FedEx Unveils plan to nearly double ground volume capacity
FedEx Corporation, announced today a $1.8 billion, six-year expansion plan for its operating company, FedEx Ground, which will nearly double its daily package volume capacity from 2.5 million to 4.8 million by the end of fiscal year 2009.
The multi-phase plan includes the addition of 10 new and 23 expanded central distribution hubs, as well as the expansion or relocation of more than 300 existing facilities.
FedEx Ground has grown steadily from handling almost 1.4 million packages per day three years ago to nearly 2.1 million packages per day in the most recent fiscal quarter ending August 31, 2002 – a 50 per cent increase. On a year-over-year basis, volume surged 33 per cent in the same fiscal quarter.
"FedEx Ground has achieved strong growth with its enhanced service, the strength of the FedEx brand, the introduction of innovative new services such as FedEx Home Delivery, and the expansion and increased effectiveness of our sales team," said T. Michael Glenn, executive vice president for FedEx Corp. "Customer demand remains strong for our Ground service and research clearly shows that customers are increasingly satisfied with the value it brings to their businesses."
To meet its long-term package processing needs, FedEx Ground will open new hubs in Memphis, Dallas, Cincinnati, and Hagerstown, Md., by 2006. Six more hubs will be strategically located by the end of fiscal year 2009.
"FedEx Ground operates the only fully automated hub network in the ground package industry," said Daniel J. Sullivan, president and chief executive officer of FedEx Ground. "With the addition of these facilities – each featuring the most advanced material handling and scanning technology in the world – we will further strengthen our competitive advantage by providing customers with more information faster while enhancing the productivity and efficiency of our sorting operations."
Capital investments in FedEx Corp.'s other operating companies will continue to be strictly by growth opportunities and the potential returns those investments will generate. Substantial investments over the past decade have built an unparalleled global air/ground network at FedEx Express that connects 95 per cent of the world's GDP in one or two business days. This network is essentially complete and prepared to handle the growth anticipated as regional economies recover around the world. Capital investments for additional aircraft should be reduced for the remainder of the decade while investments will continue in the company's operating infrastructure and information systems.
For FedEx Freight, capital investments will also continue based on the company's excellent returns and outstanding growth prospects. FedEx Freight is now the largest and most profitable regional less-than-truckload carrier in the U.S., with 90 per cent of shipments delivered next day or second day.
A primary benefit of the FedEx "operate independently, compete collectively" strategy is the flexibility it provides the company in sizing its various operating companies depending on varying macro economic conditions and shipping demand for the market segments in which they compete. Consequently, FedEx Corp. can optimize its return on investment by channeling the right level of resources, in the right network, at the appropriate time. This strategy has been yielding solid financial results for the company in a challenging economic environment. Net income for FedEx Corp. increased 45 per cent in its most recent quarter ending August 31, 2002.
About FedEx Ground
FedEx Ground, North America's second largest small-package ground carrier, has a network of more than 500 distribution hubs and local pickup-and-delivery terminals throughout the United States and Canada. The company reported annual revenue of $2.7 billion in fiscal year 2002.
About FedEx Corp.
With annual revenues of $21 billion, FedEx Corp. is the premier global provider of transportation, e-commerce and supply chain management services. The company offers integrated business solutions through a network of subsidiaries operating independently, including: FedEx Express, the world's largest express transportation company; FedEx Ground, North America's second largest provider of small-package ground delivery service; FedEx Freight, the largest U.S. provider of regional less-than-truckload freight services; FedEx Custom Critical, the world's largest provider of expedited time-critical shipments; and FedEx Trade Networks, a provider of customs clearance, international freight forwarding and trade facilitation.
Certain statements in this press release may be considered forward-looking statements, such as statements relating to management's views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, any impacts on the company's business resulting from the events that occurred on September 11, 2001 or any future threats or acts of terrorism, the timing and amount of any money that FedEx is entitled to receive under the Air Transportation Safety and System Stabilization Act, the timing, speed and magnitude of any economic recovery during the remainder of the company's 2003 fiscal year, the ability to match capacity to shifting volume levels and other factors which can be found in FedEx Corp.'s and its subsidiaries' press releases and filings with the SEC.
