FedEx reshuffles fleet, adopts Tricolor plan

FedEx is reshuffling its freighter fleet and network as the company continues to mitigate operational costs and realign its air cargo network into categories. “Historically, our unmatched global air network was primarily built on a hub-and-spoke system to support speed and global connectivity,” President and Chief Executive Raj Subramaniam said in an earnings call with analysts Dec. 19. [caption id="attachment_56866502" align="aligncenter" width="1764"] FedEx is retiming some flights away from its peak banks. (Courtesy/FedEx)[/caption] “With the rapid growth of e-commerce and as volume mix continues to shift to deferred, we recognize the need to reconfigure our network to focus on both speed and density.” Under the new “Tricolor” strategy, FedEx’s own freighters that it will continue to deploy for high-priority, high-margin, shipments using the current hub-and-spoke model will be known as the purple fleet. This will be “the backbone of [FedEx’s] International Priority parcel business,” Subramaniam said. A new orange network refers to aircraft operating off-peak flights that will help reduce congestion at hubs during the main, nighttime arrival and departure bank, Subramaniam said. The change will allow FedEx to build density and feed into its surface networks, giving the company “a differentiated capability to drive profitable, less capital-intensive growth in the sizable global deferred parcel and airfreight markets,” he said. Lastly, FedEx will continue to use a white network of flexible, contracted capacity, especially on imbalanced trade lanes, Subramaniam said. The company has previously engaged 747-400Fs and MD-11Fs from ACMI carriers like Atlas Air and Western Global to supplement its own freighter fleet. Cutting costs with Drive The air network redesign will contribute to $4 billion in savings that FedEx hopes to achieve in fiscal year 2025 as part of its Drive initiative, according to the company. Although Drive has generated profits, FedEx continues to see challenges with the variable shift in cargo volume and related yields, Subramaniam said, adding that factors affecting margins include declining postal volumes, obligatory requirements in the FedEx contract with the United States Postal Service and the timing of the Tricolor redesign. FedEx had planned the Tricolor reorganization at the outset of the Drive initiative, Executive Vice President and Chief Financial Officer John Dietrich said. Drive has led to a significant reduction in flight hours in the past twelve months to resize fleet capacity with demand, Subramaniam said. FedEx retired its final MD-10-30F in December 2022 when it removed unit 46837 from service. The express company also began retiring its MD-11Fs in May and expects to fully retire them in 2028. Meanwhile, delivery of two new ATR 72-600Fs has slipped into fiscal year 2025, according to FedEx’s latest statistical book, released Dec. 19. The company has sixteen ATR 72-600Fs and now expects five more by April 30, 2024; another eight by April 30, 2025; and a final unit by April 30, 2026. Last quarter’s stat book also showed two 767-300F deliveries slipping into fiscal 2026 . Cargo Facts EMEA 2024, the essential event for stakeholders in Europe, the Middle East and Africa, will take place Feb. 5-7 in Amsterdam. Register by Dec. 22 to take advantage of early-bird pricing .

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