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FedEx consolidation is on track for next year

FedEx consolidation is on track for next year
FedEx consolidation is on track for next year

It’s been over six months since FedEx announced plans to consolidate its operating companies. FedEx DRIVE is on track to be fully phased in by the middle of next year. It’s expected to have significant implications, especially for the parcel delivery market and FedEx customers. 

Essentially, it will mean the operating companies will merge into one organization to “build a stronger, more profitable enterprise.”

The consolidation will bring FedEx Express, FedEx Ground, FedEx Services, and other FedEx operating companies into Federal Express Corporation. It will become a single company operating a unified, fully integrated air-ground network under the FedEx brand.

“DRIVE is also enabling the implementation of Network 2.0, which is expected to generate an incremental $2 billion of savings in fiscal 2027,” reads a statement. 

Why the consolidation

FedEx Express numbers have been declining, but with the consolidation, it’s hoping to lower the costs. The network consolidation is only expected to be fully implemented from next year, but the impact can already be seen on FedEx customers and their shipments. 

FedEx believes the unified organization will bring focus to the air network and international volume. It will also bring a more holistic approach to operations on the ground, utilizing both FedEx employees and contracted service providers.

DRIVE implementation progress 

The DRIVE transformation will affect 14 domains across four major areas: customer, surface network, air network and international, as well as general and administrative.

It’s expected to generate $4 billion of permanent cost reduction in 2025. 

Reaction from expert

Logistics expert and owner of Shippingwise Nicholas Fanelli says any major hiccups by FedEx will flood volume into the market, affecting even non-FedEx customers’ service levels and negotiation leverage. “The risk here is delivery performance. Capacity constraints and Express packages being delivered by Ground contractors will affect service levels,” he says on LinkedIn. 

Fanelli encourages shippers to familiarize themselves more with this initiative. “FedEx Express is also reducing routes, aircraft, and crew, which is already making an impact as per their most recent earnings report.”

Revenue and increases

FedEx has increased its prices by more than 5.9% for 2024. Customers will have to fork out more for domestic exports and import services in January. FedEx Freight shipping rates will also hike by up to 6.9%. Anyone sending a parcel in the US will be impacted. 

The US-based company says the price adjustment will help it invest in enhancement, fleet management, and other customer service areas.”

About the author

Mia is a multi-award-winning journalist. She has more than 14 years of experience in mainstream media. She's covered many historic moments that happened in Africa and internationally. She has a strong focus on human interest stories, to bring her readers and viewers closer to the topics at hand.

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