port its “economy” service, though Logue stressed it would
just be for a small fraction of its moves.
Here’s how it works for a hypothetical load moving from
Boston to Jacksonville, Fla.: A shipment booked as “priori-
ty” is routed through a dedicated sorting facility in
Newburgh, N.Y., about 50 miles north of New York City.
The next morning, the cargo is loaded on the company’s
relay network for delivery to a dedicated hub in Valdosta,
Ga. From Valdosta, the shipment is delivered to a service
center in Jacksonville for two-day delivery to the consignee.
The same shipment moving via “economy”
At each shipment’s origin point, the cargo
will be sorted and segregated based on the
delivery level requested by the customer. Once
the shipment arrives at the origin facility, the
cargo will be scanned by on-dock computers
to determine how the shipment should be
loaded and the appropriate departure times.
A key distinction between the two service
levels is that shipments booked for the slower
deliveries will be handled in daytime sort
shifts, while the expedited cargoes will move
through nighttime sorts. That parallels the
network design that the company’s air express
unit has used for decades.
The operation has hubs dedicated to each
service level in addition to dual-use hubs like
the one in Orlando. Logue says the dual-use
hubs are located to “maximize efficiency and
density as well as [to provide] access to rail
facilities.” The dual-use model is a “critical component” of
the program’s success, he adds.
As part of the restructuring, FedEx Freight shuttered 100
freight terminals, nearly 20 percent of the unit’s 470 terminals. In the process, about 1,700 of the unit’s 34,000 jobs
were eliminated. FedEx estimates the restructuring will cost
between $140 million and $170 million by the time it’s
completed.
ket inroads as long as it focuses on careful and near-flawless
segregation of each shipment.
In fact, Clowdis foresees a day when the network’s reliability allows FedEx to offer services that “segment [ship-ments] by specific delivery dates and times, accompanied
by appropriate pricing.” From this could evolve a spate of
products that guarantee deliveries before 10 a.m., by 12
noon, and the next afternoon, service levels long available
to air express users but virtually unheard of in the LTL category, he says.
HEAT’S ON: BILL LOGUE IS BETTING BIG THAT A TOTAL REVAMP WILL REVERSE THE FORTUNES OF FEDEX’S BATTERED FREIGHT UNIT.
NO ROOM FOR FUMBLES
As for how the new service will fare in the marketplace, a lot
will depend on the execution.
Charles W. Clowdis Jr., managing director, transportation
and supply chain advisory services for consultancy IHS
Global Insight, says the new FedEx service could make mar-
From an operations standpoint, it would be hard to find
someone inside FedEx more qualified to quarterback the
new game than Bill Logue. A 22-year FedEx veteran, Logue
has held top operational positions throughout the compa-
ny; before being named FedEx Freight’s president in late
2009 (he added the CEO title in the spring of 2010), Logue
was executive vice president and COO of FedEx Express’s
U.S. operations, responsible for all of the unit’s air, ground,
and domestic support services.
