As eCommerce Slows, FedEx Says It Will Rely on Efficiency

Top FedEx executives have laid out plans for helping the company recover over the next few years from the post-pandemic decline in online commerce, The Wall Street Journal (WSJ) reported Wednesday (June 28).

“We have dealt with economic crises before,” CEO Raj Subramaniam said at the meeting, per the report. “Cycles come and go. To be very clear, we are not assuming a deep economic recession. If the economy slows down to a mild recession, we can manage through it.”

Subramaniam took over the company’s top job from Founder Fred Smith June 1.

Increasing efficiency will be important over the next few years, Subramaniam said in the report, listing as one step the co-location of some Round and Express sorting facilities. Another likely change, he said, is having FedEx Ground handle more packages that now are handled by FedEx Express.

Prior to the meeting, FedEx issued a news release quoting Subramaniam as saying: “Our strategy is focused on driving yields, expanding margins, and elevating returns through profitable growth and capital efficiency.”

The report noted that FedEx executives used the phrase “revenue quality” more than a dozen times during the presentations and highlighted the importance of the most profit-generating customers. That included focusing on customers that use premium services, said Chief Customer Officer Brie Carere, per the report.

“There is a large amount of very price-sensitive, lightweight small businesses,” she said in the report. “That’s not who we’re targeting.”

During a June 23 call with investors, Subramaniam said he did not foresee a major recession occurring anytime soon.

Read more: FedEx Sees eCommerce Leading Growth

In a video presentation Wednesday (June 29), FedEx Founder Fred Smith, who is the company’s executive chairman, said the six of FedEx’s networks are one of its strengths. FedEx’s rivals include Amazon, which is building is own delivery network. Smith said Amazon.com “is not a peer network competitor.”