Chairman’s Letter

The FedEx multiplier effect: How we deliver more opportunities for everyone

“Going viral” is a common phrase today — describing the phenomenon of a photo, tweet, or link swelling through the internet with great speed and huge viewership.

Perhaps FedEx was one of the first companies to go viral. We established such a fast and broad network — both physical and digital — that we have multiplied the benefits of our size and scale for individuals and organizations around the world. In fact, today we connect 99 percent of the global GDP.

Our strong financial performance over the past few years gives us the resources to make sure the FedEx “multiplier effect” continues to expand the horizons of businesses, communities, and the environment.

Multiplying growth for business and society

We stand at the nexus of world trade and support its ability to create jobs and foster prosperity for countries and cultures everywhere. After all, 95 percent of consumers live outside the U.S., and we serve virtually all of them.

We firmly support global trade and consider all our more than 425,000 FedEx jobs to be trade jobs. We know how important trade is to businesses small and large. For example, a small business called Nurdle in the Rough transforms ocean plastic pollution into beautiful jewelry. It relies on FedEx to deliver the items to customers worldwide and broaden the company’s participation in global trade, all while providing a social good. Small businesses grow when they connect to the world.

Our strong financial performance over the past few years gives us the resources to make sure the FedEx ‘multiplier effect’ continues to expand the horizons of businesses, communities, the environment, and people.

Frederick W. Smith Chairman and CEO

As e-commerce continues to expand around the world, FedEx collaborates with retailers such as Walgreens in the U.S. and 7-Eleven in Asia to make it easier for customers to pick up and ship packages. In America, 80 percent of citizens live within five miles of FedEx hold locations such as grocery and drug stores as well as FedEx Express and FedEx Office facilities. We continue to explore new delivery models, technologies, aircraft, and vehicles to better serve customers’ needs as they travel the world’s physical and digital pathways.

As long-time navigators of urban landscapes everywhere, we are working with the World Resources Institute to share our transportation expertise with major cities in Brazil and India on such topics as bus electrification and route optimization that get people to school and jobs with greater efficiency, less environmental impact, and increased safety.

Of course, in our mission to connect people and possibilities, we believe in contributing resources directly. In fiscal year 2016 we committed to giving $200 million to 200 communities by 2020 as part of our FedEx Cares global giving initiative. As of the end of FY17 we have made great progress: $101.66 million in cash grants to a total of 134 communities. We’re well on our way to achieving our goal.

We also faced one of the most challenging years in our history in terms of natural disasters. With four major incidents in the span of one month in 2017, FedEx pledged $3 million in cash and transportation to victims of hurricanes and earthquakes, delivering water treatment systems, blankets, clean-up kits and other supplies. In addition, our charitable shipping program donated space for more than 4.5 million pounds of goods, totaling 79,000 shipments.

Multiplying efficiency efforts

Transportation fuel represents 92 percent of our emissions footprint, and with our Reduce, Replace and Revolutionize approach, we constantly seek new ways to maximize efficiencies, minimize impacts, and foster innovative solutions.

Efficiency efforts at FedEx Express and FedEx Freight saved more than 44.5 million gallons of vehicle fuel, and avoided more than 457,000 metric tons of CO2e emissions in FY17.

On the jet fuel side, in FY17 our aircraft fleet modernization and FedEx® Fuel Sense programs saved 177.3 million gallons of fuel and avoided more than 1.7 million metric tons of CO2e emissions, over 16 percent more emissions avoided than the previous fiscal year.

We’re continuing our investments in sustainable energy:

  • We’re adding electric vehicles to our fleet and had more than 2,860 alternative-fuel, electric, and hybrid-electric vehicles by the end of FY17.
  • Across various FedEx operating companies, we’re using hydrogen fuel cells and biodiesel where we can, and are always looking for additional alternative fuel types to become more efficient and sustainable.
  • We added two more on-site solar-energy systems at FedEx Ground facilities last fiscal year, bringing our company-wide total to 20.
  • FedEx Freight has reserved 20 Tesla Semi trucks which, when produced, could deliver a better experience to truck drivers while increasing safety and reducing cargo-transport costs.

Multiplying people potential

Every day, our more than 425,000 team members around the world are committed to delivering our Purple Promise to customers — to make every FedEx experience outstanding. Their dedication has made us one of the most admired companies in the world. For that we thank them!

To multiply the potential of our team members, we provide training, career development, and innovative benefits as well as a diverse, inclusive, and safe workplace. At the end of FY17, team members could choose among 21,000 online courses through the FedEx Learning Center, and throughout the year they each participated in an average of almost 20 hours of formal training.

In the past fiscal year, we also began changing our performance management system to a coaching-based approach. It provides ongoing manager input and improves the team member experience.

Because we value the diverse backgrounds and perspectives of our team members, we have established internal programs and best-in-class external programs to recruit, develop, retain, and nurture a diverse workforce. Among our efforts are diversity and inclusion training to new employees and to managers. FedEx also sponsors a companywide Diversity and Inclusion Corporate Council to strengthen the roots of diversity within FedEx.

Of course, we also multiply possibilities for people beyond FedEx, especially those seeking employment. We’ve contributed $4.4 million to programs that provide avenues to employment to disadvantaged youth since FY16. More than 100,000 young people have enjoyed training or connections to job opportunities through our FedEx Cares Employment Pathways programs.

Safety is another way we multiply benefits for our communities, customers, and team members. Since it’s a core value for us, we prioritize safety on the roads, in the air, in our facilities, and in the communities we serve. For example, we achieved nearly 13 percent improvement in our preventable, recordable vehicle-accident rate in FY17.

And through our work with SafeKids Worldwide, in FY17, we:

  • Invested more than $3 million in road safety initiatives and committed $10 million over four years to the organization;
  • Provided safety expertise and hands-on support delivered by nearly 1,200 team members to more than 1 million children in 711 cities around the globe.

Overlaying all of these efforts is our commitment to maintaining the highest ethical and professional standards.  Proper business conduct encourages loyalty among team members, suppliers, and customers and fosters a rewarding relationship between FedEx and communities where we operate.

Connecting is what we do at FedEx, and we make connections happen reliably, millions of times a day. The more connections we generate, the more options we multiply for individuals and businesses everywhere — so people see the world not within the confines of a narrow geography but as an ever-growing universe of opportunities. We believe this report opens a window to that universe.

Frederic W. Smith

Frederick W. Smith
Chairman and CEO

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