FedEx Trade Networks expands its global air and ocean freight services.
By Chris Gillis
FedEx is already known by shippers for its finely tuned express package service, but now the express giant seeks the same customer recognition for its burgeoning air and ocean freight consolidation operations.
For the past several years, the company has invested in expanding its global cargo-handling services which operate under the brand FedEx Trade Networks.
“About three and half years ago we made a conscious decision to become a large global air and ocean freight forwarder,” said Fred Schardt, president and chief executive officer of FedEx Trade Networks, Inc. “With our commitment of infrastructure and capital, we have the ability to deploy these services and attract customers anywhere.”
FedEx, already a long-time provider of express package delivery services, entered the freight forwarding and non-vessel-operating common carrier industry when it acquired Tower Group International from McGraw-Hill Cos. in February 2000. With 1,600 employees and 63 offices in the United States and Canada at the time of the acquisition, Tower was handedly one of the largest customs brokers in North America and a leading player in the U.S.-Canada cross-border trade.
FedEx followed this move a month later by acquiring World-Tariff, a customs duty and tax information company. In 2002, FedEx made an additional acquisition to supplement what it had acquired with Tower.
While the acquisitions quickly made FedEx Trade Networks one of the country’s biggest brokers, its NVO/ocean and air forwarding operation started much smaller.
Schardt, a plus-35-year industry veteran who held various senior management roles at Fritz Cos. and UPS Supply Chain Solutions, joined FedEx Trade Networks in 2008 as executive vice president and chief operating officer. From the start, he was credited with realigning its operations and standardizing service offerings internationally.
He also started an aggressive global expansion plan, which included an increased freight forwarding presence for the company and numerous office openings in Asia, Latin America, Europe, Africa, India and the Middle East. Between June 2009 and February 2010, for example, the company opened a record 20 overseas offices.
Schardt was appointed president and chief executive officer of FedEx Trade Networks in October 2009.
He explained that in 2009 the business was 70 percent brokerage and now it’s becoming more balanced with the other logistics services offered by the company. In addition, the company has gone from mostly a North American business base to one that now includes 50 percent international.
In July 2011, FedEx Trade Networks announced its “ocean choices” portfolio, which allows the company to offer shippers three distinct ocean freight forwarding services to best fit their business requirements.
“We understand that our customers have different shipping needs, depending on the product they’re shipping,” Schardt said. “Customers now have the ability to match their demands with our ocean service levels, helping them to take greater control of their supply chains and operate more efficiently.”
The three service types include:
- FedEx International Direct Economy Ocean, which offers traditional forwarding services to and from major overseas locations for both less-than-containerload (LCL) and full-containerload (FCL) shipments with flexible delivery schedules.
- FedEx International DirectDistribution Ocean, which allows shipments to bypass distribution centers, offering “speed-to-market” services to destinations in the United States, Canada, and Puerto Rico from origins in Asia, Latin America, India and Europe.
- FedEx International Direct Priority Ocean, which provides scheduled U.S. deliveries of LCL containers to Los Angeles/Long Beach and Seattle/Tacoma for FCL containers from select origins in China, Hong Kong and Taiwan. LCL shipments are routed through FedEx Freight, the domestic trucking arm of the express carrier, while delivery of FCL shipments are handled via the FedEx Trade Networks preferred carrier portfolio.
Under the Direct Priority service, the internal expectation is to move LCL cargo from marine terminals into the FedEx Freight system within one business day. From Long Beach to Bangor, Maine, for example, it generally takes about five days to deliver an LCL shipment by truck.
“One of the beauties of synchronizing the (Direct Priority) service with FedEx Freight is that it becomes part of a priority service to 100-percent of points in the United States,” said Grant Crawford, vice president of international at FedEx Freight.
“With the flexibility and strength of the FedEx Trade Networks freight forwarding operation and the reliability of the FedEx Freight delivery network, customers will benefit from a premier ocean LCL solution backed by the FedEx brand,” Schardt added.
FedEx Trade Networks has an estimated 50,000 active customers. Schardt said there’s plenty of room for the company to grow its forwarding operations with an estimated global market of $165 billion. “No one in the industry has a discernible market share. The largest player controls less than 10 percent of the business,” he said.
According to trade intelligence firm Zepol Corp., which analyzes U.S. Customs manifest data, FedEx Trade Networks in 2011 handled nearly 60,000 TEUs of freight through its U.S. inbound NVO services. That’s up from about 51,000 TEUs in 2010.
Schardt also described the expansion of FedEx Trade Networks as “extremely aggressive” in overseas markets. The Memphis, Tenn.-based operation has opened 50 offices in the past three years. “We grow as our customers grow,” he said.
It usually takes three to six months to open a new office, mostly to deal with local regulations. The company staffs its overseas office management with “people who understand both local business and FedEx’s requirements,” Schardt said.
The global expansion of FedEx Trade Networks, which now includes more than 100 service locations and over 4,300 employees, is overseen from five regional head offices: Memphis (United States), Hong Kong (Asia-Pacific), Toronto (Canada), Amsterdam (Europe, the Middle East, India and Africa), and Miami (Latin America).