Modeling the Logistics of FedEx International Express

The FedEx international express network ships 11.5 million pounds of packages per daythrough 15 international hub airports and local airports from which packages are localcollected and distributed. FedEx shipment data and estimation methods based on logistitheory provide for the development of a logistic cost function. To determine the lowest cost operating strategy for FedEx international express, logistic costs are estimated for the current network with and without transhipment points, which consolidate international shipments into fewer hub airports with higher volume.  These estimation methods are then applied to a proposed network expansion and the related costs are estimated and compared. The potential to expand the network and increase overall revenue is explored, as the increase in costs is balanced by an increase in revenue. An alternate strategy is explored to reduce cost, including the introduction of a more diversified air fleet and the creation of a hybrid network with modified transshipment points.  Through these alternate strategies, further cost savings for FedEx is realized through the use of larger aircraft and well as varying the number of transshipments dueto demand between nodes.  This study presents a method to estimate logistics costs and presents a repeatable methodology to evaluate the impact of new technologies, larger distribution areas, and innovating shipping schemes on shipping revenues.  

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