FedEx Faces Obstacles on Its Way to Look More Like UPS
Unifying its Ground and Express networks is the right move, but turnover among contractor drivers and the inefficient handoff of packages are serious challenges.
FedEx needs its contractors, but it also needs to address their structural deficiencies.
Photographer: Angus Mordant/Bloomberg
FedEx Corp.’s Chief Executive Officer Raj Subramaniam seems to be making all the right moves in his push to transform the courier after taking over from founder Fred Smith about two years ago. He has promised to add $6 billion to profit by May 2027 through broad cost cuts and the combination of the company’s two distinct delivery networks. Subramaniam also excited investors by announcing a strategic review of the freight unit, which could result in a spinoff worth $30 billion or more.
FedEx’s shares have jumped 13% this year as of Tuesday’s close even as parcel demand weakens. Rival United Parcel Service Inc. has dropped 21% as it struggles with a costly union labor contract.