EXECUTIVE SUMMARY

This report is an overview of FedEx Corporation which we came across through the source of internet. We focused on different aspects of what FedEx is, how it works and how much is its global recognition. FedEx is the world's largest express delivery, ground small-parcel delivery, less-than-truckload freight delivery, supply chain management, customs brokerage, trade facilitation and ecommerce solutions company with more than 145,000 employees, worldwide and delivering more than 3.2 million packages daily. They command a fleet of 634 aircraft and more than 42,500 vehicles. FedEx offers various international packages and document delivery services to 214 countries, as well as international freight services and also offers commercial and military charter services. Federal Express has reorganized in an effort to provide consumers better and more complete transportation, distribution, and logistics products and services. The Federal Express Corporation, formerly FDX Corporation, now provides strategic direction for six other companies; each with a key role in the corporations overall operation. FedEx Express (formerly Federal Express) the traditional global express delivery company utilizing air routes and local ground distribution FedEx Ground (formerly RPS) - North American ground package delivery; expanding from business-to-business to business-to-consumer FedEx Custom Critical (formerly Roberts Express) time-specific, critical shipment within North America and within Europe FedEx Logistics (formerly FDX Logistics) a transportation management company plus two regional freight carriers FedEx Trade Networks provider of full-service customs brokerage, trade consulting, information technology, and e-clearance solutions Viking Freight western U.S. regional less-than-truckload carrier offering premium service FedEx is best known for its by-line of "when it absolutely, positively has to get there". This is but one reason FedEx is the leader in the industry. Fred Smith founded FedEx in April of 1973. Smith incorporated such management principles that have made FedEx an overnight success. These principles have made FedEx employees show unprecedented dedication to their work and to their company. One reason FedEx is a corporate leader is it's an organization filled with individual leaders. It sets direction and aligns the organization around strategic goals then creates a common vision to guide organizational behavior. All management is held accountable for a people first attitude, impeccable service to external and internal customers, and a reasonable profit, which can be used to reward employees and to improve the company.

FedEx did not become the largest shipping company by chance, they did it by focusing on their customers needs and making quality in their services a top priority. FedEx uses many different systems to maintain, monitor, or improve quality. In 1994 the company became the first international express cargo carrier to receive system wide ISO 9001 certification. FedEx becomes the first global express transportation company to receive worldwide ISO 9001 quality certification throughout its entire system. In August 2003, FedEx have been re-certified by Lloyd's Register Quality Assurance based on ISO 9001 version 2000. Again, it demonstrates their commitment to CUSTOMERS - providing a high performance and consistent international express service and total logistics solutions to them. FedEx Ground, an operating company of FedEx Corporation, received ISO 9002 registration for its U.S. and Canadian network of more than 500 facilities. FedEx Corporation has been recognized as one of the worlds most respected companies for the strategic leadership it provides to the independent companies that make up todays FedEx. It has received huge amount of awards almost every year in various categories such as Most Admired Company, Best Company, Cleaner Vehicles, Education, Green Power, Material Resources, Facilities Management, etc. Not only FedEx Corporation has received such awards FedEx Express, FedEx Ground, FedEx Freight, FedEx Kinkos Office and Print Services, FedEx Custom Critical, FedEx Trade Networks individually have been receiving a wide variety of awards almost every year. FedEx was built upon innovation and it continues to be an integral part of the FedEx culture and business strategy. Their commitment to innovation propels the development of ideas, products and services that empower their customers to grow their businesses around the world. FedEx employees are the foundation of its success and the key to its future. FedEx provides a safe, diverse and rewarding environment where its people have opportunities to grow and succeed. Smith believed that since FedEx was a service organization, its success depended heavily on its employees. Hence, in 1973, he developed and implemented FedEx's 'PeopleService-Profit' (PSP) philosophy. According to this philosophy, if FedEx took proper care of its employees, they would provide efficient service to the customers, which would in turn benefit the company by generating more profits. This philosophy formed the basis of all management decisions taken at FedEx. Building an emotional connection with customers takes time and commitment. But even in the short term, significant improvement is possible. FedEx is a prime example. In just a few weeks, the company saw an increase in its year-over-year business following the debut of a customercare program designed to enhance an emotional connection between FedEx and its clients.

FedEx provides customers and businesses worldwide with a broad portfolio of transportation, ecommerce and business services. They offer integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world's most admired and trusted employers, FedEx inspires its more than 275,000 employees and contractors to remain absolutely, positively focused on safety, the highest ethical and professional standards and the needs of their customers and communities.

FEDEX HISTORY
In the late 1960s, Frederick W. Smith, a young businessman knowledgeable of the air transportation industry, conceived the idea of Federal Express. Upon investigating methods of airmail movement, he discovered that the Federal Reserve System was in critical need of a method to rapidly transfer checks among its 36 branches, preferably overnight. Federal Express was first created to fill this requirement. But in researching this need, it became obvious that the overall deficiencies in the nation's air cargo system were so great that the company should focus on broader priority transportation needs. Air express was a cumbersome and time-consuming ordeal. When the airfreight finally touched down at its destination, there were surface transportation problems. Speed, reliability, and tracing left a great deal to be desired, and poor security practices resulted in numerous losses. Airline transfers often meant damage, confusion, voids in the system, and generally poor service. The most critical service problems in the air freight system of the early 1970s were experienced in medium and small communities across the country. Government regulations at the time limited the size of aircraft that could be used by a new air carrier, so small jet freighters were required. After examining various aircraft within these constraints, the Dessault Fan Jet Falcon 20 was found to be the most useful in size and load capacity for a nationwide overnight delivery air express system. With modifications that included a large cargo door, the Falcon 20 was converted into a unique cargo aircraft. The Federal Express version of the Falcon Jet, carrying a load of slightly more than three tons, was designed as an economical, convenient means of transporting cargo to airports all over the country. In April 1973, Federal Express formally began operations serving 25 cities. With capital funding of over $90 million, it was the largest venture capital startup in the history of any business in the United States. The hub sort facility was completed in May and by the end of the year, 44 vans were on the road. Employees numbered 389.

During the next several years, the company expanded dramatically, serving more cities, opening new stations, and adding aircraft to the Falcon fleet. A fleet of delivery vans established a totally integrated system of customer pickup and delivery, all operated by Federal Express employees. However, expansion was hampered by restrictive federal legislation that prevented the company from acquiring larger, more economical aircraft. They led the fight to have these restrictions lifted, and in November 1977, President Jimmy Carter signed a new airline cargo deregulation bill. In January 1978, Federal Express acquired its first 727-100 aircraft, a plane carrying almost seven times the payload of the Falcon. Other 727s soon followed. With the 727s available in 1978 to serve cities previously supported by five or six Falcons, Federal Express service expanded greatly. In April 1978, Federal Express became a public company by offering over a million shares of stock for sale to employees and the general public. The following September, shareholders approved changes in our Corporate Charter that resulted in a two-for-one split. By December, the stock was listed on the New York Stock Exchange under the symbol FDX. 1981 was the year that Federal Express introduced COSMOS (Customer Oriented Service and Management Operating System), a computerized package tracking system, and DADS (Digitally Assisted Dispatch Systems), which provided a much more efficient method of routing and communicating with couriers. That same year, the company launched the Overnight Letter, an immediate success, and greatly expanded the Memphis package sorting facility with an addition called the SuperHub. In 1982, Federal Express implemented "Operation Earlybird"--their commitment to overnight delivery by 10:30 a.m. throughout most of the country. It was an effective response to customer preference for earlier delivery and took less than 6 weeks to implement. 1983 was the year in which Federal Express attained $1 billion in revenues, the first company to do so in only 10 years without the benefit of merger or acquisition. The expansion of their international operations on a global basis began in 1984 when Federal Express purchased Gelco International, a small onboard courier operation. This was the first of a number of international acquisitions that gave the company an integrated global network serving more than 100 countries. Another enhancement to their service network was the opening of over 250 business service centers (now called Federal Express service centers) across the country in 1983, followed by the introduction of drive-thru centers (now called mini-centers) in 1985. These centers have allowed Federal Express to bring their services closer to the customer.

In 1985, Federal Express inaugurated transatlantic service to Europe with regularly scheduled flights to Brussels, the site of our European Hub. With the l986 purchase of Lex Wilkinson, the company gained a United Kingdom domestic service and contract distribution system. As nightly volumes continued to climb, they opened the first of their regional sorting centers in Newark. Federal Express also continued the aggressive use of computerized applications that year by installing over 2,000 customer automation devises on customer premises, thus enabling their customers to weigh and rate their own packages, print airbills, and generate daily invoices. These devices and the overall customer automation system are currently known as PowerShip. Reaching a record $3.2 billion in revenues during 1987, Federal Express continued to increase productivity and improve the quality of service by phasing in the COSMOSIIB tracking system with a device called SuperTracker. The company was named the Official Air Express Carrier of the 1988 Olympic Games, signifying their emergence as a truly global logistics network. Federal Express was granted exclusive air express rights to Japan and flew the inaugural trip on June 16, 1988. The company averaged a nightly volume of 1,000,000 packages late that year and continued our worldwide expansion. Their focus and mission is to continue to lead the way in providing the best service, prices, and locations in the worldwide marketplace. Federal Express responded to the distribution revolution by creating its FedEx Logistics Services Division. By using its sophisticated data management and the world's foremost transportation systems, they are offering their customers opportunities to revolutionize all of their logistical needs. In 1989, the company acquired Flying Tigers. This enabled Federal Express to greatly expand its routes, add equipment, and facilities. Most important, the company expanded with dedicated, seasoned professionals. Worldwide employment climbed to more than 119,000. In 1990, Federal Express became the first service company to win the Malcolm Baldrige National Quality Award. In 1994, the company was the first to reach simultaneous Corporate ISO 9001 Certifications. They added the new generation McDonnell Douglass MD-11 to their aircraft fleet. The MD-11 and the DC10s enable the Federal Express Freight fleet to offer unmatched service around the globe complementing their 727 fleet and a growing number of Airbus A300s and A310s. After coming close to $10 billion in revenues for the first time in fiscal year 1995, Federal Express hit $18 billion in revenues during fiscal year1999 and is projected to match or exceed this figure in fiscal year 2000. On 12-Feb-2004, FedEx Group acquired Kinko's, Inc. Now it also provides document solutions and business services, including copying and printing services, signs and graphics, videoconferencing, high-speed wireless and wired Internet access and computer usage.

When first introduced in the 1970s, overnight express service was considered a specialty. Today, it's an important part of the global business economy. This exceptional service stems from one source--FedEx people. Meeting customer needs with a dedicated work force is the primary component of the historical success of Federal Express Corporation.

FEDERAL EXPRESS CORPORATION

Federal Express has changed its look. They have reorganized themselves in order to make it as easy as possible for businesses of all sizes to achieve their shipping, logistics, supply-chain, and e-business objectives. As an $18 billion market leader in transportation, information, and logistics solutions, Federal Express Corporation provides strategic direction for five major operating companies and a leading regional carrier: FedEx Express, FedEx Ground, FedEx Custom Critical, FedEx Logistics, FedEx Trade Networks, and Viking Freight. Each company operates independently, focused on its market segment, but also competes collectively under the powerful FedEx brand worldwide. In today's Network Economy, FedEx Corporation is uniquely positioned to leverage the power of networks to help connect their customers to the high-tech, high-speed global marketplace through: Unsurpassed physical networks, delivering nearly five million shipments every business day. Virtual networks, handling more than 100 million electronic transactions a day. Continuing to invest about $1.5 billion each year in the best information technology people and Information Technology. The Federal Express people network, which consist of more than 200,000 employees and contractors delivering more than packages; they deliver integrated business solutions.

Federal Express (Express)

The worlds largest express-transportation company, offers consumers the worlds most advanced and reliable global air/ground express distribution network, serving 210 countries and connecting markets that comprise more than 90 percent of the worlds Gross Domestic Product (GDP) within one or two business days. The Federal Express (Express) global transportation network provides rapid, reliable, time-definite delivery of documents, packages, and freight shipments worldwide. A state-of-the-art information technology network enables informationrich service offerings. More than two million customers are connected electronically with Federal Express (Express) through its Web site or its customer automation systems; about twothirds of the companys domestic transactions are processed electronically every business day.

Federal Express (Ground)

It is a leading provider of ground small-package delivery. Federal Express Home Delivery, a low-cost Federal Express (Ground) service that is currently rolling to major metropolitan markets, focuses exclusively on business-to-home deliveries. Federal Express (Ground) is North Americas second- largest provider of business-to-business ground small-package delivery services and a pioneer in applying advanced information technology to meet customer needs.

Federal Express (Custom Critical)

It is the worlds largest surface expedited carrier. It offers nonstop, time-specific door-to-door delivery within the United States, Canada, and Europe of time-critical shipments and shipments that require special handling. This company is North Americas largest time-specific critical-shipment carrier. Their door-to-door surface and air-charter delivery solutions are driven by sophisticated and proprietary shipment-control technology. The White Glove Services division was recently created to meet the demands of fragile, hazardous, perishable, sensitive, irreplaceable or high-value freight. The companys Charter Air division offers an array of expedited air solutions to meet customers critical delivery times.

Federal Express (Trade Networks)

It facilitates global transportation and logistics services by providing full-service customs brokerage, trade consulting, information technology, and e-clearance solutions. FedEx Trade Networks Inc. helps customers of all sizes solve the intricacies of shipping goods globally. The company provides customers with full-service customs brokerage, which includes: entry filing and release services; assessing and advancing customs duties and fees; and filing declarations for items shipped via express air and ground networks. Other services include trade consulting and information technology, including fully integrated regulatory compliance for imports and exports, document preparation and archiving. E-clearance solutions, another service offered to customers, make it possible to quickly clear more shipments through customs by using advanced e-commerce programs. Other transportation and logistics services, catering to customer need and some built around the unique customer situation are also available.
7

Federal Express (Logistics)

It specializes in transportation management, integrated logistics, and consulting services that are in keeping with the hall marks of the Federal Express brand, global, time-definite and information-intensive. The company offers complete supply chain solutions targeted to customers in the aerospace, automotive, health care, high technology, industrial, and consumer products industries.

Federal Express (Freight)

Viking Freight is the leading less-than-truckload carrier operating principally in the western United States offering premium next-day, on-time regional freight service and direct ocean service to Alaska and Hawaii.

Operate Independently But Compete Collectively

This is a new concept (a new business model) at Federal Express. The concept allows Federal Express Corporations five primary subsidiaries (i.e. FedEx Express, FedEx Ground, FedEx Custom-Critical, FedEx Logistics, and FedEx Trade Networks) the freedom to operate their transportation, distribution, and logistics systems independently; each focusing on the segment of the market it serves best. Each subsidiary has a transportation system, a cost structure and a unique culture suited to its particular market segment. Fred Smith, Corporate CEO, feels that attempts to combine the operations would dilute the quality of service each company provides. While the companies under Federal Express Corporation have the freedom to operate independently, the strength of the corporation is in the sum of the capabilities each company brings to the corporation. In short, Federal Express Corporation leverages the companies capabilities and their myriad of services; overlays the Federal Express elaborate infrastructure, distribution and information network; all under the Federal Express brand to create the ultimate and most complete express-distribution operation in the world.

FEDEX LEADERSHIP
Throwing spotlight on Federal Express leadership, it aligns its organization through the company's "living" credo: PEOPLE SERVICE PROFIT. It sets direction and aligns the organization around strategic goals then creates a common vision to guide organizational behavior. Former Marine Fred Smith has based his own personal leadership style at FedEx on the principles derived from his experiences in the Marine Corps. Smith has incorporated many of his personal leadership lessons into the FedEx Leadership Institute, where the firms managers are trained. Smith has noted that those trained in the military will immediately recognize many of the principles that are taught at the FedEx Leadership Institute as being familiar from their military training. All management is held accountable for a people first attitude, impeccable service to external and internal customers, and a reasonable profit, which can be used to reward employees and to improve the company. All the organizations values and objectives flow from this model, which helps to align employees and managers activities. FedEx strives to be an environmental leader in the transportation industry. They participate in the development of sound environmental policy and the promotion of effective environmental management by their suppliers and contractors. They believe that opportunities to use new technologies to achieve greater benefits are just beginning to be realized. FedEx is proud to be one of the first companies to make investments in large-scale solar power, renewable energy purchases, hybrid-electric delivery trucks and other emerging environmental efforts. Through collaborations with government and nonprofits, greener technologies like these are gaining in popularity, and FedEx continues to use its leadership position to help establish them as the standard in the industry. FedEx was the only transportation company to publicly call for fuel efficiency standards for commercial medium and heavy-duty truck classes. These standards would help speed development of new, cleaner vehicle truck technologies, as they did for passenger cars. FedEx Chairman, President and CEO Fred Smith have also made a public call for energy efficiency and diversification through his involvement with Securing Americas Future Energy. FedEx is proud to have been recognized by leading government agencies, nonprofit organizations, academic institutions and more for its contributions to sustainable business development.

FEDEX MISSION, STRATEGY, VALUES

Mission
FedEx mission is to produce superior financial returns for shareowners by providing high valueadded supply chain, transportation, business and related information services through focused operating companies, to meet customer requirements in the highest quality manner appropriate to each market segment served, to strive to develop mutually rewarding relationships with its employees, partners and suppliers, to make safety the first consideration in all operations and to conduct corporate activities to the highest ethical and professional standards.

Strategy
The unique FedEx operating strategy works seamlessly - and simultaneously - on three levels.

Compete collectively by standing as one brand worldwide and speaking with one voice. Operate independently by focusing on our independent networks to meet distinct customer needs. Manage collaboratively by working together to sustain loyal relationships with our workforce, customers and investors. Along with the above three levels, the company is currently exploring four strategies for use in establishing itself as a viable competitor in the world market: The global strategy is used when an enterprise locates its headquarters in one country while its operations are performed in one or more other countries. Many domestic organizations have adopted this approach in order to broaden their markets by exporting their products. Under this approach, an organization operates in a centralized manner. Efficiently, obtained through economies of scale, is the key criterion of effectiveness sought by the global company. In a multinational strategy, national or regional operations are relatively autonomous and decentralized in order to increase sensitivity to differences among the individual countries in which it operates. The key competitive issue is responsiveness to local markets.

10

 Under the international strategy, enterprises compete on a worldwide basis against other international companies. The international approach calls for a more horizontal structure and establishes strategic linkages between countries in which a firm operates. Because the key to success in this approach lies in the enterprises ability to transfer knowledge to overseas units, learning constitutes its key issue. The transnational enterprise strategy poses the greatest challenge for organizations seeking to increase their global competitiveness. The primary difficulty is to design an organization form that is capable of being efficient and responsive, and that enables the transfer of knowledge across locations.

Values
People: They value their people and promote diversity in their workplace and in their thinking. Service: Their absolutely, positively spirit puts their customers at the heart of everything they do. Innovation: They invent and inspire the services and technologies that improve the way they work and live. Integrity: They manage their operations, finances and services with honesty, efficiency and reliability. Responsibility: They champion safe and healthy environments for the communities in which they live and work. Loyalty: They earn the respect and confidence of their FedEx people, customers and investors every day, in everything they do.

11

FedEx Quality
FedEx did not become the largest shipping company by chance, they did it by focusing on their customers needs and making quality in their services a top priority. FedEx uses many different systems to maintain, monitor, or improve quality. The main quality control system is called (TQM) Total Quality management. This TQM system incorporates programs such as a formal Quality Improvement Process (QIP). The philosophy of the QIP program is that quality must be a way that FedEx does business not part of the time, but all of the time. As a result sayings such as "Do it right the first time", "Make the first time you do it the only time anyone has to", and "Q=P" (quality = productivity) are important parts of the FedEx culture. To maintain these mottos the company teaches all of its employees the 1-10-100 rule. According to the rule, if a problem is caught and fixed as soon as it occurs, it costs a certain amount of time and money to correct. If a mistake is caught later in a different location, it may cost 10 times that much to repair. And if a mistake is caught by a customer such as receiving a wrong package that perhaps got mixed up during the shipping process it may cost up to 100 times as much to fix. FedEx also utilizes quality action teams (QAT) and (IT) information technologies to continuously improve FedEx's quality. QATs design work processes to support new product and service offerings. A set of service quality indicators (SQI) has been established to determine the main areas of customers' perception of service. All of this data is processed through SQI teams and information technologies.

12

FEDEX ISO 9000 CERTIFICATION

In 1994 the company became the first international express cargo carrier to receive system wide ISO 9001 certification. In that time, they have come a long way in instilling the ISO requirements as a way of life, a way to conduct smart business. FedEx has an extensive quality and service assurance network which facilitates their internal audit program (a requirement of ISO 9001) and provides ISO 9000 expertise for all departments. FedEx becomes the first global express transportation company to receive worldwide ISO 9001 quality certification throughout its entire system The Asia Pacific Division was visited by their external assessor, Lloyd's Register Quality Assurance (LRQA) in November 1995. LRQA continues its assessment through electronic and field audits. The twenty elements of ISO 9001 range from Management Responsibility to Process Control to Training. They are far reaching and challenging, but simply good business. It means that FedEx have processes in place to deliver to its customers what it says its going to deliver: reliable, time-definite service backed by real-time information on shipments. FedEx met the rigorous quality system standards they at Lloyd's apply for ISO 9001 certification. LRQA president in the U.S complemented that they were impressed both by the company's use of technology and by the commitment of its employees to provide the high level of service FedEx customers expect.

ISO 9001 Update

Version 2000 of ISO 9001 on Quality Management System Standard provides comprehensive guidelines for organizations to develop an excellent business system. To meet with the new requirements, FedEx begin with understanding the need of our customers. Based on customers valuable input through different communication channels, they continuously validate that they are delivering the right service to them. At the same time, they enhance their internal systems like technology, training, operations and billing etc., so that they are always the best in the industry. Finally, the company has different teams of employees contact customers and listen to their valuable feedback with heart. This information is then mapped to the processes and enabling FedEx to improve its service through regular business process enhancement. The whole process is managed by senior management and a team of quality professionals. In August 2003, FedEx have been re-certified by Lloyd's Register Quality Assurance based on ISO 9001 version 2000. Again, it demonstrates their commitment to CUSTOMERS providing a high performance and consistent international express service and total logistics solutions to them.

13

14

FedEx Ground Awarded ISO 9002 Registration

FedEx Ground, an operating company of FedEx Corporation, received ISO 9002 registration for its U.S. and Canadian network of more than 500 facilities. The company was audited and certified by Lloyd's Register Quality Assurance Inc., a part of the Lloyd's Register Group and the leading independent classification and inspection authority for shipping and engineering industries. "ISO 9002 registration clearly demonstrates our ongoing commitment to provide customers with the highest quality transportation and logistics services," said Daniel J. Sullivan, president and CEO of FedEx Ground. "This registration is a credit to our team of more than 35,000 employees and independent contractors and their uncompromising dedication to uphold a strong quality focus." With registration of the company's network -- including its FedEx Home Delivery facilities -FedEx Ground now falls under FedEx Corporation's umbrella certificate of ISO 9001 registration. This certificate, which encompasses FedEx Ground, FedEx Express and FedEx Services, covers the design, management and operation of its worldwide express and ground transportation services. Mike Glenn, executive vice president, Market Development and Corporate Communications at FedEx Corp said that the certification gives assurance to customers competing in the global marketplace that they have world-class quality processes in place to deliver both time-definite express and date-definite ground services as promised. They are proud to be the first and only global transportation leader to have both our entire express and ground networks registered.

15

FEDEX RECOGNITION
FedEx Corporation has been recognized as one of the worlds most respected companies for the strategic leadership it provides to the independent companies that make up todays FedEx: FedEx Express, FedEx Ground, FedEx Freight, FedEx Kinkos Office and Print Services, FedEx Custom Critical, FedEx Trade Networks, FedEx Supply Chain Services and FedEx Services. Recent recognition of its leadership, workplace environment and contribution to the community includes:

Most Admired / Best Companies

Americas Most Admired Companies list, No. 6 Fortune - 2007 Worlds Most Admired Companies list, No. 7 Fortune 2007 "Premier 100 IT Leader for 2007" Computerworld 2007 Americas Most Admired Companies list, No. 2 Fortune 2006 Worlds Most Admired Companies list, No. 4 Fortune 2006 Worlds Most Admired Companies list, No. 8 Fortune 2005 Americas Most Admired Companies list, #No. 6 Fortune 2005 No. 1 Delivery Company Fortune 2005 Hall of Fame for claiming a spot on the 100 Best Companies to Work for in America list every year since its inception (1998-2005) Fortune - 2005 Worlds Most Respected Transportation Company Survey, No. 1 - Financial Times and PricewaterhouseCoopers 2004 U.S. Corporate Reputation survey, No. 8 - Harris Interactive, the Reputation Institute and Wall Street Journal 2004 Worlds Most Respected Transportation Company Survey, No 1 - Financial Times and PricewaterhouseCoopers 2003 Worlds Most Admired Companies list, No. 10 - Fortune - 2003 Worlds Most Respected Companies Survey list, No. 70 - Financial Times and PricewaterhouseCoopers - 2002 2003 Top-10 Companies for Overall Reputation - Harris Interactive, the Reputation Institute and Wall Street Journal 2003 "Index of Top 40 Companies" list No. 12 - Wired 2003 Worlds Most Admired Companies list, No. 10 - Fortune - 2002

16

Cleaner Vehicles

FedEx Express, along with Environmental Defense Fund and Eaton Corporation, received the prestigious Harvard University Kennedy School of Government biennial 2005 Roy Family Award for Environmental Partnership for the organizations joint creation of a hybrid delivery truck. The hybrid truck project also claimed the 2005 Blue Sky Award by West StartCALSTART for its nearly single-handed placement of commercial hybrid trucks on the map for corporate America. FedEx Express received the Environmental Protection Agencys (EPA) 2004 Clean Air Excellence Award for clean air technology in April 2005, along with the Environmental Defense Fund and Eaton Corporation for their collaboration to launch the FedEx hybridelectric truck.

Material Resources
FedEx Office was awarded the 2007 Gold Achievement Award from EPAs Waste Wise program for the companys efforts to reduce plastic waste. The Business Environmental Resource Center and Sacramento County, Calif., presented FedEx Express with the Pollution Prevention Business Award in 2004. In 2004, FedEx Office received the Rainforest Alliance Corporate Green Global Award for its commitment to sustainable paper practices. FedEx Office received the 2001 Environmental Stewardship Award from the National Recycling Coalition. Tennessee Recycling Coalition's "Recycling Innovator of the Year" award was presented to FedEx Express in 1999 for our innovative program that recycled over nine million pounds of material from our Memphis operations. In 1998, The American Trucking Organization awarded FedEx Express its "Environmental Excellence in Trucking" award for recycling over six million pounds of material in innovative waste minimization activities for published manuals and training.

Green Power
FedEx Express and FedEx Office are ranked in the top 50 of the EPAs April 2008 Green Power Partnership list of Fortune 500 companies that have invested in renewable energy. FedEx Office is ranked in the top 10 among retail companies. FedEx Express was given the Green Power Leadership Award from the EPA in 2001, 2003 and 2005 for Green Power On-Site Generation. In 2002, we also earned the EPA's Green Power Partner of the Year.

17

Education

In recognition of the actions to promote environmental preservation and effective environmental management, FedEx United Arabs Emirates was awarded the Dubai Cargo Village Environmental Awareness Award in June 2004 for the third year running. FedEx Corp. is a participant in the Global Environment Management Initiative (GEMI), a nonprofit organization that has united leading companies dedicated to fostering environmental and corporate citizenship worldwide.

Facilities Management

FedEx Express was awarded the International Earth Award for excellence in environmental facility management by Building Owners and Managers Association (BOMA) International in 2004 and 2005. The FedEx Services World Technological Center in Collierville, Tenn., received the award in 2003. The City of Fort Worth's Water Department awarded the FedEx Express Alliance Fort Worth Hub its Pretreatment Star Award for both 1999 and 2000, achieving 100 percent compliance with pretreatment regulations. The next year, the city honored the hub with its "Pretreatment Partnership" award for achieving 100 percent compliance with local, state and federal pretreatment regulations for a period of three consecutive years (19992001).

FedEx Express Awards

Fortune, "100 Best Companies to Work for in America" (1998, 1999, 2000) Fortune, "50 Best Companies for Asians, Blacks and Hispanics" (1998, 1999) Working Woman, "100 Best Companies for Working Mothers" (1998)

FedEx Ground Awards

National Small Shipments Traffic Conference (NASSTRAC) and Logistics Management and Distribution Report magazine, "Parcel Delivery Carrier of the Year" (1999) American Trucking Association Safety Contest, first place, "General Commodities Division, Miscellaneous Fleets, Linehaul, Over 20 Million Miles" category (1998, 1999) American Trucking Association, President's Trophy for the best overall safety program (1996).

18

FedEx Custom Critical Awards

Pfizer Corporation, "Quality Carrier of the Year" for transportation excellence for the fifth consecutive year (1998) Goizueta Business School of Emory University, "Best Practices in Customer Relationship Management" (1997) Smithsonian Institution, included in the Permanent Research Collection on Information, Technology and Society (1996)

FedEx Logistics Awards

Institute of Transport Management, "European Logistics Company of the Year" (1999) Logistics Management & Distribution Report "Quest for Quality Award" in the category of third-party logistics (1999) General Motors "International Supplier of the Year Award" (model year 1998)

FedEx Freight Awards

Dayton Hudson Corporation, "Director's Excellence Award" Glaxo Welcome, "Carriers' Performance Best of Class Award" International Paper, "Regional LTL Carrier Award for Outstanding Performance" PacBell Directory, "Supplier Quality Alliance Silver Medal" Phillips-Van Heusen Corporation "Carrier of the Year" National Small Shipments Traffic Conference (NASSTRAC) "LTL Regional Carrier of the Year" (fourth time) Logistics Management & Distribution Report "Quest for Quality" readers' choice award (eighth time) California Trucking Association, first place, "Fleet Safety Contest" American Trucking Association, "President's Trophy for Safety"

19

FEDEX INNOVATIONS
FedEx was built upon innovation and it continues to be an integral part of the FedEx culture and business strategy. Their commitment to innovation propels the development of ideas, products and services that empower their customers to grow their businesses around the world. FedEx created a new and distinct market over thirty years ago when it began providing customers access to next day just-in-time delivery service. Since its inception, Frederick W. Smiths vision for the company has always had a focus on innovation. In 1978, Fred Smith was famously quoted as saying, The information about the package is just as important as the package itself. Today, FedEx provides customers access to almost realtime information which has enabled new supply chain models and efficiencies. This unprecedented access to information is connecting customers around the world to economic markets and communities. Innovation is a part of the DNA at FedEx. Whether it is through web services, alternative energy practices or the development of high-technology, FedEx sees innovation as a strategic business practice that is continuously enhanced, developed and encouraged.

History of Innovation
FedEx has a rich history of innovation that is built on a series of firsts including: Installing computers in delivery vehicles, providing sophisticated automation for corporate mailing services and developing tracking capabilities and software. In 1994, they were the first to offer package-status tracking for improved customer service via fedex.com. Offering shipping for improved customer service and convenience via fedex.com Pioneering the use of wireless technology for shipping over 25 years ago with the introduction of the Digital Assisted Dispatch System (DADS).

20

FEDEX HUMAN RESOURCE

FedEx employees are the foundation of its success and the key to its future. FedEx provides a safe, diverse and rewarding environment where its people have opportunities to grow and succeed. Since its inception, FedEx's management focused on providing a suitable work environment that encouraged employees to come up with innovative solutions. Employees responded positively to the faith reposed in them and displayed exemplary commitment towards their work. The extent of the commitment of the employees could be gauged from the fact that during the first couple of years, when the company was going through severe financial difficulties, the employees were prepared to sell their personal belongings and use their own credit cards to purchase fuel to deliver the packages to the customers. Even when the employees didn't receive their salary on time, they continued working with FedEx. Smith believed that since FedEx was a service organization, its success depended heavily on its employees. Hence, in 1973, he developed and implemented FedEx's 'People-Service-Profit' (PSP) philosophy. According to this philosophy, if FedEx took proper care of its employees, they would provide efficient service to the customers, which would in turn benefit the company by generating more profits. This philosophy formed the basis of all management decisions taken at FedEx.

The Right People...

FedEx always look for talented people that share the basic qualities of honesty, enthusiasm, creativity and respect for co-workers and customers. As FedEx has grown into a global company, a culture has developed that respects diversity and tries to develop the fullest potential of employees within FedEx. Management understands that FedEx will only continue to be successful with the dedicated employee. This is core to its philosophy of People - Service - Profit.

Growing with FedEx...

FedEx has led the industry in creating employee focused programs to promote positive internal communications and staff development.

21

On August 20, 1997 Federal Express Corp. distributed an approximate $20 million Special Appreciation Bonus to nearly 90,000 U.S. operations employees in recognition of their extraordinary efforts. It's no idle boast to say that they are a family. Below are some of the key programs offered to employees:

Promotion From Within Policy - allows employees to be considered first for open positions. Open Door Procedures - allows employee input to be received and considered by management. Guaranteed Fair Treatment - assures any employee grievance is dealt with fairly and objectively. Survey - Feedback - Action - gives an opportunity for employees to offer feedback on the effectiveness of management. G.O.L.D. (Growth, Opportunity, and Leadership & Development) Program provides an in-house management development program.

Growth Opportunities
FedEx believed in promoting people from within for higher management cadres. The SFA program helped management take decisions regarding promotions, though its utility was confined to evaluating the performance of the managerial cadre employee only. FedEx also provided opportunities to employees from the non-managerial cadres to move up to the managerial level. In order to encourage non-managerial cadre employees to move to the managerial within the organization, FedEx devised a unique program known as Leadership Evaluation Awareness Process (LEAP).

22

FEDEX CUSTOMER CARE

Building an emotional connection with customers takes time and commitment. But even in the short term, significant improvement is possible. FedEx is a prime example. In just a few weeks, the company saw an increase in its year-over-year business following the debut of a customercare program designed to enhance an emotional connection between FedEx and its clients. During the 2003 holiday season, FedEx introduced a new communication tool for its business account managers that consisted of 16 electronic messages, or e-cards. With the help of Hallmark Loyalty, FedEx created custom electronic greetings appropriate for a variety of occasions. The greetings are designed to help establish personal relationships between FedEx account representatives and their business customers. Going beyond purely professional communication, FedEx's aim was to demonstrate to its customers that its account reps care about them as customers and as people. The company introduced its e-cards to more than 300,000 business account contacts, many of whom wrote back. In fact, the vast majority of sales reps who send e-cards get replies from customers either thanking them, or opening up a dialogue about more business. To further convey its commitment to quality customer care, FedEx asked that the Hallmark logo appear on the opening e-card screen, just as it appears on the back of paper greeting cards. Customers reacted to the greetings almost immediately, both by increasing the amount of shipping they were doing with FedEx and by sending notes of appreciation to their account representatives. FedEx had struck a chord. In the three months following the start of the e-cards program, the company saw double-digit, year-over-year revenue and volume increase among the accounts that received e-cards during the holidays. Forging an emotional connection with customers translated into increased business for FedEx in just a few short weeks. The enhanced loyalty that has been fostered likely will mean increased revenue over the next few years from reduced customer attrition. FedEx showed customers that it cares, and customers returned the gesture.

23

FEDEX CONCLUSION
Federal Express is in the process of transforming itself into a diversified company that offers much more to its customers than ever before. The acquisition of Caliber Systems allows Federal Express the opportunity to offer its customers more reliable transportation, distribution, logistics and other related services. In addition, Federal Express is able to perform a wider range of express distribution services and options second to none in the express transportation industry. This transformation, however, is taking its toll on the corporation. On the fast-paced stage on which companies in Corporate America play, and in light of continuous, rapid changes due to innovations in technology, a companys ability to reinvent itselfin part or across the board-must become routine and seamless. It is this pressure generated by the constant reality of preparing for and reacting to change that makes strategic thinking and strategic planning essential to any company who plans to survive in the 21st century. The term used by business management strategist is that of becoming a learning organization, that is, the flexibility of an organization to recognize and adjust to changes in its environment rapidly in order to maintain the competitive advantage. Federal Express is currently going through the pains of this dilemma. Federal Express operational concept of operating independently and competing collectively is an ideal move that will make the company more versatile and accommodating to its customers. The companies within Federal Express Corporation comprise the most complete expressdistribution operation ever created; the only other organization that comes close is the Transportation Command (TRANSCOM). Federal Express, however, may be more efficient and effective due to its highly integrated transportation, distribution, logistics, and information network. FedEx holds certificates of authorities to serve more foreign countries than any other U.S allcargo air carrier. This is a great opportunity for FedEx to grow even higher.

24