does Fedex fly its own airplanes full of packages? Is there somebody else flying airplanes full of packages to service both Fedex, UPS and whatever other private mail carriers? Or do they just ship them in the regular passenger liners that we all use to fly on vacation?
Which naturally segues to the question, is it possible to start your own “mini-Fedex” shipping company and get somebody else do the actual air shipping for comparably cheap rate? Indeed, why hasn’t anybody done so, i.e. what are the major barriers to entry that make sure that Fedex and UPS appear to constitute an oligopoly without smaller niche competitors?
yes. fed ex has the largest civil fleet of airplanes in the world
yes. they contract with third-party air transportation companies where it is too expensive them to fly one plane in for 1 or 2 parcels.
if you go on fedex’s website and look up pricing, they have a super expensive option (same with UPS) that can get a package halfway across the country the same day as they pick it up. these custom options utilize commercial air transportation if the situation presents itself.
you can form a company that is contracted to fed ex, no problem
as for starting your own system of national parcel delivery based on contracting out with 3rd parties, i’d think not. it’s got extremely high start up costs - because you have to service the entire nation. no one is going to switch from fed ex for that one package that they send to an adjacent state served by your mini company.
One interesting tidbit, FedEx also transports Express and Priority Mail for the US Postal Service:
“In 2000, FedEx Express signed a 7-year contract to transport Express Mail and Priority Mail for the United States Postal Service. This contract allowed FedEx to place drop boxes at every USPS post office, and has recently been extended until September 2013. USPS continues to be the largest customer of FedEx Express”
W/regard to starting a business using existing carriers’ assets, yes you can and many do. My company is a “Freight Forwarder,” sometimes, but inaccurately, referred to as a “Consolidator.” We purchase discounted service/space from "Integrated Carriers such as FedEx, UPS, airlines (cargo and passenger), etc. An Integrated Cariier owns its own equipment and operates it with its own employees.
They make a fine living from people who understand that it’s possible to get something sent overnight for less than what FedEx or UPS charges because not every overnight package must be flown to its destination.
GSO is comparatively small and scrappy, and they only ship within California. If you want something to go overnight from San Francisco to LA, you can either pay FedEx to fly it to Memphis and back, or pay less to GSO, who will put it on a truck and drive it to LA.
It wouldn’t surprise me if FedEx gobbles up GSO some day. About 20 years ago, there was a small parcel delivery service out on the West Coast called Regional Package Service or RPS that competed directly against UPS. Ten or so years ago, FedEx bought them as the genesis of FedEx Ground. At abouut the same time, FedEx bought out Viking Freight to be the backbone of FedEx Freight. They also bought out Flying Tigers. As the name suggests, they were a company that specialized in flying exotic freight, including live animals, that truly absolutely positively had to be there on time with a lot of figurative hand-holding. (eg: feeding, security escort, etc.) That became FedEx Custom Critical.