FedEx CEO Raj Subramaniam said Thursday (April 24) that the logistics giant is using advanced data analytics and AI to navigate complex global trade disruptions — the latest of which are U.S. tariffs.
“Things are changing by the minute,” Subramaniam said during a fireside chat at the Semafor World Economy Summit 2025 in Washington, D.C. “On the overall demand side, we will manage through. … So far, things are OK, but I can’t tell you what will happen next week.”
In March, FedEx cut its full year and revenue outlook for the third consecutive quarter, citing continued weakness and uncertainty in the U.S. industrial economy. A big factor in its outlook is the end of its contract with the U.S. Postal Service, which concluded in 2024.
Subramaniam, who succeeded founder Fred Smith in 2022 as only the second CEO in FedEx’s 54-year history, said trade disruptions have brought supply chains concerns into the boardroom as a strategic imperative.
Prior to the pandemic, supply chain was “the domain of the procurement manager, maybe the CFO at best. Today, supply chains are a boardroom conversation — every boardroom,” he said.
The pandemic, when hundreds of ships waited outside Los Angeles ports, woke companies up about the critical nature of supply chains. “We have evolved our mission to make supply chains smarter for everyone,” he said.
While the current tariff uncertainty brings a different type of disruption than the pandemic, the mission for FedEx remains “whether the infrastructure is available to now actually physically clear all these packages and freight that’s going to come across from different parts of the world.”
Since 2020, FedEx has been working on making supply chains smarter through technology. But while the initiative began around the start of the pandemic, the motivation was not due to COVID-19, Subramaniam said.
“We realized the value of the data and insights that FedEx has,” Subramaniam said. “That work did not anticipate either the pandemic, or what’s happening right now, or the advent of AI [artificial intelligence].”
Read more: Global Shipping Slowdown Anything but Smooth Sailing for FedEx
Robots Loading Trucks
Subramaniam said FedEx has created a digital twin of its complex physical network of moving packages throughout the world, then applied the latest AI and machine learning models to make supply chains smarter and surface better insights while providing greater visibility into logistics.
FedEx also is now directly doing data integration with the websites of large customers. “Somebody orders something on their website, we are able to pass on intelligence to say where you should fulfill that traffic from, to get that to [the consumer] by Tuesday,” he said.
The system takes into account weather forecasts, traffic patterns and the like to recommend the best route to take. “It’s a deep learning model that continues to learn every single day,” the CEO said.
The result is that there is “much more predictability” about making sure it gets to its destination on time, he added.
FedEx’s entire package in, package out process is already completely automated at its hubs, Subramaniam said.
Now, FedEx is also trying out robots to see if they can do truck loading and unloading of packages, a laborious task human workers have to do repeatedly. “It’s a very complex problem,” he said. “Can you imagine trying to figure out how to [get the robot to] load or unload?”
But the five-year digital transformation has already yielded results. FedEx has shaved $6 billion from its cost base of $87 billion from three years ago — a feat during a time of higher inflation. “The majority happened because of technological changes,” Subramaniam said.
To illustrate the complexity of global trade, Subramaniam shared an example of a customer manufacturing neon signs.
“They had 200 versions of neon signs. Before, they just Googled up the classification code, put it on those 200 different types, sent it across, and it cleared. Starting [this year], they’re going to need 200 different classification codes to get that across, and only we can provide that.”
FedEx connects 3 million shippers and 225 million consumers while handling 16 million packages daily, representing almost $2 trillion worth of goods annually. It also employs 500,000 people.
“All these innovations make their job easier. If we can have a machine do the harder, difficult things, that just makes the job more productive and easy,” Subramaniam said.
Despite the adoption of technology, the CEO said FedEx remains fundamentally “a people-centric company” where culture drives performance.
“The difference between our team members just doing enough not to get fired, versus going above and beyond to deliver an outstanding experience — that’s the difference between failure and success,” he said.
Source: https://www.pymnts.com/
