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In a letter to shareholders that explains recent decisions made by the company, FedEx CEO Fred Smith discussed the challenges and changes faced by the business this fiscal year.

The letter touches on trade disputes, e-commerce growth, the COVID-19 pandemic, fleet modernisation, and FedEx's decision not to renew its biggest contracts with Amazon.

On global trade disputes—many of them driven by the Trump administration—Smith said the company was most adversely affected in Europe, where integration efforts with TNT are still ongoing.

The letter also highlighted the impact of the coronavirus, but Smith said that the “peerless” adaptability of the FedEx network had allowed volume to keep moving and facilitated many humanitarian and emergency shipments around the world.

FedEx van crossing bridge
Credit: VanveenJF

The Amazon decision, according to Smith, related to FedEx's new strategic focus on e-commerce markets and the declining profitability of its partnership with Amazon—though last year FedEx also finally acknowledged Amazon as a market rival. Smith spoke of FedEx Ground's new commitment to making residential deliveries seven days a week and improved last-mile delivery and large item handling.

FedEx continues to retire some of its older, more inefficient aircraft, replacing them with more fuel-efficient Boeings, as well as investing in more modern hubs that will also improve efficiency over time.

In 2020, Smith said, despite unforeseeable events, “the world accelerated to meet our existing strategy”. Previously predicted e-commerce growth over the next few years has accelerated, underscoring the importance of FedEx's investments in last-mile deliveries and technological developments.

Smith emphasised the importance of data and tracking to its future endeavours, and greater visibility and reliability of supply chain processes, including the adoption of blockchain technology.

Source: FedEx

Header image: Jaymantri

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