US-based transport business, FedEx Corporation, has announced it will consolidate its operating companies into one organisation to become a stronger, more profitable enterprise.
This phased transition, with full implementation expected in June 2024, will ultimately bring FedEx Express, FedEx Ground, FedEx Services, and other FedEx operating companies into Federal Express Corporation, becoming a single company operating a unified, fully integrated air-ground network under the FedEx brand.
FedEx Freight will continue to provide less-than-truckload freight transportation services as a stand-alone company under Federal Express Corporation.
Raj Subramaniam will serve as President and CEO of the combined organisation.
“Over the last 50 years, we built networks that have created a differentiated and unmatched portfolio of services,” said Subramaniam.
“This organisational evolution reflects how we represent ourselves in the marketplace – focused on flexibility, efficiency, and intelligence. As one FedEx team, we are well positioned to execute on our mission to help customers compete and win with the world’s smartest logistics network.”
This new structure will help facilitate the company’s DRIVE transformation, including Network 2.0, the multi-year effort to improve the efficiency with which FedEx picks up, transports, and delivers packages in the US and Canada. In addition, the unified organisation will bring distinct focus on the air network and international volume, as well as a more holistic approach to operations on the ground utilising both FedEx employees and contracted service providers.
“We are building a simplified experience for our customers, who are at the centre of everything we do, so they can adapt to the market,” said Subramaniam. “This combination will allow us to provide customers with even greater value, offering the most advanced data-driven insights to help them make smarter decisions for their business.”
To aid in this smooth transition, effective 16 April 16 2023, John A. Smith will become President and CEO of US and Canada Ground Operations at FedEx Express and assume leadership of surface operations across the FedEx Express, FedEx Ground, and FedEx Freight businesses.
Richard W. Smith will serve as President and CEO, Airline and International at FedEx Express, overseeing all other regions and FedEx Logistics. During the transition period leading up to June 2024, there will be no change in financial reporting segments.
The DRIVE transformation spans 14 domains across four major areas: Customer, Surface Network, Air Network & International, and General and Administrative (G&A). FedEx expects DRIVE to generate $4.0 billion USD of permanent cost reductions in fiscal 2025.
Each area is expected to generate savings in fiscal 2025 as follows:
- $1.2 billion USD in Surface Network
- $1.3 billion USD in Air Network & International
- $1.5 billion USD in General & Administrative
DRIVE is also enabling the implementation of Network 2.0 which is expected to generate an incremental $2 billion USD of savings in fiscal 2027.
FedEx continues to project costs of up to $2 billion USD by the end of fiscal 2025 to implement its business optimisation initiatives including the DRIVE and Network 2.0 programs.