Building the World’s Largest Delivery Company: FedEx Corporation (FDX) and More

On this day in economic and financial history…

One of the largest corporations in the world was created by legislation on Feb. 20, 1792, when President George Washington signed the Postal Service Act into law. Although it had existed in an early form for the rebellious American colonies since the Continental Congress appointed Benjamin Franklin postmaster general in 1775, it was only with the 1792 legislation that the basic legal and operational framework of the U.S. Post Office came to be. That year, the fledgling nation created 75 regional post offices and operated 2,400 miles of service routes, delivering letters at a rather high cost of $0.06 to $0.12 apiece.

The Post Office grew rapidly. By the turn of the 19th century it had established a total 903 branches on an operating budget of $214,000, which works out to about $2.8 billion today. Thanks to efficient operation, the Post Office turned a sizable profit, which became difficult as it expanded to handle the needs of a fast-growing, far-flung nation. In 1971, in an effort to reduce the costs of government, President Richard Nixon signed the Postal Reorganization Act, which transformed the U.S. Post Office into an independent for-profit entity, the United States Postal Service.

In 2011, the USPS generated $66 billion in revenue by handling 167.9 billion pieces of mail, which works out to about 40% of the entire global mail volume. The USPS also shipped more than 148 million Priority Mail Flat Rate boxes and more than 42 million other packages that year. To get all this mail to its destination, the USPS employs 546,000 people in career positions and uses 213,881 vehicles — the largest fleet in the world. By comparison, United Parcel Service, Inc. (NYSE:UPS) generated $54.1 billion in revenue in 2012, delivering 4.1 billion packages and documents with the aid of 397,100 employees using 96,394 vehicles. FedEx Corporation (NYSE:FDX) has a similar operational breakdown, generating $42.7 billion in 2012 revenue by delivering roughly 3.3 billion shipments with the aid of more than 300,000 employees using more than 90,000 vehicles.

Party like it’s 1899
On Feb. 20, 1899, the 2-year-old Dow Jones Industrial Average made one of its strongest advances to that point in time, rising 5.8% on high volume as a merger-driven bull market shifted into high gear. Railroad shares, which drove broader market gains throughout this bull market, offered mixed performance on the day, but the commodity-laden Dow was propelled upward by American Sugar and American Tobacco, the latter of which posted a double-digit price gain. More than a million shares exchanged hands — a rare event in an era before telephones were widely used.