The History of FedEx
The transport of goods from places to places has become much easier and faster with air freight. But, before there were FedEx and UPS, a lot of companies ventured into the same industry that were not as successful.
To measure the effectivity of moving freight by air, a department store first transported silk from Dayton to Columbus in November 1910. As expected, the transport had beaten the length of time it takes to transport goods through railroad express between the two cities. In the 1920s, airlines flew freight,which allowed businesses to import and export goods as quickly as possible.
The volume of freight shipped on airplanes continues to grow and in the 1930s, millions of pounds are being shipped by the American Railway Express, Henry Ford’s express, and the US Post Office.
The first airline to fly all-cargo air freight is the National Air Transport, which later became part of United Airlines. The board members thought gaining an airmail contract would greatly contribute to the company’s early development and in 1926, they won the bid on the mail contract of the US Post Office from Chicago to Dallas and vice versa. On the next year, they won another mail contract bid New York and Chicago route. The service offered by NAT can be considered as an air charter service.
Other companies that offered air freight services during those times were Railway Express Agency and General Air Express. However, both companies did not make much profit due to low air freight rates. Until February 1935, both companies decided it would be advantageous to join forces.
Before the World War II began, four of the biggest airlines, United Airlines, Trans World Airlines American Airlines, and Eastern Airlines formed Air Cargo, Inc. but by the end of the war, the four airlines began operating on their own.
In 1949, the Civil Aeronautics Board permitted four all-cargo airlines; Air news, Flying Tiger, Slick and U.S. Airlines to operate at standard rates. However, Air news and US Airlines did not last long in the business due to heavy losses. Both Slick and Flying Tiger survived, but they also faced threats such as lowered rates offered by a passenger airline, American Airlines. The two companies decided to merge, but it became impossible due to labor issues. Slick was eventually closed and in the 1960s, Flying Tiger became the largest air freight airline with an annual profit of $20 million.
Despite the hopes for a booming industry, air freight remained a very small part of the total air traffic. It was not until 1980 when a new airline brought a new era for the air freight industry. Fred Smith, a young entrepreneur, believed that combining air freight traffic and air passenger traffic will only delay delivery services as the two have entirely different route patterns.
After gathering funds, Smith built a hub exclusive for air freight services named Federal Express. The company’s next-day delivery hugely contributed to its success. Though the starting years were not easy, Federal Express continue to grow in revenues,and in 1983, it earned a whopping $1 billion. Federal Express became the world’s largest full-service all-freight airline after acquiring Tiger International, Inc. In 1994, the company named its operating division FedEx.
Today, individuals or businesses can even ship high-value, time-constrained and sensitive cargoes through FedEx’s air charter services.