BY MARK B. SOLOMON, SENIOR EDITOR
THE TRANSPORTATION MARKET
specialreport
At FedEx,
say hello
to the next 40 years
A major revamp
reshapes the company,
lays the foundation for
how it does business
in the 21st century,
and bows to present
and future realities.
PHOTOS COURTESY OF FEDEX
THE MODEL CREATED BY FEDEX CORP. IN THE EARLY 1970s HAS SERVED
the company and its customers extraordinarily well for more than four decades. It
also transformed how people and companies across the globe interacted with one
another, and in so doing, helped FedEx achieve cultural-icon status that transcended everyday business.
As of mid-October, the model ceased to exist.
In its place will emerge a very different FedEx—one that will expand into new
markets and services, serve a certain type of customer, and manage its networks in
ways that its founder couldn’t have imagined 20 years ago.
At a long-awaited meeting of analysts and investors Oct. 9 and 10 in Memphis,
Tenn., Chairman and CEO Frederick W. Smith and his top lieutenants outlined a
plan codifying what the world, and the company, already knew: that the shipping
environment which FedEx rode to glory—and to $43 billion in annual revenue—
has irrevocably changed. In the process, certain precepts FedEx has held dear since
its founding in 1971 will change as well.
FedEx’s “profit improvement plan,” which has been under way for nearly a year but
not made public until now, is expected to add $1.7 billion annually to its bottom line
by 2016. The gains will come through a mix of cost cuts, efficiency enhancements, and
yield-boosting measures, virtually all targeted at FedEx Express, the company’s traditional core air and international business, and still its largest revenue-producer.
The effects of the revamp will carry the company well into the next generation
