FedEx Announces Major Company Consolidation for June 2024

After announcing in April 2023 that FedEx will consolidate all its operating companies into a single organization effective June 2024, CEO Raj Subramanian provided further details about the initiative at Bernstein’s 40th Annual Strategic Decisions Conference this week.

As previously reported by LM, FedEx described this consolidation as a phased transition that will subsequently bring nearly all of its operating companies—FedEx Express, FedEx Ground, FedEx Services, as well as other FedEx operating companies—into Federal Express Corporation, and transition into what it called a single company operating a unified, fully integrated air-ground network. It also noted that its less-than-truckload subsidiary, FedEx Freight, will remain a standalone operation within Federal Express Corporation.

Subramanian previously said that this combination will allow FedEx to provide customers with even greater value, offering the most advanced data-driven insights to help them make smarter decisions for their business.

What’s more, FedEx said that this consolidation will play a key role in facilitating the company’s DRIVE initiative, which includes Network 2.0, a years-long effort focusing on operational efficiency, in which the company picks up, transports, and delivers packages in the U.S. and Canada. Another benefit of the consolidation, it cited, is to “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.”

In his comments at the Bernstein conference, Subramanian explained that as the company has grown its respective businesses over time, the company’s customers “have embraced the bundled offering,” with almost 80% of its U.S. revenue generated from its Express, Ground, and Freight offerings.

“We run our business to better align with market demand and operate more efficiently,” explained Subramanian. “And this is the reason why in April 2023, just over a year ago, we announced a multiyear strategy to unify our businesses and create the world's most flexible efficient, and intelligent network. And one important pillar of that transformation is what we call Network 2.0. It is the network of the future, where we are combining our Express and Ground networks in the U.S. and Canada. And the best way to think of Network 2.0 is one truck, one label. We’ve spent the past several years updating our technology and facilities to prepare, and we are now in the execution phase. We have already implemented Network 2.0 in over 50 locations with dozens more to follow this calendar year. And as we have stated previously, we're targeting a $2 billion in cost savings in FY '27.”

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