FedEx pioneered global just-in-time supply chains, and these aircraft represent a giant step forward. Our 777Fs give FedEx customers a meaningful edge in the modern global marketplace. We can now fly directly between Asia and the United States with no refueling stops.
FedEx is the first in its industry to fly Boeing 777Fs, the world’s largest twin-engine cargo planes, nonstop across the Pacific, giving us (and our customers) an advantage it will take years for competitors to match. The idea to turn the 777 passenger plane into a freighter was first sketched on a napkin a few years ago during a meeting between FedEx Chairman, President and CEO Fred Smith and executives at Boeing.
At full capacity, the 777Fs are 18 percent more fuel efficient than the MD-11s they replace. They can fly from Shanghai to Memphis without refueling, which means we can extend our shipment cutoff times and give customers with global, just-in-time supply chains more time.
A 777F can carry nearly 14,000 more pounds of freight than the MD-11, helping handle the fast-rising volumes of traffic coming out of Asia. Under the right circumstances, FedEx would like to have at least twenty-two 777Fs in service by 2014 and another 16 by 2020.
“With the MD-11, the flight schedule was from Shanghai to Anchorage for refueling and then to Memphis,” says Li Tao, a senior ramp agent in Shanghai. “Now that we use the 777F, we have a nonstop flight from Shanghai to Memphis. The flight leaves Shanghai two hours later, so the cutoff time for our customers is also two hours later.” And in global commerce, two hours can change the game for a business.
The very first FedEx plane to take to the skies was named Wendy, after the daughter of company founder Fred Smith. That first flight in 1973 started a tradition: Every FedEx aircraft (today more than 650) is named for the child of a FedEx team member. The first Boeing 777F to fly for FedEx Express is named Saad, after the young son of New Jersey-based input auditor Kashif Zia. Here is his story.
This gives our customers later cutoffs to prepare shipments in an era when every extra minute is critical. Many companies’ strategies depend on inventory turning over at maximum speed and new goods moving directly to customers — even if they have to move all the way across the Pacific Ocean.
Under the right circumstances, FedEx would like to have at least twenty-two 777Fs in service by 2014 and another 16 by 2020. The 777Fs fly farther on less fuel, and they carry nearly 14,000 more pounds of freight than the MD-11s they replace. Put those things together, and they create a meaningful advantage for FedEx: a steep reduction in cost and emissions per unit transported.
The 777Fs are the most visible examples of how, during the worst recession in our history, we kept investing to produce real value for our customers, their customers, and for us. We also continued replacing our 727s with 757s, which have 47 percent lower fuel consumption per pound of payload, greater operational efficiencies, and lower maintenance costs. And we expanded the list of countries where we operate branded FedEx Express domestic services to include India, along with the United States, China, Canada, Mexico, and the United Kingdom.
At FedEx Ground, we continued network expansion and accelerated transit times. Since 2002, FedEx Ground has opened nine new hubs, featuring the most advanced material-handling technology. We’ve expanded and/or relocated more than 500 local facilities. What’s the payoff?
It’s a boon to FedEx, too. FedEx Ground’s average daily package volume has increased by more than 50 percent, from 2.2 million daily packages in 2003 to more than 3.5 million in FY10.
On the other hand, it was a tough year at FedEx Freight, but we have a strategy in place to turn things around. Essentially, since the economic downturn, too much less-than-truckload (LTL) capacity has been chasing too little inventory. This put downward pressure on prices and resulted in lower profits. Our focus now is to balance growth and yield. Having integrated our Freight Sales and Customer Service units with FedEx Services during FY10, we are now able to do so in more exacting and efficient ways. In addition, we’re reducing costs and improving productivity, for example, in our pickup-and-delivery and linehaul operations. Our long-term goals for FedEx Freight are to be the premier LTL provider, to be the market leader, and to be the most profitable carrier. We are confident we have the strategy, leadership, and resources in place to achieve our goals.
FedEx helped Agilent Technologies realign its supply-chain network, enhance processes and integrate shipment processing systems.
In January, we launched FedEx International DirectDistribution Ocean Solutions, which can replace a maze of shipping channels with one global distribution command-and-control center. Through this service, we can pick up shipments at factories or container yards in Asia or Europe, consolidate them, forward them by ocean transport, provide customs brokerage service in the U.S. and Canada, then handle final delivery to multiple destinations via FedEx Ground, FedEx SmartPost, FedEx Freight, or FedEx Custom Critical.
In April, we introduced FedEx Electronic Trade Documents (ETD), which lets customers submit customs documents electronically, which reduces paper usage and saves them time and money. FedEx ETD is available for shipments to 71 countries, and we plan to expand its reach as fast as possible.
FedEx Office has rolled out an alliance with Canon/HP that means deployment of more than 12,000 new state-of-the-art printing and production machines in all 1,800 U.S. FedEx Office centers over the next few years. This alliance will also open doors for new customer-facing solutions such as smart phone printing and other creative publishing solutions.
Our retail network is an increasingly important channel for express and ground shipping.
Also, FedEx Office has completed its rebranding and is now testing different store prototypes to identify the best model for the future — the one that makes it easier for customers to access what they want and for our team members to do a better job of selling our shipping and business solutions.
The entire history of our company is built around a singular vision: to make it possible for people and businesses to connect and collaborate with each other, no matter where they are in the world.
We know from years of research and inquiry that Access has the power to change millions of lives for the better. We work constantly to expand Access. Every year, we do that more responsibly and resourcefully, and FY10 was no exception. In this regard, we continue to promote the great advantages of open global markets to political leaders and the public.