FedEx of the Future
At the moment, Job No. 1 at FedEx is ensuring the final integration of TNT and FedEx Express, Bronczek said. “We want to make sure we focus on it – get it right. We’ve done acquisitions around the world in Brazil, China, India, Poland, France, U.K., but nothing like this one. So for now, we have all hands on deck to make this seamless for our customers.”
Some of the final, and more tedious, hurdles that remain are to get approval from the various countries in which FedEx and TNT curently operate, Smith added. “For instance, TNT orginated in Australia, so we had to get Australian clearance. And China clearance, and Brazil clearance – and, for that matter, U.S. clearance.” Also, because FedEx is a U.S. company, it is prohibited from owning a European airline, so TNT is also in the process of finding a European buyer for its airline subsidiary.
But the rest of its business can’t be put on a shelf while the TNT integration takes place. FedEx is expecting its peak-season volume to grow by 12.5 percent over last year, which would represent the company’s fifth consecutive record-high peak season since the Great Recession ended. Which is another reason Bronczek said he is relieved to have the labor contract resolved in advance. “Weneed to have pilots available to volunteer for extra routes during peak,” he said. “If we didn’t, I think there’s a possibility that we wouldn’t have had as much flexibility. “
Farther down the road, Bronczek acknowledges that growth for the express business is in the explosion of e-commerce logistics. Companies like Amazon and Alibaba represent another frontier of e-commerce, especially the new global logistics networks being planned, such as Alibaba’s Cainiao consortium. “You listen to the growth rate projections for some of these companies, like Amazon, they’re astronomical,” he said. “We just want to make sure we have our business opportunities with them, and so we’re working on that.”
For now, FedEx Express is happy to be a shipping option for companies such as Amazon, Walmart.com and Target.com. “I know there are a lot of reports that say these are our enemies or our competition,” Bronczek said. “Certainly there’s some competition, but they’re also partners. It’s sort of like the U.S. Postal Service. We partner with them, and at the same time, we compete in some sectors with them.”
But until the express network wars start heating up, Bronczek and Smith say they plan to use the year they experienced in 2015 as a blueprint to continue FedEx on a path toward higher profitability and growth. “Like so many things in life, once you get momentum, like we have, it carries you a long way,” Bronczek said. “I feel very good about what’s happened and where we are, and actually more excited about where we’re going.”