Air Cargo and Express

On the night of 17 April 1973 a small fleet of Dassault Falcon 20 business jets, converted to carry packages, flew into Memphis from 25 American cities. Federal Express, the company Frederick W. Smith had incorporated in 1971, sorted what they carried in the early hours at the city's airport and flew the packages out again before dawn. There were about 186 of them (company history, widely reported). The network made no sense on a map. A package from Atlanta to Miami flew first to Tennessee; a package from Boston to New York went the same way. But only a hub could promise that any of the 25 cities would reach any other by the next morning, and the promise was the product. Unlike a trucking company, which can start on one lane, the network had no value until every city was connected at once, which is why it launched all 25 in one night.

The first years were close to fatal. Volume was tiny relative to capacity, so the company lost money every night it flew. The Arab oil embargo of October 1973 sent jet-fuel prices up within months of the launch. Rules of the Civil Aeronautics Board restricted all-cargo airlines' aircraft size, so FedEx operated its small jets as an "air taxi" to stay outside route certification. The start-up had raised about $90 million of equity and loans (reported), and it survived a series of financing crises in 1973–75 (reported). The Air Cargo Deregulation Act of 1977, for which FedEx lobbied, lifted the limits and let it fly Boeing 727s and later DC-10s, sharply cutting its cost per package. Its "absolutely, positively overnight" advertising turned reliability into a brand, and shares were listed in 1978.

FedEx grew into a group of separate networks: Express in the air, Ground on independent contractors from the 1998 Caliber purchase, Freight in LTL from 2001, and a European road network from TNT in 2016. It merged Express and Ground into one operating company from 1 June 2024 and spun off FedEx Freight on 1 June 2026. Fred Smith, executive chairman since Raj Subramaniam became chief executive on 1 June 2022, died on 21 June 2025. In fiscal 2026, the year to May, FedEx's revenue was about $94.7 billion (company). This chapter explains the two halves of the air-cargo business, why the integrators earn their money from density and reliability, and how US trade policy closed one of the industry's biggest markets in 2025.