzed so many definitions of the concept exist. Although time and place remain central facets, such domains as accuracy and the ease of using the service have also been recurrent (Lai & Cheng 2016). Kampf, Ližbetinová, and Tišlerová (2017) stated that customer service definition often depends on the goals and specifics of an organization. In the majority of cases, however, companies view customer service as the provision of a product at a certain time, at a particular time, and in the “quantities desired” (Kampf, Ližbetinová & Tišlerová 2017: 26). Clearly, a high-quality service tends to entail more than two aspects.

The central elements of customer service are divided into pre-transaction, transaction, and post-transaction elements (see Figure 2) (Rushton, Croucher & Baker 2014). The pre-transaction component can be defined as the ability of an enterprise to provide a customer with a clear picture of what service can be expected (Wiger 2018). The transaction segment is the delivery of the service itself (Brenner 2015). The post-transaction element is the company’s ability to manage complaints, provide additional items or services, or handle product returns.

It has also been acknowledged that the attainment of competitive advantage is possible if companies manage to exceed customers’ expectations. When applying the approach entailing the core and surrounding product, it is necessary to consider tangible and intangible elements of customer service (Mason & Evans 2017 and Klapalová & Škapa 2015). The core product is associated with tangible elements while surround product is related to intangible components. Tangibles include product features and quality, durability, and technology (Kennedy 2018). Intangible aspects are service quality, customer-personnel interaction, ease of doing business, and reliability.

Potential for Improvement of Customer Services at FedEx

FedEx is one of the leaders in the delivery market due to the high quality of customer service, as well as its innovative approach (Bruner & Bulkley 2017). The company provides various services including but not confined to delivery services, marketing, sales, billing, technical support, and collection services (Kang & Huh 2019). FedEx tries to make sure that the pre-transaction elements of customer service result in excellent performance and high customer satisfaction.

The organization has sound customer service policies that ensure customers’ understanding of potential outcomes. One of the strengths of the enterprise is the development of the policies (and a strong culture) for employees that are based on the focus on customers’ needs. Employees are encouraged to satisfy customers’ needs and even exceed their expectations, and FedEx rewards the personnel for achieving the corresponding goals (Kang & Huh 2019).

The company is characterized by a considerable degree of transparency and effective internal communication that contribute to sustaining pre-transaction components of customer service at an appropriate level (Rao & Singh 2017). Lin and Chang (2018) stated that internal communication, as well as the corresponding skills in employees, plays a critical role in the performance and development of a delivery service provider.

Order tracking, which is an important transaction aspect, is a common feature for delivery companies, including FedEx. FedEx introduced this service in the mid-1990s based on its innovative information system, which helped the organization to win a competitive advantage at that time (Gilbert & Perl 2018). Order cycle time is another strength of the company in question as it offers overnight delivery options (Ding et al. 2016). One of the bright illustrations of this transaction component was the collaboration between FedEx and Amazon when Harry Potter books were shipped on its release day (Gilbert & Perl 2018).

Pricing and flexibility in this area contribute to the success of the company as FedEx manages to attract diverse customers who have different financial capacities (Fiat, Goldner, Karlin & Koutsoupias 2016). One of the latest innovations related to intangible elements of customer service is the organization’s compliance with green logistics standards. Maurer, Ernst, and Friedrich (2015) claimed that FedEx managed to reduce its environmental footprint in such areas as transport, waste, and materials management.

Transition and pre-transition components have certain flaws that lead to customer dissatisfaction. The focus on efficiency is often achieved at the expense of the development of relationships with customers, especially when it comes to small and medium-sized companies (De Waal Malefyt 2019). De Waal Malefyt (2019) found that customers were upset that FedEx employees did not have sufficient time for them. Customers felt that the organization under analysis did not value them. The company proved to lack flexibility for small businesses that had to comply with the deliverer’s rules, which was not always convenient.

One of the weaknesses of the company is also related to the post-transaction elements of customer service. The delivery to customers on a smaller scale remains a significant challenge due to the company’s focus on delivery time at the expense of reliability (Ghoumrassi & Țigu 2017). The winter season of 2014 was a harsh period when a considerable rate of parcels was damaged, which led to a decrease in the organization’s profit.

Recommendations for Improving Customer Service in Logistics and the Performance of FedEx and Its Customers

Based on the aforementioned, it is possible to provide several recommendations regarding the development of the company under consideration. In order to improve customer service and remain a leading delivery company, FedEx needs to undertake certain steps. The primary areas to focus on include digitalization and interactions with customers, especially small and mid-size companies:

1. The use of blockchain technology should be employed and improved (Waller et al. 2019 and Yi 2019). The current trends in international logistics are closely related to innovation and the provision of customized service. The use of blockchain to store customer’s data and ensure their security is one of the vital developments of recent years because it enhances data security and information flow (Waller et al. 2019 and Yi 2019). FedEx also started using this technology to ensure proper data management, which also contributed to the company’s positive image among its customers (Wang, Han & Beynon-Davies 2019).
2. It can be beneficial to implement a project aimed at raising existing and potential customer’s awareness of the digital instruments FedEx uses (Skilton 2016). The further digitalization of the industry is a current trend in international logistics that is related to various elements of customer service (Rimmer & Kam 2018 and Sinha et al. 2020). Companies tend to train customers and partners, as well as raise people’s awareness of the peculiarities of utilizing different digital services they offer (Skilton 2016). Wirtz (2019) stated that FedEx is trying to digitalize their service in order to improve the quality of provided services and developments in this area will help the company address the needs of its customers.
3. The organization should pay more attention to the development of relationships with its customers. The provision of flexible pricing should remain a working policy, but FedEx has to create policies related to interactions with customers (Rao & Singh 2017). More time may be given to communication with people as small businesses are important customers whose loyalty is important (De Waal Malefyt 2019). Effective communication with customers is critical, and prevention is seen as the goal of every delivery company. Therefore, proactive communication is an effective approach FedEx applies to improve its customer service (Goodman 2019). The essence of this method lies in the organization’s prediction of customers’ potential requests and needs. This approach enables the company to avoid various undesirable events and customer dissatisfaction.
4. The provision of training to employees should include such areas as communication with customers and the development of proper relationships with customers (Goodman 2019). This training is necessary for improving communication with customers and the implementation of the recommendations mentioned above.

Conclusion

On balance, it is necessary to note that international logistics is developing at an unprecedented pace, and delivery companies offer various services addressing the diverse needs of their customers. Modern delivery companies pay much attention to technology and try to improve their data management through further digitalization.

The utilization of blockchain technology also refers to the pre-transaction component of customer service that can improve customer satisfaction. Customization is another feature of contemporary logistics as customers want a more personalized approach. Technology provides numerous opportunities delivery companies do not waste.

In order to remain competitive and maintain its leading position in the market, FedEx needs to evolve and follow certain trends. Although the organization is utilizing the latest technology, more steps in this direction should be made. The further digitalization and customization of services are needed for gaining a competitive advantage.

This approach will enable the company to find the necessary balance between efficiency and personal aspects. Small and mid-size businesses regard FedEx as a company oriented at big corporations. However, losing these customers may have a negative impact on the company’s development. Therefore, FedEx should become more flexible and start building effective relationships with smaller businesses.

List of References

Brenner, V. (2015) Causes of Supply Chain Disruptions: An Empirical Analysis in Cold Chains for Food and Pharmaceuticals. Hannover: Springer.

Bruner, R. and Bulkley, D. (2017) ‘The Battle for Value: Federal Express Corporation vs. United Parcel Service of America, Inc. (Abridged)’. Darden Business Publishing Cases, UVA-F-1124, 1-25.

Cao, Y., Ajjan, H. and Hong, P. (2018) ‘Post-Purchase Shipping and Customer Service Experiences in Online Shopping and Their Impact on Customer Satisfaction: An Empirical Study with Comparison’. Asia Pacific Journal of Marketing and Logistics, 30 (2), 400-416.

Christopher, M. (2016) Logistics & Supply Chain Management. 5th edn. London: Pearson UK.

Chu, Z., Wang, Q. and Lado, A. A. (2016) ‘Customer Orientation, Relationship Quality, and Performance: The Third-Party Logistics Provider’s Perspective’. The International Journal of Logistics Management, 27 (3), 738-754.

Daugherty, P. J., Bolumole, Y. and Grawe, S. J. (2019) ‘The New Age of Customer Impatience: An Agenda for Reawakening Logistics Customer Service Research’. International Journal of Physical Distribution & Logistics Management, 49 (1), 4-32.

De Waal Malefyt, T. (2019) ‘Using Ethnographic Insights to Foster Positive Value Exchange Between Consumers and Corporations: A Case Study with FedEx’. in The Routledge Handbook of Positive Communication. ed. by Muñiz, J. A. Velázquez and Pulido, C. M. New York, NY: Routledge, 178-191.

Ding, J. F., Shyu, W. H., Yeh, C. T., Ting, P. H., Ting, C. T., Lin, C. P., Chou, C. C. & Wu, S. (2016) ‘Assessing Customer Value for Express Service Providers: An Empirical Study from Shippers’ Perspective in Taiwan’. Journal of Air Transport Management, 55, 203-212.

Fiat, A., Goldner, K., Karlin, A. R. and Koutsoupias, E. (2016) ‘The FedEx Problem’. in Proceedings of the 2016 ACM Conference on Economics and Computation – EC ’16. Maastricht, The Netherlands: Association for Computing Machinery, 21-22.

Ghoumrassi, A. and Țigu, G. (2017) ‘The Impact of the Logistics Management in Customer Satisfaction. Proceedings of the International Conference on Business Excellence, 11 (1), 292-301.

Gilbert, R. and Perl, A. (2018) Transport Revolutions: Moving People and Freight Without Oil. 2nd edn. Oxon: Routledge.

Goodman, J. (2019) Strategic Customer Service: Managing the Customer Experience to Increase Positive Word of Mouth, Build Loyalty, and Maximize Profits. 2nd edn. New York, NY: AMACOM.

Herold, D. M. and Lee, K. H. (2017) ‘The Influence of the Sustainability Logic on Carbon Disclosure in the Global Logistics Industry: The Case of DHL, FDX and UPS’. Sustainability, 9 (4), 601-622.

Kampf, R., Ližbetinová, L. and Tišlerová, K. (2017) ‘Management of Customer Service in Terms of Logistics Information Systems’. De Gruyter Open 7, 26-30.

Kang, H. & Huh, C. (2019) ‘Exploration of the Sources of Competitive Advantage: UPS vs. FedEx’. International Journal of Management Cases, 21 (3), 5-20.

Kennedy, J. (2018) ‘Determinants of Service Quality in the Trucking Industry’. Journal of Applied Business & Economics, 20 (4), 54-71.

Klapalová, A. and Škapa, R. (2015) ‘Reverse Logistics: The Difference Between Service and Manufacturing Industry’. in Enhancing Customer Experience in the Service Industry: A Global Perspective. ed. by Altinay, L. and Poudel, S. Newcastle upon Tyne: Cambridge Scholars Publishing, 103-130.

Klumpp, M. and Heragu, S. (2018) ‘Outbound Logistics and Distribution Management’. in Operations, Logistics and Supply Chain Management. ed. by Zijm, H., Klumpp, M., Regattieri, A., and Heragu, S. Cham: Springer, 305-331.

Lai, K. H. and Cheng, T. C. E. (2016) Just-in-Time Logistics. New York, NY: Routledge.

Lin, C. C. and Chang, C. H. (2018) ‘Evaluating Skill Requirement for Logistics Operation Practitioners: Based on the Perceptions of Logistics Service Providers and Academics in Taiwan’. The Asian Journal of Shipping and Logistics, 34 (4), 328-336.

Mangan, J. and Lalwani, C. (2016) Global Logistics and Supply Chain Management. 3rd edn. Chichester: John Wiley & Sons.

Manners-Bell, J. (2016) Introduction to Global Logistics: Delivering the Goods. 2nd edn. London: Kogan Page Publishers.

Mason, R. and Evans, B. (2017) Marketing and Logistics Led Organizations: Creating and Operating Customer Focused Supply Networks. London: Kogan Page Publishers.

Maurer, J., Ernst, J. and Friedrich, E. (2015) Green Logistics. Drivers, Paradoxes and Optimization. Munich: GRIN Verlag.

Merminod, N., Fenneteau, H. and Pache, G. (2020) ‘Logistics, Marketing and Purchasing: Which Interfaces to Improve the Value Creation Process?’. Journal of Research in Marketing, 8 (2), 661-668.

Murfield, M., Boone, C. A., Rutner, P. and Thomas, R. (2017) ‘Investigating Logistics Service Quality in Omni-Channel Retailing’. International Journal of Physical Distribution & Logistics Management, 47 (4), 263-296.

Mutalib, S. S. A., Razzaq, A. S. and Hassan, A. (2018) ‘A Review of Customer Service Quality in Malaysian Homestay Operation as the Strategies to Enhance Rural Area Economic Income’. Advanced Science Letters, 24 (1), 534-536.

Rai, H. B., Verlinde, S. and Macharis, C. (2018) ‘How Are Logistics Service Providers Adapting to Omnichannel retail?’. IFAC-PapersOnLine, 51 (11), 588-593.

Rao, V. and Singh, S. (2017) ‘Managing Human Resources, the Fedex Way’. Case Studies Journal, 6 (1), 105-110.

Rimmer, P. J. and Kam, B. H. (2018) Consumer Logistics: Surfing the Digital Wave. Northampton, MA: Edward Elgar Publishing.

Rushton, A., Croucher, P. and Baker, P. (2014) The Handbook of Logistics and Distribution Management: Understanding the Supply Chain. 5th edn. Philadelphia, PA: Kogan Page Publishers.

Sinha, A., Bernardes, E., Calderon, R. and Wuest, T. (2020) Digital Supply Networks: Transform Your Supply Chain and Gain Competitive Advantage with New Technology and Processes. New York, NY: McGraw-Hill Education.

Skilton, M. (2016) Building the Digital Enterprise: A Guide to Constructing Monetization Models Using Digital Technologies. New York, NY: Springer.

Sohn, J. I., Woo, S. H. and Kim, T. W. (2017) ‘Assessment of Logistics Service Quality Using the Kano Model in a Logistics-Triadic Relationship’. The International Journal of Logistics Management, 28 (2), 680-698.

Waller, M. A., van Hoek, R., Davletshin, M. & Fugate, B. (2019) Integrating Blockchain into Supply Chain Management: A Toolkit for Practical Implementation. New York, NY: Kogan Page Publishers.

Wang, Y., Han, J. H. & Beynon-Davies, P. (2019) ‘Understanding blockchain Technology for Future Supply Chains: A Systematic Literature Review and Research Agenda’. Supply Chain Management, 24 (1), 62-84.

Wiger, M. (2018) Logistics Management Operationalised in a Healthcare Context: Understanding Care Chain Effectiveness Through Logistics Management Theories and Systems Theory. Linköping: Linköping University Electronic Press.

Wirtz, B.W. (2019) Digital Business Models: Concepts, Models, and the Alphabet Case Study. Cham, Switzerland: Springer.

Yi, H. (2019) ‘A Secure Logistics Model Based on Blockchain’. Enterprise Information Systems, 1-17.

Zhou, R., Wang, X., Shi, Y., Zhang, R., Zhang, L. and Guo, H. (2018) ‘Measuring E-Service Quality and Its Importance to Customer Satisfaction and Loyalty: An Empirical Study in a Telecom Setting’. Electronic Commerce Research, 19 (3), 477-499.