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tics of commodity classes.

For decades, shippers who’ve tendered shipments classified as “freight, all kinds” (FAK) have enjoyed rate windfalls because carriers have routinely mispriced that type of freight class. The problem for carriers has been worsened by the growing role of brokers and third-party logistics companies that tender large volumes of FAK freight and use their clout to beat back any attempts at price increases.

A PROFOUND SHIFT

The moves announced by Smith are as much a profound cultural shift as they are economic. They reflect upper management’s acknowledgment that it can no longer protect the air business from a world that has morphed—perhaps permanently—into one where speed to market is no longer the main driver of customers’ buying decisions.

Jeffrey A. Kauffman, transport analyst for the Birmingham, Ala.-based brokerage Sterne Agee, said the actions underscore “a change in philosophy at the top levels” driven by those a bit further down who work in the trenches.

The U.S. express business “has been a sacred cow at FedEx, but this change marks an admission that the world has changed, and that the network FedEx built must change as well,” Kauffman said in a research note.

According to analysts who attended two days of meetings in Memphis, Smith and other top executives took pains to underscore the relentless “trading down” of transportation modes by shippers as they realign their supply chains to adjust to a slow-growth economic environment here and abroad. Domestically, less expensive truckload has taken share from LTL, while ground parcel has become, for many shippers, a cost-effective substitute for air freight.

Internationally, the traditional airfreight business, which

accolades

Automotive supplier Delphi has presented Penske Logistics with the 2011 Delphi Above & Beyond Award for Penske’s distribution center management services. … Nissan Forklift Corp. has recognized Nissan Forklift of Michigan with a Gold Service Excellence Program award.

… Cognex Corp., a supplier of machine vision systems, has won Control Design magazine’s Readers Choice Award in the Machine Vision System category by a margin of 43

percent over the second-place finisher. … Temperature-controlled warehousing and logistics service provider

Americold announced that its Malaga Place facility in Ontario, Calif., was named General Mills Frozen Facility of the Year for 2011. … Bell Carter Foods Inc., a producer of olives, has presented Star Distribution Systems Inc. with

is defined as airport-to-airport service mostly managed by airfreight forwarders, is feeling pressure from two sides. It’s being squeezed on price by cheaper ocean services. It’s also being hemmed in on service by air express, which—in spite of its premium prices—has proved to be invaluable to shippers of high-value commodities that want to avoid inventory obsolescence.

Perhaps the most striking example of customers’ trading down in mode is at FedEx Freight. There, 14 percent of its linehaul miles are today moving via lower-cost rail service. By contrast, just 2 percent of the unit’s linehaul miles went by rail prior to a 2011 reorganization that segmented service into two categories: priority deliveries and slower, less-expensive economy service.

PLAUDITS FOR THE PLAN

As for the restructuring, most analysts believe FedEx, which disclosed that it is already a year into the process, can hit its goals. David G. Ross, analyst for investment firm Stifel, Nicolaus & Co., said FedEx’s analysis and the reasoning behind it are rational. Kauffman of Sterne Agee believes the plan will succeed because it is mostly cost-driven and doesn’t involve cutting into the bone of the enterprise. “[It] doesn’t take a better economy or unspecified revenue synergy to be successful,” he wrote.

William Greene, transport analyst for Morgan Stanley & Co., may have spoken for many when he called the plan “surprising in magnitude.” And Greene may have spoken is a positive in itself.” ;

its Service Provider of the Year award for the fourth consecutive year. … Alberto Alemán Zubieta, immediate past administrator of the Panama Canal, will receive the 2012

Connie Award from the Containerization & Intermodal Institute. … Mark’s Work Wearhouse Ltd.

presented the third-party logistics company Century Distribution Systems Inc.

with an Innovation Award for demonstrating a steadfast commitment to engineering supply chain efficiencies. … The National Defense Transportation Association has named