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11
MESSAGE FROM THE CHAIRMAN
FedEx Corporation achieved another year of record
revenues and earnings in fiscal year 2006 through
highly effective execution of our business strategy. But
a single year’s results cannot completely capture the
positive impact we see from people’s ever-expanding
access to goods, services and information around
the globe.
In its simplest form, better access makes it easier for
people to get the things they need to improve their
lives, their businesses and their communities. The
success of FedEx reflects our increasing efficiency
in connecting our customers to what they want and
need. We combine the most comprehensive global
networks with the global mindset to tailor our solutions
to the desires and dreams of each customer. This
combination enables our customers in each of the
more than 220 countries and territories we serve to
reach more of what’s possible in the world today.
The Power of Networks
The impressive power of networks is universally
recognized today: physical networks of roads or
telecommunications cables, economic networks of
trading partners, or social networks of like-minded
Internet users. It is said that a network’s power
increases exponentially to the number of connections
added. Our experience shows that the FedEx shipping
and information networks follow that same model. In
FY06, FedEx initiatives brought better connectivity
and choice to our customers. As examples, let’s look
at two of the world’s fastest growing economies —
China and India.
Ever since we established international express
operations in China more than 20 years ago, FedEx
has played an important role in one of the greatest
economic surges in world history. In January 2006
we announced a strategic investment in the long-term
growth of China by agreeing to acquire the domestic
express network of DTW Group along with its 50
percent share in our International Priority express
joint venture. In FY06 we also broke ground on a
new Asia-Pacific hub in Guangzhou and added three
more weekly flights between China and the United
States, maintaining our long-standing leadership
position in this critical corridor. We are well positioned
to serve the emerging growth patterns of this vibrant
economy.
In FY06, we also expanded our service in India. FedEx
was the first express company to serve this important
market with direct international air routes. This
expansion connects more of India — 4,348 cities and
towns — to more of the world, faster. We inaugurated
the first overnight express flight from India to China
and doubled our capacity from Europe to Asia through
an eastbound around-the-world flight, mirroring its
westbound counterpart launched in FY05. As India’s
economy continues its rapid expansion, we have the
network to serve it.
In the United States, we are making multiple moves
to strengthen our networks. For example, FedEx
Express announced a major expansion of its
Indianapolis hub, which will increase package
processing capacity more than 30 percent.
Our FedEx Freight network’s rapid growth will be
accelerated through the planned acquisition of
Watkins Motor Lines, a leader in the long-haul
segment of the less-than-truckload market. To be
rebranded FedEx National LTL, it will dovetail with
the regional networks of FedEx Freight, to create a
comprehensive LTL solution for our customers.
Our FedEx Ground network is on track to expand
its average daily package pickup capacity to approxi-
mately five million in the next five years, with three
new hubs opened in FY06. FedEx Ground has accel-
erated transit times in more than half its lanes over
the past three years, and in June 2006 alone improved
transit times in more than 4,000 additional lanes.
All of this progress has been made under the out-
standing leadership of FedEx Ground CEO Dan
Sullivan, who will retire January 5, 2007. Dan founded
the predecessor company 21 years ago and has been
a valued member of our Strategic Management
Committee since the company’s acquisition by FedEx.
He will leave with our thanks and admiration and will
remain a consultant to FedEx. Dave Rebholz, currently
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