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Aug 15, 2023

FedEx implements cost

FedEx announced on Wednesday that it is combining its air and ground operations

FedEx announced on Wednesday that it is combining its air and ground operations as the shipping company looks to cut $4 billion in costs.

The company said in a release that its plan will unite FedEx Express, FedEx Ground, FedEx Services and other FedEx operating companies into a single entity called FedEx Express Corporation. The implementation is set to be completed in June 2024.

The release also stated that FedEx Freight, the freight transportation delivery division, will remain its own company within the larger unified company.

This consolidation is expected to create a permanent $4 billion cost reduction from the surface network, air network and international, general and administrative areas in fiscal 2025.

"Over the last 50 years, we built networks that have created a differentiated and unmatched portfolio of services," FedEx Corporation President and CEO Raj Subramaniam said. "This organizational evolution reflects how we represent ourselves in the marketplace – focused on flexibility, efficiency, and intelligence."

The company previously said in September that it was acting to address rising operating costs, taking steps like closing more than 90 FedEx offices and five corporate offices, delaying new hires and operating fewer flights.

FedEx's Network 2.0 — a multi-year effort to improve its efficiency with picking up, transporting and delivering packages in the United States and Canada — is expected to generate an incremental $2 billion in savings in fiscal 2024, the release states.

The company added that it is raising its annual dividend by 10 percent to $5.04 per share in fiscal 2024.

The Associated Press contributed to this report.

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