Parcel delivery powerhouse FedEx Corp. today announced plans to consolidate most of its operating companies into one organization in search of cost cuts, bringing FedEx Express, FedEx Ground, FedEx Services, and other FedEx operating companies into an umbrella unit called Federal Express Corp.
The lone exception to the realignment is FedEx Freight, which will continue to provide less-than-truckload (LTL) freight transportation services as a stand-alone company under that parent organization.
When the change is fully implemented by June 2024, the new single company will operate a “unified, fully integrated air-ground network” that creates efficiencies to enhance the company's ability to meet the evolving needs of customers, FedEx said.
“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,” Raj Subramaniam, who will serve as president and CEO of the combined organization, said in a release. “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.”
In other anticipated changes, the unified organization “will bring distinct focus on the air network and international volume, as well as a more holistic approach to operations on the ground utilizing both FedEx employees and contracted service providers,” the company said.
Phrased in the company’s corporate lingo, the new structure is intended to facilitate the company’s cost-cutting “DRIVE” transformation, including “Network 2.0,” its multi-year effort to improve the efficiency with which FedEx picks up, transports, and delivers packages in the U.S. and Canada.
The change comes at a complex time for the parcel sector, when interest and inflation rates are exerting economic pressure, the freight trucking market is knee-deep in a downturn cycle, and many package carriers are keeping a wary eye on the growing last-mile delivery capability of Amazon.
In the face of those headwinds, FedEx’s founder and former CEO Fred Smith has said in recent comments that he doesn’t view Amazon as a direct competitor, and that he sees innovative ideas as the key to FedEx’s future success.
Indeed, FedEx remained the second-biggest U.S. parcel carrier by revenue in 2022, behind only UPS Inc. and ahead of the U.S. Postal Service and Amazon, according to a market analysis by shipping and mailing company Pitney Bowes Inc.
