Fred Smith, founder of FedEx, passes away at 80
What's the story
Fred Smith, the visionary who revolutionized the parcel delivery industry by founding FedEx Corp in 1971, has passed away at the age of 80. The news was confirmed by Chief Executive Officer Raj Subramaniam on the company's website. Smith's journey began in 1965 when he envisioned a hub-and-spoke network for overnight package delivery while studying at Yale University.
Background
Early life and education
Born on August 11, 1944, in Mississippi to James and Sally Smith, Fred was fascinated by aircraft from an early age. He became a pilot as a teenager and studied economics at Yale. His paper on the hub-and-spoke model for a delivery company laid the foundation of his future business empire. After graduating in 1966, he joined the Marines and served two tours in Vietnam as platoon leader.
Entrepreneurial journey
FedEx faced financial difficulties in its initial years
After serving two tours in Vietnam as a Marine, Smith persuaded investors to support his ambitious idea. However, the initial years of FedEx were marred by financial difficulties and legal troubles as he tried to disrupt a duopoly package-delivery market ruled by United Parcel Service and the US Postal Service. Despite these hurdles, FedEx has grown into one of the world's largest logistics companies with over $80 billion in annual sales.
Business impact
Smith was the largest individual shareholder
Smith served as the executive chairman and was the largest individual shareholder of FedEx with around 8% of the stock. His son, Richard W. Smith, is currently the CEO of FedEx's airline business. Under his leadership, FedEx disrupted the package-delivery industry by bringing next-day air service to a sector that wasn't built for speed decades ago.
Business hurdles
Smith's strategies to tackle Amazon
With the rise of e-commerce and an increase in residential deliveries, FedEx faced challenges from Amazon. Both companies had a fallout over pricing in 2019, leading to the termination of their contracts. To tackle these issues, Smith revamped FedEx Ground by extending service days, building facilities for large packages, reclaiming final delivery from postal services, and upgrading software for efficient routing.
Pandemic response
FedEx flourished during the COVID-19 pandemic
During the COVID-19 pandemic, FedEx Express flourished as airlines cut flights, diverting more overnight cargo to FedEx and UPS. The company played a major role in flying tons of personal protective equipment (PPE) to the US and distributing vaccines globally in 2021. Smith's innovative strategies helped the firm cope with an avalanche of package volume after lockdowns forced many consumers to shop online.