Every year, students in John Bartholdi's warehousing and distribution class at Georgia Tech choose a handful of remote locations around the globe and send packages off to each of them via UPS, FedEx, and DHL. The exercise has become known as The Great Package Race. Its objective is to see which carrier reaches the remote and sometimes dangerous locations first.
Last year, the students selected Apia, the only city on the island of Upulu (a part of Samoa); Florianopolis, an island off the southern coast of Brazil; Harare, the capital of Zimbabwe; Tikrit, the birthplace of Saddam Hussein in Iraq; and Yangon (formerly Rangoon), until recently the capital of Burma (or Myanmar, as its military rulers would have it).
Bartholdi, who is the research director for Georgia Tech's Supply Chain and Logistics Institute, is careful to note that The Great Package Race is just a way to get students interested in the challenges of global shipping and should not be viewed as a valid comparison of the carriers' performance. But the exercise does serve to illustrate the reach of the three major express carriers.
As the Georgia Tech students learn, FedEx, UPS, and DHL can indeed deliver to addresses almost anywhere in the world. But that's not all they do: As they have extended their physical reach, they have also expanded into the types of services traditionally offered by freight forwarders and customs brokers.
By adding brokerage, forwarding, and other information-related services to their lineups, the Big Three express carriers can offer something approaching a one-stop shopping experience for international parcel shipments. And because they have expanded the scope of their services while simplifying import and export procedures for their customers, they've opened the door to global trade for a growing number of companies—particularly small and mid-sized players that may previously have found international trade daunting.
Navigating the global marketplace
Trimble Navigation Ltd. is one of the small and medium-sized enterprises that have benefited from the parcel carriers' comprehensive international services. The California-based company provides positioning technologies for the agriculture, engineering and construction, transportation, and wireless communications industries. It has offices in 18 countries, manufacturing facilities in Asia, and customers around the globe.
Trimble uses all of the major express service providers to import and export parcels, many of which are destined for—or departing from—the shipper's Dayton, Ohio, distribution center, says Brigitte Smith, Trimble's manager of transportation and logistics. Smith demands speed and a high degree of reliability—critical factors for a company that promises turnaround times of 24 to 48 hours and must provide warranty replacements and service for thousands of products.
The high-tech company relies on its parcel carriers not just to provide transportation but also to help it manage the complexities of international shipping. While it's important for any importer or exporter to be familiar with the regulations of the countries it operates in, Smith says, carriers can and should be able to provide additional expertise in areas like commodity classifications. She also expects them to provide a comprehensive customs service, including automated clearance, reporting, and management of drawback claims.
Along with using their transportation services, Smith also benefits from using the shipping software that the express carriers provide. She cites DHL's EasyShip program as an example of the type of software tool she has come to rely on. EasyShip offers automated document preparation and processing, shipment management tools, shipment tracking, and database management and maintenance for international traders.
Smith especially likes the fact that express carriers are so versatile nowadays. In the past, Trimble sometimes had to use four or five different service providers to handle various parcel shipping activities, but that's no longer the case. "It is nice to have a carrier that has the flexibility to provide services without branching out to a forwarder," she says.
Window on the world
Trimble is just one of thousands of small and medium-sized companies that are now taking advantage of express carriers' international services. In fact, says Carl Asmus, vice president of international marketing for FedEx Services, small and mid-sized companies represent the fastest-growing segment of the international parcel shipping market. "In the past, they have not had the resources to participate in international sourcing or selling," he explains. "[But now] they have to do it in order to survive. They have to compete with companies that can source around the world or have markets around the world."
For many of them, parcel carriers can provide the necessary resources. Henk Vlietstra, vice president of international services for DHL Express, says that by having offices around the world staffed with employees who understand import and export rules, parcel carriers can extend the reach of shippers that don't have their own international facilities. "They effectively have the capability to do international sourcing," he says.
In some cases, carriers are not only enabling smaller companies to build an international supply chain but are also actively encouraging it through education. FedEx, for instance, began a program in Latin America and the Caribbean in 2004 that offers seminars on exporting to small and mid-sized companies in Mexico, Argentina, Brazil, Chile, Colombia, Costa Rica, the Dominican Republic, and Puerto Rico.
The international trade software that parcel carriers provide to their customers allows even small shippers to track their goods and ensure that those shipments comply with diverse and perpetually changing regulatory and security regimes. By providing a window on the world, these software tools encourage companies with limited international trade experience to venture across borders.
UPS, for example, developed its TradeAbility software package to help those shippers overcome many of the obstacles to international trade, says Ross McCullough, vice president of global marketing. The software, which helps international shippers generate cost estimates for duties, taxes, and transportation and locate compliance information for 34 countries, can take some of the worry out of exporting and importing for shippers that may not even know where to start. McCullough notes that UPS's WorldShip software, which provides direct Internet connections between shippers' own databases and UPS's air and ground information systems, is installed in some 550,000 locations around the world.
FedEx has focused on developing technology that improves the speed and reliability of its international express services, says Asmus. Among the tools it makes available to customers is FedEx InSight, a Web-based program that provides visibility into inbound, outbound, and third-party shipments, allowing shippers to find out about customs-clearance delays while it's still early enough to take corrective action. At the same time, the carrier has been promoting its Internet-based FedEx Global Trade Manager service as a tool to guide customers who are new to international trade through the international shipping process. The program includes import and export documents from more than 200 countries, assists in landed-cost calculations, and conducts denied-party screening for exports.
DHL, too, offers international shipping tools for customers of all sizes. "We can do automated shipment preparation for everyone from the mom-and-pop shipper to operations that ship up to 7,000 parcels per day," says Vlietstra. In addition to the EasyShip software that Trimble uses, the carrier offers DHL Import Express Online. The program helps importers prepare import shipments and manage the details from pickup to delivery.
Keep walking the walk
Demand for international services almost certainly will continue to grow as more shippers take the plunge into international trade. The express carriers are responding by expanding their physical and technical infrastructure to give their customers what they need, wherever they need it.
These days, where they need it is likely to be China or India. Even the smallest of international traders are now venturing into those markets. But bureaucracy is deeply entrenched in China and India, and it can be challenging to stay abreast of their constantly changing (and sometimes inconsistent) regulatory requirements. In those cases, smaller importers and exporters may end up relying more heavily than ever on their parcel carriers to help them navigate the trade landscape.
UPS, FedEx, and DHL will be ready. UPS, for instance, has allied with AFL, an express carrier in India that will pick up international shipments on its behalf. Big Brown also expects to open a new international air hub at Pudong International Airport in Shanghai later this year.
FedEx Express will offer FedEx International Economy, a new day-definite, customs-cleared, door-to-door service in 10 Asia-Pacific markets. Last year, FedEx acquired express businesses in China and India, and by the end of 2008, it expects to complete a new air hub at Guangzhou's Baiyun International Airport in South China.
DHL, meanwhile, has expanded its lift capacity between the United States and Asia through a 20-year agreement with Polar Air Cargo Worldwide. And in May 2007, it consolidated its various investments in Indian logistics, freight forwarding, and customs brokerage into a single joint venture.
Regardless of where in the world they do business, international shippers of all sizes are likely to demand much from their carriers. Smith of Trimble Navigation certainly does. "It is a very competitive world, and we have to do what we can to ensure that our customers will come back to us," she says. "Our carriers have to talk the talk and walk the walk."