Fedex has revealed details of an ambitious AI transformation in which a powerful "evolving" AI model will take over more and more jobs that were once performed by human employees.
Earlier this year, Fedex proposed to cut 2,000 positions across Europe after spending the previous year getting rid of another 22,000 globally.
At the time, the global courier appeared to argue that transformation would allow it to cut even more jobs and make deeper savings.
During an earnings call on March 2024, John Dietrich, Executive Vice President, said: "As part of responsible headcount management, we have reduced our workforce by nearly 22,000 over the last year and expect additional opportunities in the future as we move forward with our transformation."
Now Fedex has revealed details of that transformation in a call discussing Q1 2025 - the most recent quarter in its fiscal year.
It announced the existence of "new technologies to facilitate high-quality service" including "the Shipment Eligibility Orchestrator", an AI model which is slowly but surely carrying out more tasks throughout the postal supply chain.
It's an "innovative internal decision-making engine that leverages machine learning to dynamically route packages in real time," explained Rajesh Subramaniam, President, Chief Executive Officer, and Director.
"Shipment Eligibility Orchestrator is an evolving, learning platform where we're adding new use cases by the day," he said.
One application of the tool is to "direct high-priority healthcare and time-sensitive shipments to designated couriers trained to handle them."
During the first quarter, FedEx also successfully piloted a new solution called Hold-to-Match, which "optimises last-mile delivery costs", referring to the costly, risky job of bringing a package on the final part of its journey from a depot to its delivery destination.
It does this by ensuring that packages sent to the same address are delivered at the same time.
FedEx also hinted at the steps it is taking towards building a post-man (sorry) robotic delivery network.
Last month, it announced a strategic alliance and investment with Nimble - an AI robotics and autonomous e-commerce fulfilment technology company.
FedEx Supply Chain, a division of FedEx that offers logistics, warehousing, and supply chain management services, will use Nimble's "cutting-edge fulfilment systems" to "streamline operations, further penetrate the global e-commerce market, and unlock new opportunities for customers."
The delivery giant is currently undertaking a wider transformation project called Network 2.0, which is a "multi-year effort to improve how we pick up, transport, and deliver packages."
Subramaniam claimed roughly a 10% reduction in pickup and delivery costs in markets where Network 2.0 has been rolled out, which include the US and Canada.
Fedex's share price plummeted this morning after it shared disappointing results, showing that revenue for the quarter was $21.6bn, which is slightly lower than the $21.7bn from a year earlier. Net profit also dropped from $1.08bn to $0.79bn over the same period.
Subramaniam added: "Our results reflect a challenging Q1 demand environment, which was weaker than we expected, particularly in the U.S. domestic package market."
It also blamed increasing demand for lower-yielding services as customers shift their preferences worldwide from fast but expensive priority delivery to slower, cheaper services.
