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FedEx Buys Logistic Company

Two weeks ago FedEx announced its decision to buy logistics company Genco, which specializes in handling product returns, a field that is growing quicker and quicker with the growth of e-commerce.

FedEx will acquire not only $1.6 billion annual sales revenues and 11,000 employees, but also warehouses and operations in over 140 countries and working with industries from healthcare, retail, and technology. This move will also make it more competitive with rivals such as UPS who are currently the world’s largest mover of packages.

According to Bloomberg News, FedEx pegs Genco as a leader among “reverse logistics” companies. Genco works with large household names such as Sears Holding Corp. and AT&T Inc. According to its website, the company provides solutions for 7 out of 10 of North America’s most prominent retailers.

Most importantly this news brings attention to e-commerce’s rapid development and its effect on shipping companies like FedEx who were once accustomed to a more traditional business-to-business delivery service. The e-commerce business is expected to grow four times faster than the U.S. economy according to UPS.

FedEx now holds a company that will not only allow it to succeed with its customers in deliveries, but also in returns. The value proposition of returned merchandise, according to Fred Smith, CEO of FedEx is said to be even better in countries like India and China. It will be interesting to see where FedEx goes in 2015 as a result of the acquisition.

-Riti Patel, Assistant, Supply and Value Chain Center

Sources:

http://www.supplychain247.com/article/fedex_to_buy_logistics_company_genco

http://www.bloomberg.com/news/2014-12-15/fedex-agrees-to-buy-product-return-firm-genco-in-e-commerce-push.html

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