to stay ahead, we go beyond
FedEx Annual Report 2012
“I wIll make every Fedex experIence outstandIng.”
— The Purple Promise
When the going gets tough, FedEx shows the spirit and determination that have always set us apart. FY12 was a year of challenges marked by economic and political disruptions and lagging growth around the globe. To stay ahead, we go beyond — in the way we manage our business, deliver the quality service our customers expect and create solutions for a more sustainable world. A good or acceptable experience doesn’t cut it for us. We share a goal to deliver outstanding FedEx experiences, a commitment we call the Purple Promise. Our team members around the world add up to a powerful advantage for FedEx. One that goes beyond the ordinary to achieve the extraordinary.
When We go beyond, our customers and communities thrive. each year we honor the best of the best of our team members with the Purple Promise Chairman’s Award. Meet three of the recipients, from left: Joe Reedy, supervisor, Fedex Custom Critical; Megan hershberger, supervisor, Fedex Custom Critical; William davis, customer advocate representative, Fedex TechConnect. go to fedex.com/annualreport2012 to read their stories.
to stay ahead, we lead the way
Three things that differentiate FedEx — our people, our strategy and our focused networks — will allow us to achieve this goal.
How a business responds during difficult times is a true measure of its resilience and a test of its strategy. In a volatile marketplace, dedicated FedEx team members turned in a world-class performance last fiscal year. Their dynamic, disciplined approach to some pretty stiff headwinds defines FedEx at its best. Our long-term strategies are working, and we believe we will improve our competitive position and our financial performance over the next several years, as a result. To do so, we must take advantage of our scale to improve our efficiency. And second, we must remain nimble and responsive to our customers. We try to manage the critical balance between the two every day. In this regard, our flexibility kept FedEx profitable during the 2008-2009 recession, and we emerged stronger. In the same vein, we recognize many residual challenges are ongoing and require us to run a lean and flexible organization. All companies, including FedEx, face many rising costs they cannot directly control, be it health care or energy. This, in turn, requires relentless focus on quality, which has been embedded in our culture since our first day of operations. Utilizing our Quality Driven Management system, we are confident we can reduce costs while simultaneously improving service levels.
To Our Shareowners,
FedEx showed real grit in FY12. We committed to a strong performance, and we delivered — no small feat, given the year’s challenges. Our earnings per share increased 40 percent, and annual revenues exceeded $42 billion, a 9 percent increase, despite political gridlock in the United States, financial turmoil in Europe, a slowing Asian economy and volatile fuel prices. Despite these issues, we managed and improved yields across all of our transportation businesses, allowing us to continue enhancing the services and technology that make our customers more successful and more productive. FedEx Ground had a stellar year, delivering 18.4 percent operating margins and accounting for more than half of FedEx operating profit. Online shipments spurred record volumes. More than one quarter of our FedEx Ground lanes are now faster in terms of transit times than the competition, boosting service and customer satisfaction to unprecedented levels. As a result, including FedEx SmartPost, our overall U.S. ground parcel-market share has increased to nearly 30 percent, doubling over the last decade. The rapid transformation of FedEx Freight, which basically reinvented the LTL freight industry a little more than a year ago, is paying off with a...
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