How FedEx's CEO Uses AI Automation as Part of His Strategy

The concept of humanoid robots has moved from science-fiction to reality as AI advances, taking automated processes to the next level.

Elon Musk, the multi-CEO of Tesla, xAI and SpaceX, has spoken about how advancements of humanoid robots may take away the need for a human workforce altogether, sharing with investor Nikhil Kamath in December: “In a future where anyone can have anything, you no longer need money as a database for labour allocation.

“If AI and robotics are big enough to satisfy all human needs, then the relevance of money declines rapidly, I’m not sure we will have it.”

But FedEx’s CEO Raj Subramaniam believes that advancement of humanoid robots is already needed to keep up with the consumer demand of his company.

In an interview with The New York Times on 18 January, in which he discussed automating the delivery process, Raj said: “Truck unloading and truck loading are a very difficult problem for robotics to solve - packages come in every size, shape and weight.

“We’re not looking for humanoid robots - we’re looking for super humanoid robots, because maybe they need to have a couple of elbows. More degrees of freedom.”

Adding that he understands automation has a long way to go, the CEO added: “We’re in the pilot stage. It is not ready for prime time yet.”

AI-native strategy 

Under the leadership of Raj, FedEx is pursuing an AI-native strategy aimed at transforming its vast, 50-year-old logistics network into a more agile, data-driven and “smart” operation.

This includes the AI-powered robots, such as those from Dexterity AI, which are deployed in hubs to handle sorting and loading, increasing trailer utilisation by up to 13% and sorting accuracy to over 99%.

Alongside this, the firm uses machine learning to analyse traffic, weather and logistical constraints in real time, reducing delivery times by up to 20%.

“We move 17 million packages per day through the global system,” Raj added during the interview. “That generates multiple petabytes of data. We realised that the data is valuable in its own right.”

Discussing the importance of AI, he said: “The fuel for AI is data. If you don’t have your data appropriately organised, then there are limits of what you can do with it.

“We’re using AI to make supply chains for everyone. We can now say with more and more precision when that package is going to arrive.”

Spearheading growth 

Since taking over as President and CEO of FedEx in June 2022, Raj has spearheaded a major, multi-year transformation strategy designed to shift the company from a “growth at all costs” model to one focused on efficiency, profitability and consolidation.

He is merging the distinct FedEx Express, Ground and Freight businesses into a single unified organisation.

This aims to eliminate redundant facilities, stop sending redundant trucks to the same neighbourhoods, and by 2027, save an estimated US$12bn a year.

Faced with declining revenue and high inflation, he also initiated a US$4bn cost-cutting plan. This has included restructuring, reducing structural costs and focusing on profitable residential deliveries rather than just volume.

Raj is continuing this approach to growth by taking steps with AI-led automation, acknowledging that its development also has progress to make in order to further automate supply chains.