EVA is “the value created or destroyed each year by deducting a charge for capital from the firm’s net operating profit after taxes.” When comparing FedEx and UPS we can look at both their annual and Cumulative EVA. When evaluating attractiveness one of the first things looked at is each company’s economic value added, or EVA. In a short amount of time, UPS has leveraged their business-model to significantly catch up with FedEx’s network coverage and appears to be primed to surpass FedEx in the near-term. Even with the late start, UPS currently provide 6 weekly flights to China and service 200 cities with their network.
On the other hand, UPS delayed their entry into the China market by establishing direct flights to China in 2001 but they have since partnered with Yangtze River Express to handle package delivery within China. FedEx was the first to enter the China market by acquiring air routes that service China in 1995 and currently they provide 11 weekly flights to China, servicing 220 cities. We can see that the same business-model approach is being used for China on both FedEx’s and UPS’s part.
This gave UPS an already-established network with which to grow without the start-up expenses that FedEx incurred. Within Europe, UPS did not enter the marketplace until 1988 but when they did enter, they did it by acquiring 10 European courier services.
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