FedEx Considers The Future

FedEx is ripping up founder Fred Smith’s well-worn playbook as it rethinks virtually the entire business. That could mean the end of FedEx drivers as we know them.

The courier’s vast and complex system of overlapping delivery networks will be simplified with the integration of its two largest business lines in the most sweeping restructuring in its 50-year history. Chief Executive Officer Raj Subramaniam, who took over for Smith less than a year ago, calls it “a more holistic approach to how we move packages” that will help the company save $6 billion by 2027.

The overhaul centers on a merger between its Ground unit, which uses non-employee contractors to move parcels, and its Express division, which hires only staff drivers. FedEx didn’t offer many specifics on the integration plans or implications, aside from telling investors last week that it would use a “hybrid” of the employee and contractor models.

With volume expected to migrate to the lower-cost Ground unit, experts predict the company will lean more toward contractors — and potentially do away with staff drivers entirely.

Source: Bloomberg