FedEx was founded as Federal Express Corporation in 1971, by 28-year-old Memphis, Tennessee, native Frederick W. Smith. Smith, a former Marine pilot, originally outlined his idea for an overnight delivery service in a term paper he wrote for a Yale University economics class. He felt that air freight had different requirements than air passenger service and that a company specializing in air freight rather than making it an add-on to passenger service would find a lucrative business niche. Speed was more important than cost, in Smith's view, and access to smaller cities was essential. His strategies included shipping all packages through a single hub and building a private fleet of aircraft. Company-owned planes would free the service from commercial-airline schedules and shipping regulations, while a single hub would permit the tight control that got packages to their destinations overnight. In making his dream a reality, Smith selected Memphis as his hub: it was centrally located and despite inclement weather its modern airport rarely closed.
A good example how an alternative distribution system emerges by capturing large volumes of new types of payloads. Also of interest is coupling of distribution with storage ( parts warehousing ). A pattern familiar from the early banking systems.