A Brief Primer on FedEx’s Distribution Network Updated July 1, 2025 FedEx, founded in 1971, started as an express delivery service with the motto: “When it absolutely, positively has to be there overnight.” A pivotal moment was the Federal Aviation Act of 1977, which enabled FedEx to operate larger aircraft and centralize sorting at its Memphis superhub (built in 1979). Memphis is now the largest cargo airport in the US and the second largest worldwide, due to FedEx’s massive operations. --- Overview of FedEx Segments FedEx has four main distribution segments: Express, Ground, Freight, and Supply Chain. A detailed map of FedEx’s distribution network is kept updated and reflects these operations. Express Generates about 55-60% of FedEx’s revenue. Focuses on speed; packages are moved swiftly on and off planes. Operates the largest cargo airline worldwide with 741 aircraft (vs. UPS’s 506). Services over 650 airports globally, shipping 16 million packages daily. Uses hub-and-spoke model pioneered by FedEx: Major hubs: Memphis (KMEM, world hub) and Indianapolis (KIND, national hub). Memphis handles 250 flights/day with 20,000+ employees; Indianapolis about 180 flights/day with 5,500 employees. Quick processing turnaround: packages can be in and out of sorting facilities within 15 minutes. Smaller regional hubs include Anchorage, Fort Worth, Greensboro, Miami, Newark, Oakland, and Ontario. Inbound packages are scanned and sorted on conveyor belts for efficient routing. Drivers: FedEx Express pickup and delivery drivers are FedEx employees. Drivers work around time-committed packages and on-call pickups. Ground Founded in 1985 as Roadway Package System (RPS), acquired and rebranded by FedEx in 2000. Accounts for roughly 25% of revenue. Also uses a hub-and-spoke model but relies on truck transportation, not air. Example route: From Cloquet, MN → Superior, WI (Local Ground Facility) → St. Paul, MN (Regional Ground Hub) → Phoenix, AZ (Regional Ground Hub) → Chandler, AZ (Ground Facility) → Delivery. Ground Hubs and Facilities: Ground Hubs shown in purple on the network map. Ground Facilities shown in green. Regional Sort Facilities (brown on map) support large retailers and sometimes assist during peak seasons. Employment: Each Ground Hub: ~1,200 employees. Ground Facilities: ~200 employees average. Regional Sort Facilities: ~575 employees average. Drivers: Ground pickup and delivery (P&D) drivers are independent contractors operating under Independent Service Providers (ISPs). ISPs contract with FedEx to cover at least 5 routes or 500 daily deliveries (~5900 ISPs in the US). Linehaul drivers work for Transportation Service Providers (TSPs), also independent contractors. Freight FedEx Freight handles shipments over 150 lbs (Less-Than-Truckload or LTL). Operates about 30,000 vehicles from roughly 400 Service Centers. Appears to use a hub-and-spoke model but hubs are less well documented. Has a higher operating margin (20-22%) compared to Express (8-9%) and Ground (11-12%). FedEx plans to spin off Freight into a separate company to create shareholder value. As part of the Network 2.0 initiative, many Freight Service Centers have been closed in recent years. Supply Chain Small segment offering logistics like warehousing, order fulfillment, freight forwarding, and transportation management. Operates 30+ fulfillment centers and 130+ distribution centers, totaling over 40 million sq. ft. of warehouse space. Some large facilities serve major clients like Target (York, PA) and T-Mobile (Coppell, TX), each employing about 1,200 people. --- Network 2.0 Initiative Announced in 2022 to integrate FedEx’s previously siloed operations (Express, Ground, Freight). Due to