Chairman’s Letter

Putting our networks to work: How FedEx multiplies opportunities across the world

To connect is a basic human impulse. The more connections we make — at home, at work, in our communities — the better our lives become. The networks we create with others broaden our thinking.

Similarly, with our mission to connect people and possibilities, FedEx has created vast global networks that power the world’s economy. Everywhere FedEx operates, we put our size, scale, and connections to use for good — multiplying positive outcomes for people, businesses, and the environment. Essentially, the FedEx “multiplier effect” creates more value for society at large.

Multiplying economic growth

We stimulate global economic growth in several ways.

We empower entrepreneurship. Each year, FedEx awards small-business grants through a small business contest. The 2018 grand prize winner, Rumi Spice, partners with more than 300 farmers and nearly 2,000 women harvesters in rural Afghanistan to source sustainably farmed saffron. The company was founded by two former U.S. Army officers who wanted to catalyze rural economic development in the country and empower women through direct wages. FedEx services help these entrepreneurs reach markets far and wide.

We generate jobs. Besides the more than 450,000 team members around the world, we also spur job growth in our communities. For example, FedEx Ground, FedEx Express, FedEx Freight, and FedEx Custom Critical rely on independent businesses for certain types of pickup-and-delivery, linehaul transportation, and other services. Our contracts with them support small businesses and local economies, employing tens of thousands of people worldwide. During FY18, we procured $9.6 billion in goods and services from diverse and small-business suppliers in the U.S. alone. Of that amount, 9 percent was spent with women-owned businesses and 15 percent with minority-owned businesses, with the remaining 76 percent spent with other small business suppliers.

We foster e-commerce. While the business-to-business market is much larger, the business-to-consumer e-commerce market is growing faster. We’ve expanded our retail networks to give our customers even more locations to pick up, ship packages, or have them held. Currently they can do that at 12,000 convenient, secure retail locations such as Walgreens and Walmart stores. As a result, 80 percent of the U.S. population is within five miles of a FedEx hold location. Our growing retail network also positions us to play a key role in reverse logistics by enabling our business customers to restore, refurbish, or reuse returned products.

We advocate for global trade. We support ambitious trade agendas that provide opportunities for our customers, our team members, and FedEx. This includes supporting policies in the U.S. and overseas that strengthen the future of the world marketplace. We advocate for greater customs clearance efficiency around the globe, and we urge trade facilitation policies that reduce administrative costs. This especially helps small and medium-sized companies, which are most disadvantaged by complicated and costly customs procedures.

Multiplying good for our communities and team members

It’s important to our customers and to FedEx that we effect positive change in the world. We do that through a corporate social responsibility strategy that includes:

  • The FedEx Cares giving and volunteering platform
  • “Safety Above All” focus throughout FedEx
  • Career development and opportunity programs for team members
  • Efficient, sustainable operations and services

In FY16, we committed to give $200 million to 200 communities by 2020. As of the end of FY18, we’re ahead of plan for number of communities (now 252) and on track to meet our total contribution goal early. This past fiscal year, we gave $55.1 million in corporate charitable contributions, $8.98 million in team member United Way contributions, and 81,976 volunteer hours contributed by more than 13,000 team members.

As noted, we put safety first in the air, on the roads, and everywhere we operate. We source the most up-to-date safety technology for our transportation equipment, facilities, and yards. For example, we’re testing platooning in our highway trucks, which allows tractors with drivers to follow each other in a safe, controlled manner through vehicle-to-vehicle communication and safety features such as collision mitigation. At FedEx Ground, we’re piloting virtual reality training modules to improve safety techniques related to dock behavior and large package lifting. Our FedEx Express Indianapolis hub now offers a slip-and-fall simulator to enable team members to experience real-life dangers in a safe environment. We set the highest standards for safety training throughout FedEx.

While we work to provide the safest workplaces for our team members, we are also broadening their career and education opportunities. That’s part of our People-Service-Profit philosophy, the bedrock of FedEx since day one. In FY18 we provided our people more than 24,000 online courses and $11.4 million in tuition assistance. Here are a few more workforce development examples from FY18:

  • As a global company, FedEx values the talent and perspectives of team members everywhere. A far-reaching cultural initiative is underway at FedEx Express which includes a cross-cultural, multinational network of team members empowered to support the continued integration of TNT and build an inclusive culture in all countries afterwards, based on FedEx values.
  • At FedEx Office, a new Diversity and Inclusion website updated interview guides and orientation materials to reflect the company’s inclusive philosophy.
  • We committed $2.5 million to create the FedEx Purple Runway Aviation Scholarship program to educate aspiring pilots, aircraft maintenance technicians, and other aviation professionals. Purple Runway will help FedEx train our pilots of the future.
  • We partnered with the University of Memphis to provide FedEx Express team members in the Memphis, Indianapolis, Oakland, Los Angeles, and Newark facilities the chance to earn a tuition-free online degree.
  • The FedEx Services Internship Program now has more than 50 percent minorities. This past fiscal year, the program received about 16,000 applications (up 2,000 from last year) to fill 170 summer intern positions. We typically hire around 70 percent of the selected interns for full-time employment.

Not only do we motivate our team to excel, we also recognize them when they do. Company-wide team members received almost 48,400 awards in FY18. More than 50 of those were to team members who showed selfless courage responding to those in need, particularly in life-threatening situations.

Multiplying efficiency and sustainability

At FedEx, we operate responsibly, efficiently, and sustainably. To these ends, we developed our “Reduce, Replace, Revolutionize” approach to FedEx aircraft, vehicles, facilities, and materials. The program focuses on improving productivity while creating new, more efficient solutions.

From FY09 through FY18, we’ve decreased CO₂ emissions intensity (on a revenue basis) by about 37 percent. Last fiscal year alone, we avoided 2.7 million metric tons of CO₂e emissions from fuel- and energy-saving initiatives throughout our operations. That’s equivalent to the carbon kept out of the atmosphere by more than 3 million acres of U.S. forests in one year. We’re realizing aircraft-efficiency benefits from fleet modernization and fuel conservation programs that saved more than 200 million gallons of jet fuel and avoided almost 2 million metric tons of CO₂e emissions in FY18. Last year we ordered an additional 12 Boeing 777 Freighters and 12 Boeing 767 Freighters, which are much more fuel efficient than the aircraft they will replace.

FedEx Express is working to improve vehicle fuel efficiency 50 percent by 2025 from a 2005 baseline. As of FY18, the operating unit has achieved nearly 40 percent improvement. In November 2018, we announced we will expand our vehicle fleet by adding 1,000 Chanje V8100 electric vehicles (EVs). These will be operated for commercial and residential pickup-and-delivery in California. The EVs can travel more than 150 miles when fully charged and will save 2,000 gallons of fuel while avoiding 20 metric tons of emissions per vehicle each year.

We’ve also made great strides converting to sustainable materials. In FY18, almost 100 percent of all paper bought by FedEx Office was third-party certified. As such, 88 percent of that was Forest Stewardship Council certified. More than half of FedEx-branded packaging was made from recycled content in FY18 with all FedEx packaging being recyclable.

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By continuing to connect more people and possibilities while giving back to our communities and our planet, FedEx will ensure that its multiplier effect benefits the world. This report gives a summary of what we accomplished in FY18, and a preview of the great things yet to come for FedEx and the billions of people we serve.

Frederic W. Smith

Frederick W. Smith
Chairman and CEO

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