17 Years of Fighting for Air Supremacy (2) — The Story of How the Acquirer Felt Out of Place

Joining Forces with Flying Tiger

In June 1988, I joined Federal Express Japan.

On December 16, 1988, Federal Express announced a tender offer to acquire the U.S. cargo airline Flying Tiger Line (commonly known as Flying Tigers).

The news arrived via a mass email from headquarters and soon spread throughout the industry. The acquisition price was $880 million. FedEx took over Flying Tiger Line's 39 aircraft and 6,500 employees, instantly gaining route rights to 21 countries and regions, including Japan.

For those of us on the front lines, this news was 'half excitement, half anxiety.'

Flying Tiger Line was a legendary entity in the air cargo industry. It was America's first scheduled air cargo company, founded in 1945 by former pilots of the 'Flying Tigers' fighter squadron, who had made a name for themselves in World War II. For over 40 years since then, they had been a 'formidable force that would make even a crying child stop,' engaging in intense negotiations with major global shippers over cargo space on jumbo jets.

On the other hand, we at Federal Express were a relatively young company whose business was delivering small packages door-to-door. The volume and value of the cargo we handled, and above all, the weight of our history in the industry, were completely different.

We accepted the fact that 'our headquarters had acquired a company larger and more historic than our own' while still finding it somewhat hard to believe.

After August 7, 1989, when the merger was officially completed, the sales staff of both companies began meeting each other in Japan.

Flying Tiger Line's Japan office was in Akasaka. When I visited for the first time, I was overwhelmed by its atmosphere. The history and prestige of a foreign-affiliated company's Japan office were soaked into every corner of the space, and the moment I opened the door, there was a profound presence that even carried a distinct scent of America. There was no comparison to our office at the time.

We gradually closed the distance between us through repeated meetings.

The other side consisted of master performers who bought and sold jumbo jet cargo space through intense bargaining. The volume of goods they handled and the money involved were on a completely different scale.

We were just young upstarts selling small packages bit by bit.

What could these guys possibly understand? That is likely how they saw us.

It was likely not just me who felt somewhat out of place as a member of Federal Express, the company that was supposed to be the acquirer.

Even so, this 'disparity' was also a great opportunity.
The members of Flying Tiger Line's Japan office were all senior veterans of the air cargo industry. We young ones were desperate to learn the industry's nuances by sticking to them day and night. I still have many memories of nights spent going out in Akasaka, listening to the seniors' heroic tales and sharing drinks.

Manuals and Numbers: The DNA of the FedEx Organization

As the merger progressed, I experienced various departments within the sales division myself. From the department handling global accounts to launching the first contract logistics division in Japan, new tasks appeared before me one after another.

Among those experiences, the one where I felt most strongly that 'this is what FedEx is as a company' was the sales training.

FedEx is a company with exceptionally comprehensive training for its sales representatives.
From product knowledge to customer service and closing techniques, a thoroughly manualized and systematized training program was provided. After finishing the training, the sales representatives had been transformed into 'Salesmen' like cyborgs.

Naturally, the veteran sales staff from the merged Flying Tiger also had to undergo this training.

However, a clash of cultures occurred here.

The nature of the work is completely different between airline sales and integrator sales.

The seniors from Flying Tiger were people who had lived in a world of direct negotiations with major agencies handling cargo space for an entire jumbo jet. For them, training began on what small packages were and what the value of door-to-door service was.

Furthermore, FedEx was a company that excelled at manualizing and quantifying everything.

To manage the efficiency of sales representatives, they were required to enter into the system every day how many visits they made and how many contracts resulted from them. This management mechanism did not exist at Flying Tiger until then.
Reactions were divided into two types depending on the person.

Those who quickly adapted to the new environment and worked positively, saying, 'It's tough, but let's deal with it.' And those who rebelled, saying, 'I can't be bothered with that; I didn't join Tiger to do things like that.'

As a junior sales representative at the time, I could only sympathize and think, 'I suppose that's true,' but the hardships of the sales managers caught in the middle are beyond imagination.

Organizational integration is not about making systems and structures one.
How to land the working person's sense of 'who am I' into a new culture—I think I learned that firsthand during this period.

Incidentally, around that time, an integration with a domestic transport company was also proceeding in parallel at the Japanese subsidiary. As the headquarters continued to make acquisitions one after another, we at the local office were placed in a feeling of new waves crashing over us one after another.

People living in history are not conscious of history

I want to write honestly here.

Whether it was the 96 MOU or the distinction between incumbent and non-incumbent, it was not the case that the sales representatives on the front lines at the time were clearly conscious of them as the 'reason'.

Japan-US aviation negotiations are something that bureaucrats and diplomats build up at the negotiating table. The results certainly influenced the rules on the front lines, but what was in front of us was not 'systems,' but 'this month's numbers' and 'the customer in front of us'.

Internal rules change before you know it, reflecting the results of negotiations. When I realized that, I would think, 'Oh, it's changed again,' and somehow try to find loopholes within the new rules. That was the daily reality on the front lines.

Major history is hard to see for those on the front lines. It is often only when looking back that things connect, and one realizes, 'Was that change the result of that negotiation?' Writing this article, I am realizing that all over again.

People in the midst of history do not live their lives while being conscious of history as history—I want to record that honestly.

Contract Logistics—Breaking Away from Being Just a 'Shipping Company'

While terms like 'Contract Logistics (CL)' and 'Third-Party Logistics (3PL)' are common knowledge in the logistics industry today, they were concepts almost unknown in Japan at the time. In short, it was a precursor to BPO (Business Process Outsourcing), where a transport company takes over a client's entire warehouse management and shipping operations.

In the United States, it was already operating by leveraging FedEx's unique hub-and-spoke network. For example, inventory would be kept at the Memphis hub airport, and when an order came in, it would be shipped directly from there. Pick, pack, and ship—FedEx employees would perform the entire series of tasks: taking products off the shelves, packing them, and shipping them. A service that was revolutionary for the time was realized: 'If you order by midnight, we will deliver it anywhere in the U.S. by 10:30 AM the next day.'

There was another model. Companies with multiple warehouses across the country would entrust all of their inventory management operations to FedEx. By doing so, they could let go of their own warehouses and concentrate their resources on their core business—a mechanism that, so to speak, 'realizes management's choice and concentration by entrusting the entire headache of logistics.'

The target customers were mainly semiconductor manufacturers, automotive parts manufacturers, and medical device manufacturers. All of these are industries where inventory moves quickly and the requirements for delivery times are high.

This department embodied the essence of FedEx's sales strategy. A company that 'just transports' cannot escape price competition. However, if you enter the core of a customer's business and become an indispensable presence, you cannot be easily replaced. Firmly locking in customers with added value—this idea remained a compass for me throughout my subsequent sales career.

[Column 4] What is an MOU—The Meaning of a 'Memorandum of Understanding' in Diplomacy
An 'MOU (Memorandum of Understanding)' is a 'memorandum' that records the content of an agreement between two governments or organizations. Unlike a formal treaty, it allows for the documentation of agreements in a more flexible form, so it is often used in venues for complex interest adjustment, such as aviation negotiations. In the context of Japan-U.S. aviation negotiations, MOUs have been concluded at every milestone, such as the '84 MOU' (agreement on Nippon Cargo Airlines' entry into the U.S.), the '96 MOU' (significant expansion of cargo flight rights), and the '98 MOU' (fundamental correction of inequality). For those in the aviation industry, these MOUs are remembered as 'milestones that mark the eras.'

The continuation of this is in '17 Years of Fighting for Air Rights (3)—History Was Made Under the Skies of Malaysia'!

Guide to the Main Story
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