Executive Briefings

Fuel Costs Force FedEx to Reconsider Its Business Model

While harboring hopes the U.S. economy will turn around and fuel prices will start to level off, FedEx is positioning itself for what company officials say is an altered industry landscape.
Frederick W. Smith, FedEx chairman, president and chief executive officer, said in the wake of the company's first quarterly loss in several years that FedEx is rethinking its foundation express operations and even the way it gears up for international traffic.
"FedEx Express has not bought a unit of capacity for the domestic express business in years and years and years," Smith says.
Instead, Smith says, the world's largest air express operator is looking at a new era of air shipping that includes still lighter reliance on aircraft for shorter hauls and a focus on fitting the domestic network into a global supply chain.
That is where increasingly savvy customers, he says, are cutting back on premium services and streamlining.
"The network in the United States has been expanded basically to move inland international traffic," Smith says. "Increasingly in the international market the movement of goods by air will be in smaller lots and door-to-door express movements rather than in the large consolidations that marked the industry structure several years ago."
Source: Air Cargo World, http://www.aircargoworld.com

While harboring hopes the U.S. economy will turn around and fuel prices will start to level off, FedEx is positioning itself for what company officials say is an altered industry landscape.
Frederick W. Smith, FedEx chairman, president and chief executive officer, said in the wake of the company's first quarterly loss in several years that FedEx is rethinking its foundation express operations and even the way it gears up for international traffic.
"FedEx Express has not bought a unit of capacity for the domestic express business in years and years and years," Smith says.
Instead, Smith says, the world's largest air express operator is looking at a new era of air shipping that includes still lighter reliance on aircraft for shorter hauls and a focus on fitting the domestic network into a global supply chain.
That is where increasingly savvy customers, he says, are cutting back on premium services and streamlining.
"The network in the United States has been expanded basically to move inland international traffic," Smith says. "Increasingly in the international market the movement of goods by air will be in smaller lots and door-to-door express movements rather than in the large consolidations that marked the industry structure several years ago."
Source: Air Cargo World, http://www.aircargoworld.com