FedEx Express (FX, Memphis International) will redesign its fleet structure, establishing a tricolour network of purple, orange, and white tails to cater to different parcel priority needs, volumes, and margins. The redesign is part of FedEx's DRIVE program, which seeks to cut costs across the business by USD4 billion by FY2025.
"We recognise the need to reconfigure our network to focus on both speed and density," said President and CEO Raj Subramaniam during a December 19, 2023, earnings call. "This fundamental network redesign is momentous in our history and includes several key elements. Firstly, we will deploy what we call our purple tail fleet, which is our FedEx-owned assets, for delivering high-priority, high-margin volumes using the existing hub and spoke model. This will be the backbone of our international priority parcel business."
"Secondly, we will re-time a portion of our purple tail flights for what we'll call our orange network, which will operate off-cycle. This will give us time to build density, decongest our hubs and feed into our surplus networks, including our international road networks, FedEx Ground, and FedEx Freight in the United States. This will provide us with a differentiated capability to drive profitable, less capital-intensive growth in the sizeable global non-priority and air freight markets."
"Thirdly, we will continue to leverage our global partner network as an adaptive capacity layer, particularly on imbalanced trade lanes. This is our white network. These changes will improve utilisation of our assets, increase margins, and enhance return on investment and capital."
Subramaniam says as the future air freight market evolves, including the e-commerce market, the tricolour network is the appropriate strategy for FedEx. He says it will allow the business to serve different markets and customers with the right type of network. The model also allows some network agility to adapt as the market evolves. "What we're designing for is the right network for the right kind of traffic," he said. "This allows us to grow profitably in the international space."
According to ch-aviation fleets data, FedEx owns almost all of its 492-strong fleet, with these planes likely to form the backbone of its purple fleet under the tricolour strategy. Its fleet includes one A300-600(F), forty-two A300-600Fs, twenty-four A300-600R(F)s, one B737-800(BCF), 110 B757-200(SF)s, 136 B767-300Fs, fifty-seven B777-200Fs, forty DC-10-10(F)s, sixteen DC-10-30(F)s, and sixty-five MD-11Fs. Only three of the B777-200Fs are known to be leased.
