New CEO for FedEx but no sign of major change


Fred Smith, founder of FedEx, is leaving the position of Chief Executive Officer, handing over the role to the present Chief Operations Officer, Raj Subramaniam. FedEx stated on Monday (28th March) that “effective June 1, 2022, Frederick W. Smith, Chairman and Chief Executive Officer, will become Executive Chairman, and Raj Subramaniam, President and Chief Operating Officer, will be promoted to President and CEO”.

It ought to be noted that Mr Smith will remain “Executive Chairman”, suggesting that his influence on the business will remain very substantial. It is also worth noting that FedEx states that the “Chief Operating Officer position will not be backfilled”, suggesting that the balance of the job of CEO has tilted towards the management of day-to-day operations.

The reason for the change is not hard to understand. Fred Smith has been running the company for fifty years, ever since he founded FedEx in 1971. He is now 77. It is therefore unlikely that the move will engender any immediate change in direction for FedEx. The company has remained somewhat more focussed on air and ground Express than its key rivals, UPS and DHL, both of whom in their different ways have diversified into other areas of logistics. FedEx’s last big acquisition was TNT, which fulfilled the role of strengthening the company in Europe, something which was important for such a US-focused operation.

However, although FedEx has useful business in East Asia it has not made any major acquisitions there. Nor has it sought to reposition itself in e-commerce, a key market but one where the core Ground and Express services still dominate its offering. That said, over the past couple of years the new CEO, Raj Subramaniam, has been working on developing FedEx’s e-commerce business both in terms of technology and integration of different parts of the company.

This tightly controlled, focused strategy seems characteristic of Fred Smith. Yet the markets around FedEx continue to change and it will be interesting to see if FedEx sustains such a cautious approach to strategy.

Source: Transport Intelligence, 29th March 2022 

Author: Thomas Cullen