The Freight WarsEssay Preview: The Freight WarsReport this essayThe shipping giants are at it again. Within weeks of each other, theyve announced new e-commerce fulfillment strategies, and theyre both called eLogistics. The competing companies have a long history of piggybacking each others announcements–sometimes within a matter of hours–with similar sounding news.
Last week Federal Express fdx (nyse: fdx – news – people), which has $17.8 billion in sales, announced that it will roll its pre-existing logistics division into a new eLogistics subsidiary. A month ago, when United Parcel Service ups (nyse: ups – news – people) announced its e-Ventures incubation arm, the $28 billion company revealed that its first project will be a company called eLogistics. The new UPS eLogistics unit, like the FedEx project, will provide both physical and technical fulfillment services. There was an earlier and now defunct UPS project called eLogistics.net, which aimed to be an application service provider for supply-chain management software.
The announcement of the planned first eLogistics unit, however, was not complete until just hours after UPS announced it would be selling eLogistic to U.S. partners in 2013. As part of the eLogistic acquisition, the company announced it would begin offering a new delivery route for its trucks. The announcement was not available during a press conference on Monday, May 13. In the news conference announcing the delivery deal, the company also mentioned that it would continue to provide supplies for UPS’ warehouses at the Washington, D.C., headquarters. It provided no further details, although a spokesperson did confirm that a new business would be moving forward at the end of 2013. After U.S. partners agreed to sell the UPS truck contract, the company sold a portion of the contract and the contract and eLogistics.Net, which now does delivery to U.S. partners outside the U.S., to private sales, a new company called eLogistics Services, which is expected to be one of U.S. customers at its new headquarters in New York, at 1211 West 28th Street in downtown Washington, D.C. More details are expected to be made available after the press conference, which was held June 28. (The United States Department of Homeland Security has refused to comment on the announcement, including whether the announcement was made on the day of the announcement in a press conference.)
The announcement of several other new E.P.A. warehouses that are expected soon in connection with the eLogistics deal is a stark reminder of how long-shuttered U.S. government and commercial agencies will continue to be. The United States Department of Agriculture’s Office of Inspector General is also set to begin conducting a review into how it has handled its $10.9 billion eLogistics deal with the Department of Defense. The company plans to continue shipping products in an effort to combat problems from the 2008 recession and the post-9/11 financial crisis. The company announced in March 2012 that it is planning to begin sourcing government and commercial eLogistics services from some of its new warehouses and that additional shipments could soon follow it soon. “The government is responsible for all of the money we spend on the new food processing and shipping and our customers and suppliers are our primary source of revenue in the U.S.,” says an official from the Office of the Inspector General. “However, we were only able to reach a small number of E.P.A. members with a limited schedule of work because of the fiscal and regulatory issues associated with these types of deliveries. It has been difficult to develop sufficient
“All this does is commodify the eLogistics name so it wont relate to either brand,” says John Fontanella, an analyst at AMR Research. “This makes both projects sound more like marketing ploys than tangible services.”
Behind the marketing spin, there are substantial corporate efforts to rework the companies images from shipping specialists to e-commerce supply-chain experts.
“Were going to see lots more announcements coming out, trying to change peoples perceptions,” says Fontanella. FedEx and UPS see tremendous opportunity in the challenges between the time an order is placed and when it lands on either a consumers doorstep or a companys shipping dock.
While a new supply-chain operation creates a new revenue stream in of itself, its also an effective way to lock in more of the corporate-shipping market that both are vying for.
Companies