FedEx Express

A former Federal Express Boeing 747-200F. Federal Express inherited Boeing 747-200s from the Flying Tiger Line after its merger. The 747s were to be retired by 1996.

The concept for what became Federal Express came to Fred Smith in the mid-1960s, while an undergraduate student at Yale.[14][15] For an economics class, he submitted a paper which argued that in modern technological society time meant money more than ever before and with the advent of miniaturized electronic circuitry, very small components had become extremely valuable. He argued that the consumer society was becoming increasingly hungry for mass-produced electronic items, but the decentralizing effect induced by these very devices gave manufacturers tremendous logistic problems in delivering the items. Smith felt that the necessary delivery speed could only be achieved by using air transport. But he believed that the U.S. air cargo system was so inflexible and bound by regulations at that time that it was completely incapable of making sufficiently fast deliveries.[14] Plus, the U.S. air cargo industry was highly unsuited to the role. Its system depended on cooperation between companies, as interlining was often necessary to get a consignment from point A to point B, and the industry relied heavily on cargo forwarders to fill hold space and perform doorstep deliveries.

In his paper, Smith proposed a new concept—have one carrier be responsible for a piece of cargo from local pick-up right through to ultimate delivery, operating its own aircraft, depots, posting stations, and delivery vans. To ensure accurate sorting and dispatching of every item of freight, the carrier would fly it from all of its pickup stations to a central clearinghouse, from where the entire operation would be controlled. For years it has been misreported that the professor teaching the course gave the paper the grade of "C",[14] but Fred clarified in a 2004 interview that the grade is not known and the reports of a "C" grade were due to his response to a reporter who asked him what grade he received and his reply was, "I don't know, probably made my usual C."[15][16] Despite the professor's opinion, Smith held on to the idea.[17]

Smith founded Federal Express Corporation in 1971 with $4 million from his inheritance and $91 million in venture capital.[18] in Little Rock, Arkansas,[19] where Smith was operating Little Rock Airmotive. After a lack of support from Little Rock National Airport, Smith moved the company to Memphis, Tennessee and Memphis International Airport in 1973.[20]

First FedEx Express aircraft, a Dassault Falcon 20 named Wendy, on display at Steven F. Udvar-Hazy Center.

The company started overnight operations on April 17, 1973, with fourteen Dassault Falcon 20s that connected twenty-five cities in the United States.[20] Fred Smith's childhood friend, John Fry of Ardent Studios, sent Ardent partner Terry Manning to the Federal Express home office on Democrat Road near the Memphis Airport with the first package to be put into the system. That night, 186 packages were carried.[20] Services included both overnight and two-day package and envelope delivery services, as well as Courier Pak. Federal Express began to market itself as "the freight service company with 550-mile-per-hour delivery trucks". However, the company began to experience financial difficulties, losing up to a million USD a month. While waiting for a flight home to Memphis from Chicago after being turned down for capital by General Dynamics, Smith impulsively hopped a flight to Las Vegas, where he won $27,000 playing blackjack. The winnings enabled the cash-strapped company to meet payroll the following Monday. "The $27,000 wasn’t decisive, but it was an omen that things would get better," Smith says.[21] In the end, he raised somewhere between $50 and $70 million, from twenty of the USA's leading risk venture speculators, including such companies as the First National City Bank of New York and the Bank of America in California. At the time, Federal Express was the most highly financed new company in U.S. history, in terms of venture capital.[17]

Federal Express installed its first drop box in 1975 which allowed customers to drop off packages without going to a company local branch.[20] In 1976, the company became profitable with an average volume of 19,000 parcels per day.

A McDonnell Douglas MD-11 pictured at Narita Airport in 1995, wearing the old Federal Express livery which was used until 1994

FedEx Tyvek envelope for express mail

A 1977 legislative change (Public Law 95-163) removed restrictions on the routes operated by all-cargo airlines, and enabled Federal Express to purchase its first large aircraft: seven Boeing 727-100s.[20] In 1978, the company went public and was listed on The New York Stock Exchange.[20] The following year, it became the first shipping company to use a computer to manage packages when it launched "COSMOS" (Customers, Operations and Services Master Online System), a centralized computer system to manage people, packages, vehicles, and weather scenarios in real time. In 1980, the company implemented "DADS" (Digitally Assisted Dispatch System) to coordinate on-call pickups for customers; this system allows customers to schedule pickups for the same day.[20]

In 1980, Federal Express began service to a further 90 cities in the United States. The following year, the company introduced its overnight letter to compete with the U.S. Postal Service's Express Mail, and allowed document shipping for the first time. Later in 1981, it started international operations with service to Canada, and officially opened its "SuperHub" at the Memphis International Airport.[22]

First FedEx van on display at the world headquarters complex in Memphis, Tennessee

Federal Express' sales topped $1 billion for the first time in 1983.[21] In the same, year the company introduced ZapMail, a fax service that guaranteed the delivery of up to five pages in less than two hours for $35. ZapMail would later become a huge failure for the company, costing it hundreds of millions of dollars.[23]

In the 70's, with the enormous growth, FedEx needed a method for quality control. They developed the tracking number for internal use to find that packages were moving properly.[24] This info was eventually applied to all packages and be made available to the public to find the status of one's own package. In 1986, the company introduced the "SuperTracker", a hand-held bar code scanner which brought parcel tracking to the shipping industry for the first time.[22] Federal Express continued its rapid expansion in the late 1980s, and opened its hub at Newark Liberty International Airport in 1986 and at Indianapolis International Airport and Oakland International Airport in 1988.[22] In 1989, the company acquired Flying Tiger Line to expand its international service, and subsequently opened a hub at Ted Stevens Anchorage International Airport to accommodate this new, expanded service.[22] As the volume of international shipments increased, Federal Express created Clear Electronic Customs Clearance System to expedite regulatory clearance while cargo is en route.[19]

A FedEx Express delivery truck, showing the dual branding, both "FedEx" and "Federal Express" that the company used from 1994 to 2000

In 1994, Federal Express rebranded itself as "FedEx" for marketing purposes, officially adopting a nickname that had been used for years. Also that year, FedEx launched fedex.com as the first transportation web site to offer online package tracking, which allowed customers to conduct business via Internet. In 1995, the company acquired air routes from Evergreen International to start services to China, and opened an Asia and Pacific hub in Subic Bay International Airport in the Philippines. In 1997, FedEx opened its hub at Fort Worth Alliance Airport and, in 1999, opened a European hub at Charles de Gaulle Airport in France.[20]

In 1998, FedEx merged with Caliber System and reorganized as a holding company, FDX Corporation. In 2000, FDX changed its name to FedEx Corporation and standardized the names of its subsidiaries around the "FedEx" brand. The original "Federal Express" cargo airline changed its name to "FedEx Express" to distinguish its express shipping service from others offered by the FedEx parent company.[20]

In 2001, FedEx Express signed a 7-year sole source contract to transport all Express Mail and Priority Mail for the United States Postal Service. Prior to 2001, the Postal Service contracted with multiple airlines on a regional basis for these services. This contract allowed FedEx to place drop boxes at every USPS post office. In 2007, the contract was extended until September 2013. In 2013, FedEx Express won a new 7-year contract for the services ending in 2020, beating out UPS which launched a competitive bid. In 2017, the Postal Service extended the 2013 contract to 2024. The USPS continues to be the largest customer of FedEx Express.[25]

In December 2006, FedEx Express acquired the British courier company ANC Holdings Limited for £120 million.[26] The acquisition added 35 sort facilities to the FedEx network and the company introduced Newark, Memphis, and Indianapolis routes directly to UK airports instead of stopping at FedEx's European hub at Charles de Gaulle Airport.[27] In September 2007, ANC was rebranded as FedEx UK. FedEx Express also acquired Flying-Cargo Hungary Kft to expand service in Eastern Europe.[19]

A DC-10-30F in its first inaugural flight to San Jose International Airport.

A former Airbus A310-200 on approach to San José

The late-2000s recession hit parent company FedEx Corporation and its express division hard. Many companies looking for ways to save money stopped shipping or moved to cheaper alternatives, such as surface shipping. FedEx Corporation announced large network capacity reductions at FedEx Express, including retiring some of its oldest and least efficient aircraft such as the McDonnell Douglas DC-10 and the Airbus A310. FedEx also announced layoffs and work hour reductions at some of its hubs.[28]

In December 2008, FedEx postponed delivery of the new Boeing 777 Freighter; four were delivered in 2010 as previously agreed, but in 2011, FedEx only took delivery of four, rather than the ten originally planned. The remaining aircraft were delivered in 2012 and 2013.[29]

FedEx Express closed a hub for the first time in its history, when operations at its Asian-Pacific hub at Subic Bay International Airport in the Philippines ceased on February 6, 2009.[30] The operations were transferred to Guangzhou Baiyun International Airport in southern China.[31][32] FedEx Express had planned to open the new Chinese hub in December 2008, but in November 2008, the company delayed the opening until early 2009, citing the need to fully test the new hub.

On June 2, 2009, FedEx opened the new hub building at Piedmont Triad International Airport in Greensboro, North Carolina. FedEx announced in December 2008 that it still intended to open the building on time despite the bad economy. The hub's operations would be scaled back from 1,500 employees to only 160, the size of the previous operations at the much smaller sorting facility. FedEx gave no time line as to when the hub would be operating at expected hub levels. The hub had been delayed many years since FedEx first picked the airport to be its Mid-Atlantic U.S. hub back in 1998. FedEx had to fight many complaints from nearby homeowners about the anticipated noise generated by its aircraft, because most of its flights take place at night. A third runway was built to accommodate the hub operation and the extra aircraft.[33] FedEx began full hub operations at the Greensboro facility September 2, 2018.

On October 27, 2010, FedEx opened its Central and Eastern European hub at Cologne Bonn Airport. The hub features a fully automated sorting system that can process up to 18,000 packages per hour. The roof of the hub features FedEx's largest solar power installation, producing 800,000 kilowatt hours per year.[34]

On December 7, 2018, the company announced the retirement of David Cunningham on December 31, 2018. He will be succeeded as CEO and president by Executive Vice President Rajesh Subramaniam, who had been with FedEx for more than 27 years and held various executive level positions.[35][36]

Navistar eStar all-electric van in Los Angeles in 2010. The EV was manufactured in the U.S. under license from Modec.[62]

In 2003, FedEx Express introduced hybrid electric/diesel trucks into its fleet. At the time, the company had hoped to replace its entire 30,000 W700 delivery truck fleet with the hybrid, but in June 2009, only 170[63] were on the road. 93 of these operated in the United States in New York, Tampa, Sacramento, and Washington, D.C.; while the rest operated in Tokyo, Toronto, and Turin.[64] FedEx blamed the low number on a lack of investment from other major companies in hybrid technology. It had hoped that other companies would order hybrid trucks, and that tax credits would be issued by the United States government to reduce the cost.[65]

FedEx claimed that the hybrid truck in the 2003 test decreased soot by 96% and emissions by 65%. It also claimed that the truck achieved more than 50% better fuel consumption while still having the same cargo capacity as a conventional truck.[64]

In 2009, FedEx Express partnered with Iveco and started a new test program of hybrid electric/diesel vans. The test program consisted of ten hybrid vans deployed in the Italian cities of Milan and Turin. FedEx claimed the new vans would have a 26.5% reduction in fuel consumption and a decrease in carbon dioxide emissions of 7.5 tons when compared to FedEx's standard vehicle. The trial was set to conclude in May 2010 and FedEx would then evaluate if the vans should be deployed on a larger scale.[63]

In July 2009, FedEx Express partnered with Freightliner and Eaton Corporation to convert 92 delivery trucks into hybrids. The conversions boosted FedEx's fleet of hybrid-electric vehicles by more than 50 percent to 264. The trucks were placed into service in California, in Los Angeles, San Diego and San Francisco.[66]

In November 2009, FedEx Express purchased 51 gasoline-electric hybrid vehicles from Azure Dynamics, to be put into service in The Bronx, New York City. The Bronx became FedEx's first all hybrid station. The addition would bring FedEx Express’ fleet of hybrid electric and electric vehicles to 325.[67]

A former Boeing 727-200 in Portland, Maine

FedEx Express has set a goal of getting 30 percent of its jet fuel from petroleum alternatives by 2030.[68]

FedEx phased out its last Boeing 727s in 2013 replacing them with Boeing 757s; the airline says the 757s are 47 percent more fuel-efficient. FedEx will eventually switch from MD-11s to Boeing 777s for its long-range, international routes, freeing up the MD-11 fleet to fly shorter routes currently flown by the DC-10.[68]