FedExpansion in Indy

Oct. 4, 2006
The expanded system is slated to be operational by December 2008.

FedEx Express is the largest express transportation company in the world. It delivers to all addresses in the United states as well as more than 220 countries and territories and shipments are delivered in one to three business days with delivery time guaranteed.

FedEx Express, the largest subsidiary of FedEx Corp., has six major hubs in the United States including Memphis (FedEx world headquarters and its largest hub); Indianapolis; Newark, N.J.; Fort Worth, Texas; Oakland, Calif.; and Anchorage, Alaska.

Bob Palmer, vice president and general manager of air-ground and freight services for FedEx Express in Indianapolis, is a shining example of FedEx's philosophy of promotion from within. Palmer started with FedEx as a mechanic at the Memphis hub 26 years ago and has since worked at nine of FedEx's locations. He has been in Indianapolis for 15 years, and his ascending career path is not entirely uncommon among FedEx employees.

"Everyone you talk to has started somewhat at the bottom of the company and worked their way up," Palmer says.

Expanding Indianapolis in 1998

FedEx began operating its Indianapolis hub in 1988 and an expansion in 1998 tripled the facility's size and doubled its sorting capacity. The '98 development also made Indy FedEx's second largest hub and the expansion itself was the largest in FedEx history.

Because Palmer was involved with the expansion in 1998, he brings experience and knowledge to the table.

"It's very easy to do an expansion or do a facility where it's just a green sheet of paper," Palmer says. "You can build it and you open the door, walk in and start doing business. But the biggest challenge we had (in 1998) was to build this facility while we continued to operate the hub."

While the expansion in 1998 created much-needed space, it also brought approximately 1,200 new employees and automation to the Indianapolis hub. New employees and automation required training, which had to be done around the normal sort schedule and not with customers' packages.

"There was a lot of training with it," Palmer says. "We actually had about 20 tractor-trailer loads of dummy boxes full of old telephone books that we used to test the system and teach people how to sort."

The New Expansion at Indy

In contrast to the 1998 hub development at Indianapolis, the new expansion is more of an addition of space and employees, without the extra training to integrate automation.

Palmer says, "This is really a continuation of the existing structure. It's something that we can just open, turn it on and add it to the current facility. In '98 the biggest change was we turned a 600,000 square-foot facility into a two-million square-foot facility. It was a totally different way of doing business."

According to a May 4 FedEx press release, plans for the expansion project include a 400,000 square-foot addition to the existing sort facility and construction of a 175,000 square-foot secondary sort building. Two maintenance buildings will also be built, including an 8,000 square-foot facility for ground support equipment and a 40,000 square-foot building for aircraft maintenance. In all, the Indianapolis hub will grow by more than 600,000 square feet. Construction has begun and the expanded system is slated to be operational by December 2008.

With the expansion, the hub will increase its package processing capacity by more than 30 percent, from 75,000 packages per hour to 99,000 per hour. Also, up to 800 employees may be hired with the expansion, which would bring the Indy hub to almost 5,000 employees.

FedEx Express is extending its lease with the Indianapolis International Airport by 12 years from 2016 to 2028. Under the agreement, the airport authority will finance, build and lease back to FedEx five wide-body aircraft gates by December of this year. The agreement includes options for as many as nine more gates to be built by Dec. 1, 2008. Currently, FedEx has 61 gates at the Indianapolis hub: 38 for wide-body aircraft and 23 for narrow-body aircraft.

Changes in Cargo

"If you look at total gross tonnage of all goods shipped in the world today ... about 20 percent of the total tonnage is what I'd call express or time-definite freight. That 20 percent though represents 80 percent of the total value of all those goods. So the trend in the last 10 or 15 years—even the last five years—is really more time-definite, high-value type of goods, especially out of Asia," Palmer says.

He says it's not good enough anymore to put a computer on a ship and have it arrive 60 days later because it's obsolete. Now it's here in two to three days.

"In the '80s there was the just-in-time theory," Palmer says. "This is like just-in-time on steroids. And now it's moving to pharmaceuticals, electronics and high-value electronic peripheral type of goods."

International Growth

This March, the U.S. Department of Transportation awarded FedEx Express the rights to operate three additional weekly flights to China, which bring its total to 26. FedEx has more all-cargo flights to and from China than any other US cargo airline, according to the March 24 FedEx press release. "The whole Pacific Rim is growing like crazy. It's been the fastest growing region in the world for quite a while," Palmer says. "China is a big driving factor for that."

A Bright and Shining Future

A large part of FedEx's success in Indianapolis and beyond is not only its business, but its people. Overall, Palmer says, FedEx has very low turnover.

"We're very loyal. It's a very strong culture of people and customer service," Palmer says. "I'm very optimistic about the future."

Perhaps as evidence of employees' loyalty and morale, this January marked FedEx's ninth consecutive year listed on FORTUNE Magazine's "100 Best Companies to Work For" in America. Also, FedEx ranked fourth on FORTUNE's 2006 list of the "World's Most Admired Companies," which was published in February.

In addition to the excitement of the Indianapolis expansion, FedEx is also building a new hub in Greensboro, N.C., which is scheduled to be in operation in 2009.