FedEx to Combine Air, Ground & Other Operations by Mid-2024 - Modern Distribution Management

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FedEx to Combine Air, Ground & Other Operations by Mid-2024

The consolidation of operations is expected to save FedEx $4 billion.
Memphis, Tennessee-based global shipping company FedEx said Sept. 15 it plans to cut costs, reduce operations and freeze hiring following a worse-than-expected earnings report that projects revenue shortfalls in the hundreds of millions of dollars.

FedEx announced April 5 that it will consolidate almost all of its ground, air and other operations by next year as part of a plan to save $4 billion.

The cost-cutting measures include merging FedEx Express, Fedex Ground, FedEx Services and other FedEx operating companies into a single entity known as Federal Express Corporation, according to a news release. The transition will take place in phases, with full implementation of the unified, fully integrated air-ground network expected by June 2024, the release said.

FedEx Freight will continue to provide less-than-truckload freight transportation services as a stand-alone company under Federal Express Corporation, according to the release.

FedEx CEO and President Raj Subramaniam will continue to lead the company following its consolidation.

“Over the last 50 years, we built networks that have created a differentiated and unmatched portfolio of services,” Subramaniam said in the release. “This organizational 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.”

As part of the transition, John Smith will become president and CEO of U.S. and Canada Ground Operations at FedEx Express and assume leadership of surface operations across the FedEx Express, FedEx Ground and FedEx Freight businesses, according to the release. Meanwhile, Richard Smith will serve as president and CEO of airline and international at FedEx Express, overseeing all other regions and FedEx Logistics.

The Memphis, Tennessee-based global package logistics provider said it expects to realize permanent cost reductions of $4 billion in fiscal 2025, including savings of $1.2 billion in surface network, $1.3 billion in air network and international, and $1.5 billion in general and administrative, according to the release.

“We are building a simplified experience for our customers, who are at the center of everything we do, so they can adapt to the market,” Subramaniam said. “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.”

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