Celebrating 50 years. Driving what’s next.
To our FedEx stockholders,
This year, FedEx marked 50 years of transforming the world by connecting people and possibilities. While a great deal has changed over the years, one thing that remains constant is our unwavering commitment to our customers and communities.
We celebrated our 50th anniversary by giving back across the globe, with our team members volunteering in the communities they serve every day.
Doing good is a core value of FedEx, and one that inspired our team to achieve another major milestone — exceeding our FedEx Cares 50 by 50 goal of helping 50 million people by our 50th birthday.
I am proud that our team is committed to delivering good in the world — and to building a stronger, smarter FedEx for the next 50 years and beyond. From day one, we changed the world with express overnight delivery. Now, we are changing it again, as we build the most flexible, efficient, and intelligent network.
Despite a challenging demand environment in FY23, we took action to deliver on this strategy in a powerful way — by strengthening our enterprise and continuing to put our customers at the heart of everything we do.
We focused on optimizing our network, aligning costs to volume levels, and harnessing the power of our digital intelligence to drive what’s next and deliver greater value to our customers and stockholders.
Making momentum with DRIVE
In early FY23, we launched DRIVE, our enterprise transformation, to enhance network efficiency, improve service, cut costs, and strengthen our performance culture. DRIVE has gained significant momentum, and we expect to realize $4 billion in permanent and structural cost savings in FY25. In addition, we expect an incremental $2 billion of savings in FY27 as we realize the full benefits of Network 2.0.
Our FY23 results demonstrated our resolute commitment to transform our business into a more nimble, efficient, and profitable network. We successfully reduced costs on an annual basis by more than $2 billion, laying a strong foundation to execute on DRIVE in FY24.
DRIVE is the most extensive undertaking in our company’s history and unprecedented in scale. Through a meticulous, bottom-up view of our organization over the last several months, we have established 14 DRIVE domains. Each domain is led by an executive sponsor who reports to me to ensure we meet our target cost and efficiency improvements.
This effort is not only to identify opportunities to transform our business, but also to understand how we do business. DRIVE requires us to work differently through a more technology-enabled, data-driven approach, as we build the smartest logistics network in the world.
As just one example, machine learnings and key insights are driving our dock modernization efforts at FedEx Ground, helping us run our docks smarter with more detailed and accurate volume forecasts. For the first time in company history, the FedEx Ground team expanded margins this fiscal year despite lower volumes. This is a clear indication our transformation is working and gives us confidence as we push forward.
In addition, we made excellent progress implementing structural cost savings at FedEx Express, including domestic efficiency initiatives. This includes the shift to a single daily dispatch of couriers, which achieved its target of $50 million in fourth quarter savings, as well as accelerated hub productivity measures.
Our DRIVE savings are starting to materially impact our financial outcomes. We have significant margin expansion opportunities as we lower our cost base and maintain our focus on revenue quality. This is empowering us to deliver value to our stockholders today, as we transform for tomorrow.
One team. One vision.
FedEx has continuously evolved to meet the needs of our customers and the market. This relentless pursuit of improvement is a hallmark of our company and key to our future. In April, we announced an exciting new evolution and the next milestone for FedEx — bringing the enterprise together as one FedEx.
With a phased approach planned for June 2024, we will streamline our operating companies into one unified organization. This move will leverage the strengths of our networks, people, and assets in new ways as we build the world’s smartest logistics network.
We will create more flexibility in our networks, simplify our processes, and expand our unmatched digital intelligence — all to make supply chains smarter for everyone.
A streamlined structure will facilitate a distinct focus on air and international volume, a more holistic approach to how we move packages on the ground, and enhanced visibility into the performance of our network with seamless interoperability. In turn, this will lower our cost to serve, improve capital efficiency, and strengthen enterprise collaboration in support of DRIVE and Network 2.0.
As we continue to harness the power of one FedEx, we will unlock significant value for our stockholders, serve our customers with excellence, and support our people into the future.
To the future: one FedEx
I am energized by the exciting path ahead of us as we enter FY24 with momentum and a shared determination to build a stronger, nimbler FedEx. While we will continue to evolve, our Purple Promise — to make every FedEx experience outstanding — remains constant.
Our long-term strategy is focused on amplifying our fundamental strengths —entrepreneurial spirit, legacy of digital innovation, and iconic culture — to deliver for our customers and drive profitable growth now and into the future.
In our entire existence, FedEx has never waited on change. We create it. And this is the spirit we will bring to transforming the world for another half century and beyond. I am immensely proud of what we delivered over the last 50 years, and I look forward to how we will drive what’s next as one FedEx.
Sincerely,
RAJ SUBRAMANIAM
President & CEO, FedEx Corporation
See “Forward-Looking Statements” and “Risk Factors” on pages 25-38 of the FY23 FedEx Corporation Annual Report on Form 10-K for a discussion of potential risks and uncertainties that could materially affect our future performance.