Federal Express was founded in 1973 by Frederick W. Smith. He literally invented the concept of overnight delivery, thereby creating a whole new market where previously there was none. Starting off with only fourteen small jets at its disposal, FedEx today has more than 560 aircrafts – making them the largest all-cargo air fleet in the world. The total daily lift capacity of their fleet exceeds 26.5 million pounds. Within 24 hours it travels approximately 500,000 miles. With the 2.5 million miles the FedEx Express couriers log a day; it is equivalent to 100 trips around the earth. A need that already has been identified rarely provides companies with big business opportunities. The greatest opportunities arise when you detect a completely new need that your customers didn’t even recognize themselves until you offered a solution to them. That is the success story of FedEx with its overnight delivery system.
The company was named “Federal Express” because of the intended associations with the word “Federal” since it expressed an interest in nationwide economic activity. Another trace to the name is the proposed contract with the Federal Reserve Bank, which the company hoped to attain at that time. Although the proposal was denied, the name “Federal Express” was chosen since Smith believed it was a particularly good one for their purposes. It draws public attention to the business and facilitates name recognition.
While the ability to identify an unidentified need provides a great business opportunity, it tends to remain useless if a company fails to come up with a new and innovative way of meeting it. The delivery of a new service can be quite tricky. FedEx solved it brilliantly by its hub-and-spoke distribution system. This innovation lies at the heart of the FedEx network and is only one example of various other innovative solutions in this area. The effective