FedEx: Fred Smith's Yale Paper, the Memphis Hub and the Cast Away Gamble

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As a Yale student, Frederick W. Smith wrote a term paper proposing a dedicated air network for overnight delivery, and legend says it earned roughly a C. He founded Federal Express in Little Rock, Arkansas in 1971 and moved operations to Memphis in 1973, choosing it for mild weather and its location near the country's population center, ideal for a hub-and-spoke system where every package flies to one sorting point overnight. The company reached $1 billion in revenue by 1983 without a merger or acquisition. It expanded to Europe and Asia in 1984, bought Flying Tiger Line in 1988 to become the largest full-service cargo airline, and acquired Caliber System, owner of the ground carrier RPS, in 1997.

Customers already said FedEx it, and the company officially adopted the FedEx name in 2000, folding units into brands such as FedEx Ground and FedEx Custom Critical. It bought Kinko's in 2004 and TNT Express in 2015. Smith stepped down as CEO in 2022, handing control to Raj Subramaniam, who launched Network 2.0 to merge express and ground delivery starting in June 2024. FedEx Freight is set to become a separate public company by June 2026. The company also pledged carbon-neutral operations by 2040 with an initial $2 billion investment, including a $100 million grant to Yale for carbon capture research.

• Lindon Leader of Landor Associates designed the 1994 logo with a hidden arrow between the E and the X.
• FedEx paid nothing for product placement in Cast Away, a film that opens with one of its planes crashing.
• In 2007 the IRS challenged how FedEx Ground classified its drivers, floating a tax liability of over $300 million.
• In 2019 FedEx diverted Huawei packages, prompting a Chinese investigation, and later called it an operational error.
• The Justice Department indicted FedEx in 2014 over shipments for illegal online pharmacies and dropped the charges two years later.