At this time of year, social media feeds are flooded with ads for gyms, self-improvement coaches, and budgeting classes inviting you to “be a better you” in 2024. Individuals aren’t the only ones making changes in the new year, though. On its December 19 Q2 2024 earnings call, FedEx announced a fundamental redesign of its air network. The new Tricolor design is part of the carrier’s plan to reduce costs by $1.8 billion from DRIVE this fiscal year.
In this blog post, we’ll talk about the different hues of the Tricolor initiative, why FedEx is implementing these changes now, and how you can be confident you’re getting the lowest rates while shipping with FedEx.
The Tricolor network design employs FedEx’s three brand colors— Purple, Orange, and White— creating a network that will boost speed and density while furthering the DRIVE initiative’s cost-saving efforts.
FedEx introduced the Purple Network as the “backbone of our International Priority parcel business.” The FedEx-owned Purple Tail fleet will be timed for high-priority, high-margin volumes using the existing hub-and-spoke model to streamline deliveries and grow their International Priority parcel business.
FedEx created the Orange Network by re-timing some of its Purple Tail flights to operate off-cycle, giving the carrier time to “build density, decongest our hubs during the precious night short, and feed into our Surface Networks, including our International Road Network, as well as FedEx Ground and FedEx Freight in the US.”
Finally, the White Network will leverage FedEx’s Global Partner Network as an adaptive capacity layer, particularly on imbalanced trade lanes.
FedEx CEO Raj Subramaniam explains the timing of this initiative, saying, “The Air Network redesign is a critical piece of our DRIVE execution at Express and will support the realization of our targeted $4 billion of total DRIVE savings in fiscal year 2025.” In conjunction with its Network 2.0, which is estimated to add $2 billion to its annualized operating income by 2027, the carrier is planning for the future by cutting costs and adding revenue.
We’re in the midst of a freight downturn, and the carriers are working hard to find ways to grow. The Tricolor redesign will improve the carrier’s use of current assets, boost margins, and improve ROIC, but their plan needs customers to succeed.
As the carriers protect their future, you should be doing the same. UPS is working on winning back the clients it lost during the potential Teamsters strike last summer and Amazon just usurped UPS and FedEx as the USA’s leading delivery business— making now the best possible time to renegotiate your contract.
The team at ShipRx will analyze your current contract for free— identifying cost-savings opportunities and leveling the playing field between you and the carrier. If you negotiated without professional help or haven’t negotiated recently, get in touch with ShipRx today. With a 100% success rate and average customer savings of 30%, there’s nothing to lose!
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