FedEx has unveiled plans for an ambitious AI transformation, where a robust “evolving” AI model will increasingly assume roles traditionally held by human workers.
Earlier this year, the company suggested eliminating 2,000 positions across Europe after having already reduced its workforce by 22,000 worldwide the previous year.
At that time, FedEx seemed to indicate that this transformation would facilitate further job cuts and yield greater cost savings.
In a March 2024 earnings call, Executive Vice President John Dietrich stated, “In line with responsible headcount management, we have cut our workforce by almost 22,000 in the past year and anticipate further opportunities as we progress with our transformation.”
Recently, FedEx provided insights into this transformation during a call regarding its first quarter of 2025, the latest quarter of its fiscal year.
The company revealed “new technologies aimed at enhancing service quality,” such as the “Shipment Eligibility Orchestrator,” an AI model that is gradually taking on additional responsibilities within the postal supply chain.
Rajesh Subramaniam, President, Chief Executive Officer, and Director, described it as an “innovative internal decision-making engine that utilizes machine learning to dynamically route packages in real time.”
He noted that the “Shipment Eligibility Orchestrator is a developing, adaptive platform where we are continuously incorporating new use cases.” One of the tool’s applications involves “routing high-priority healthcare and urgent shipments to specialized couriers who are trained to manage them.”
In the first quarter, FedEx successfully tested a new solution named Hold-to-Match, which aims to “optimize last-mile delivery costs,” addressing the expensive and challenging task of transporting packages from a depot to their final destination.
This solution achieves efficiency by coordinating the delivery of packages sent to the same address to arrive simultaneously.
Additionally, FedEx alluded to its efforts in developing a robotic delivery network, moving towards a future with automated solutions.
Last month, FedEx unveiled a strategic partnership and investment in Nimble, a company specializing in AI robotics and autonomous e-commerce fulfillment technology.
FedEx Supply Chain, the division responsible for logistics, warehousing, and supply chain management, plans to implement Nimble’s “advanced fulfillment systems” to “enhance operations, deepen its presence in the global e-commerce sector, and create new opportunities for its customers.”
The delivery giant is in the midst of a broader initiative known as Network 2.0, described as a “multi-year project aimed at enhancing our processes for picking up, transporting, and delivering packages.”
Subramaniam stated that there has been approximately a 10% decrease in pickup and delivery costs in regions where Network 2.0 has been implemented, including the US and Canada.
This morning, FedEx’s share price took a significant hit following the release of underwhelming financial results.
The company’s revenue for the quarter reached $21.6 billion, a slight decline from the $21.7 billion reported the previous year. Additionally, net profit fell from $1.08 billion to $0.79 billion during the same timeframe.
Subramaniam remarked, “Our results indicate a tough demand landscape in Q1, which turned out to be weaker than our expectations, especially in the U.S. domestic package sector.”
The company also pointed to a growing preference for lower-yield services as customers globally transition from costly, expedited delivery options to more economical, slower alternatives.
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