Update

FedEx gives COVID figures, changes operating principles

By , Daily Memphian Updated: September 21, 2020 2:49 PM CT | Published: September 21, 2020 11:07 AM CT

COVID-19 has infected about 1.7% of FedEx’s global workforce and killed a “really low” number, the company says.

FedEx’s human resources chief said the infection rate was “pretty low” and fatalities were “a fraction of a percent” among 500,000 employees worldwide. The cited infection rate suggested about 8,500 employees tested positive for COVID-19.

Judy Edge, corporate vice president of human resources, gave the response during a Q&A session following FedEx’s annual shareholder meeting, held in virtual format Monday, Sept. 21.

The human toll was only one facet of COVID-19’s long shadow over the Memphis-based company’s year in review and look ahead.


FedEx primed for growth through 2021


The pandemic is believed to have fundamentally changed the landscape for FedEx and other shipping companies by hastening a trend toward online shopping, and carriers have been called on to deliver massive amounts of equipment and medical supplies to fight the outbreak.

FedEx was in the midst of a companywide restructuring to handle more residential deliveries at lower cost when the virus first appeared in Asia.

But “in many ways the world accelerated to meet our strategy,” chairman and chief executive officer Frederick W. Smith said.

“The obvious uncertainty presented by the pandemic stands in the way of making a fiscal 2021 forecast at this point, (but) we remain very confident in our path forward. We believe that we’re uniquely positioned for future success, and we will continue to grow,” Smith said.

Smith said FedEx Express had moved more than 42 kilotons of personal protective equipment since Feb. 1, including 1.7 billion masks.

COVID-19 response

During the Q&A, Edge fielded questions about infection and mortality rates among FedEx workers.

“Our infection rate is pretty low, approximately 1.7% of our employee workforce,” Edge said.

About 10% to 15% of FedEx employees can do most of their work from home and a “significant number” continue to work remotely, she said.

As to a fatality rate, Edge said, “It’s hard to say if it’s direct cause from COVID-19, but the deaths reported from March, when the pandemic first started, through now are really low, a fraction of 1% globally.”

FedEx was hit by critical news coverage in May because of COVID-related deaths at its Newark Express hub. The company at the time defended its efforts to protect employees from the virus and suggested the rate was consistent with the New York-New Jersey area’s status at the time as a hot spot for COVID-19 infections and deaths.

FedEx’s unit of the Air Line Pilots Association said last week it was aware of 100 pilots who had tested positive for the virus since last spring, out of a pilot force of more than 5,000.

Edge described measures including drive-through testing for some employees, temperature checks at facilities, making masks and protective equipment available to workers and suspending most customer signature requirements to promote social distancing at delivery points.


FedEx plans for twin peaks, plus vaccine distribution


Farewell to Alan Graf

Smith and other directors were reelected during the annual meeting, and Smith paid tribute to retiring chief financial officer Alan B. Graf Jr. and board member John A. Edwardson.

Graf has more than 40 years with the company, more than 30 years as CFO, and played a part in every major acquisition and advancement during that time. Edwardson had been on the board more than 17 years.


FedEx’s Alan Graf: Lessons learned from COVID-19


Mike Lenz is scheduled to start as CFO on Tuesday, Sept. 22, and Graf will remain on board as a senior adviser through Dec. 31.

A new mantra?

Smith announced a significant change in FedEx’s long-time operating principles of “compete collectively, operate independently, manage collaboratively.”

It’s been the philosophy underlying separate operations at operating units FedEx Express, FedEx Ground and FedEx Freight.

The operating principles have been updated to “compete collectively, operate collaboratively, innovate digitally.”

The change comes as the operating units increasingly work together to improve efficiency and lower costs of deliveries. Wall Street analysts have advocated more joint operations, seeing it as an opportunity to boost profits.

“We are creating the network for what’s next, and our new operating principles are the blueprint to get us there,” said Raj Subramaniam, FedEx Corp. president and chief operating officer, who was appointed to the board earlier this year and among those elected Monday.

“Operate collaboratively is an important and strategic shift for FedEx. While our networks and the expertise that lies within our operating companies are and will remain independent, we are building a holistic, collaborative approach to compete in this dynamic, ever-changing market,” Subramaniam said.

“By operating collaboratively, we can ensure we have the right package in the right network at the right cost to serve. We are already seeing the benefits of collaboration between companies at an all-time high,” he said.

FedEx Freight has provided 20 million miles of road and intermodal support and delivered more than 750,000 non-conveyable shipments for FedEx Ground since June 1, Subramaniam said. FedEx Freight had never delivered a package for FedEx Ground before May, he said.

Delivery of certain FedEx Express residential and rural packages by FedEx Ground launched early this year and has reached 57 origin markets, Subramaniam said. FedEx Ground is a lower-cost delivery network, so the company makes more money per package.

Data driven

“Innovate digitally” encompasses technology such as improved customer visibility into shipments, autonomous delivery devices such Roxo the SameDay Bot, next-generation monitoring of package contents and FedEx’s partnership with Microsoft to harness data for customers.

“The size and scale of our network, and more than 16 million packages that pass through it every day, gives us a bird’s eye view of global supply chain and trends,” Subramaniam said.

“This foundation enhances our ability to build better insights as a result of information about our network and the world around it. ... Innovating digitally is the catalyst that helps us reimagine the future of FedEx at the intersection of physical and digital networks,” he said.

One shareholder asked FedEx’s current view of Amazon as a competitive risk, after FedEx dropped Amazon as a customer last year.

Subramaniam said this year’s growth in the e-commerce market has shown there’s plenty of room for FedEx to grow without Amazon as a customer.

“Our approach is to have a much more diversified customer base: small, medium and large,” Subramianiam said. ‘“We believe that’s a winning strategy, and the recent results show we’re doing a pretty good job. So we’re confident in our e-commerce strategy and we believe it’s a winning hand.”


FedEx gears up for vaccine shipments with new tracking technology


Unmanned flight testing

During the Q&A, Smith said he doesn’t foresee unmanned flights of FedEx’s widebody aircraft in the foreseeable future, “decades perhaps,” although he acknowledged the company is interested in robotic operations of feeder aircraft.

A FedEx partnership with Reliable Robotics Corp. involves turboprop Cessna 208 aircraft and the feasibility of autonomous aircraft serving remote and relatively uninhabited areas, Smith said.

Reliable Robotics retrofitted a FedEx Cessna 208B for autonomous flight and demonstrated a fully remote landing of the aircraft in Northern California in June. FedEx operates 235 Cessna 208Bs.

“As has always been the case, FedEx will continue to explore new technologies in order to best meet our customers’ needs and remain the world’s premier logistics and delivery network,” Smith said.

“Our latest work with Reliable Robotics continues this commitment to innovation and exploration, although I would point out that this initiative deals with smaller turboprop airplanes, and in this particular case, the single-engine C208, which we are looking at putting in very remote, and uninhabited areas as part of our network,” Smith said.

“While we’re excited to see autonomous technology develop ... FedEx has no plans to replace its trunk aircraft fleet with autonomous aircraft. And I might add on the basis of my 50-plus years in aviation, I think the prospect of large transport aircraft being flown without pilots is highly remote and not something our crew force should be worried about in the foreseeable future, decades I would say,” Smith said.

Washington Football Team

Chief marketing and communications officer Brie Carere took a question about FedEx’s role in persuading the Washington Football Team to drop the name “Redskins.”

The team’s move in July came days after FedEx asked for its brand to be removed from FedExField if the team didn’t drop the name, which some believe is offensive.

“We appreciate very much the Washington Football Team’s decision to change its name and its logo, and please remember, that it was the team’s decision. It is also important to remember that FedExField is a great opportunity to host a wide variety of both sports and entertainment events and activities,” Carere said.

“We value very much our sponsorship of FedExField and we look forward to the next step in the team’s rebranding,” Carere said.

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Topics

FedEx COViD=19 FedEx annual shareholder meeting Frederick W. Smith Raj Subramaniam Brie Carere Reliable Robotics
Wayne Risher

Wayne Risher

Business news reporter, 43-year veteran of print journalism, 35-year resident of Memphis, University of Georgia alumnus and proud father and spouse of University of Memphis graduates.


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