Raj Subramaniam became FedEx’s second ever CEO in the company’s 53-year history when he replaced founder Fred Smith in June 2022. It was a difficult time to take the helm: after the exuberance of runaway online shopping during the pandemic, global demand had began to slow significantly. Subramaniam even warned of a worldwide recession in September of that year, causing his company’s stock to plummet.
FedEx and its competitors are still adapting to a world without as much online shopping, and Subramaniam has had to make adjustments. He said in 2023 that the company would combine all of its ground, air, and other operations as part of a $4 billion savings plan, and the company cut tens of thousands of workers. The moves appear to have stabilized the company. Its shares are trading near pandemic highs, and in June FedEx reported an improvement in quarterly revenue after six straight quarters of declines.
During conversations in May and August, Subramaniam spoke to TIME about his upbringing, his career at FedEx, and the company’s future.
This interview has been condensed and edited for clarity.
I know that you studied chemical engineering in India and the U.S.—how did you get into the corporate world?
Having grown up in India, I had two choices, either be an engineer or a doctor. My mother was a doctor, and there’s no way I was going to do that—I definitely did not have that skill set. And in India, there was a well-worn path—but a very narrow path—that some of the top students got scholarships to go to the United States to pursue a master’s degree in engineering. That was the path that I took, but once I got here, when I was doing my master’s in chemical engineering, I figured out that a job in engineering wasn’t what I was going to do. I decided that I was going to pursue a business career, and went on to do an MBA from the University of Texas at Austin.
What attracted you to FedEx specifically after you got your MBA?
Well, let’s call it a process of elimination. It was 1991 and we were in the depths of the recession. People like me who didn’t have a green card had a very, very tough go of it. So I had applied to several companies and made it past the first round of interviews, but when they figured out that I did not have a green card, I got eliminated. It was well past my graduation date—I graduated in May, but it was August—and FedEx came to campus. I remember walking into the interview and basically saying, ‘Listen, I don’t have a green card.’ And they looked at me and said: “Let’s first figure out whether you have what it takes to do a job at FedEx, and then let’s worry about the paperwork.” That was the first company who said that, and the rest is history.
You’ve been at FedEx since 1991—what was your first job at the company?
I started off as an associate marketing analyst in the international division, in Memphis. That job is the lowest level in marketing. But the interesting thing was that it was an international area, and FedEx was expanding internationally at that point. I heard our chairman talk about how our network is the product, and that folks in marketing should be in charge of design of the network. The idea of the network was foreign language to most people in marketing, but here my unique combination of engineering and business came into play, and here I was at the bottom of the pyramid, but saying, ‘Hey, put me in, chief.’
Most people don’t stay at a company for that long, have you ever thought about trying something else?
I am more the rule than the exception. People stay at FedEx for a long, long time—I think there’s something about FedEx that really holds people. It has a good people culture, and you get to do different things over the course of your career, so I never had the inclination ever to actually look for anything else. I always felt within FedEx that someone was looking out for my comfort zone. And the minute I got a little bit comfortable, I got moved into another assignment or something else got added. That challenge and excitement appeals to me and I kept going.
Who do you look to for leadership lessons?
Growing up, it was definitely my dad. He was in the police, and he was absolutely fearless and very decisive. Over time, I’ve realized that he’s also extremely well read. His decisiveness came because of his experience and the fact that he had knowledge of a lot of things.
Coming into FedEx at a very early age, I’ve also been mentored in many ways by Fred Smith. His leadership style is just extraordinary. He’s got this uncanny ability to see around corners and be that visionary. He’s also instilled this idea of a servant leadership within FedEx—we have almost an inverted organizational pyramid. The job of the leader is to remove barriers for people to do their job.
Speaking of visionaries, I know you predicted a recession in 2022. How are you feeling now about the economy?
What I should have probably said at that time was that we were looking at a trade, or freight recession. You see it across all the players in our industry—there has been a decline in revenue for now, I think, six or seven quarters. But I have to say if you’re Rip Van Winkle and went to sleep before the pandemic, and you woke up just now, you would see a 5% or 6% CAGR [compound annual growth rate] and say, what’s the problem? The problem was rapid growth for the first two years, and then a decline in the next two. So I think we are now at a point of reset.
Still, demand for FedEx’s services has slowed significantly since the start of the pandemic—are you concerned?
We are now four years past the pandemic. The first two years we saw significant growth and then in the last two years we’ve seen a slight slowdown. If you look back over the four year period, you’d say that we saw normal levels of growth over those four years.
How have you adjusted to the drop in demand?
What we have done through this process is really, really looked at our mission. Our mission now has evolved to make supply chains smarter for everyone. We are sitting on top of insights about the global supply chain every single day. So we have built the data infrastructure to capture those insights.
What is an example of one such insight, and how would it make the supply chain smarter?
When a consumer orders something online, that information instantly passes on to FedEx. It now arrives in FedEx’s system maybe 12 hours before it used to. Those 12 hours are a lifetime for FedEx, and so we are able to plan our assets better for that traffic.
Because of the use of artificial intelligence and machine learning, we are continuously improving our predictability of when that package is going to arrive, keeping in mind the latest and greatest in terms of weather conditions, traffic patterns and so on.
When did you implement that and what was the motivation behind it?
We began working to create such a capability back in 2020.
Was that motivated by the pandemic?
This was actually independent of the pandemic. It was the direction we were heading anyway, because we realized that the value of the data that we are sitting on is quite significant.
With the changing economic outlook, in recent FedEx earnings calls you’ve placed a lot of increasing cost savings and shareholder value. That can be at odds with making a better company because it often means limiting spending. How do you balance the two ideas of creating shareholder value and value for your customers?
From the very get go of FedEx, our founding philosophy has been very straightforward. We take care of our people, who provide outstanding service and experience for our customers, which in turn generates profits for our companies which we reinvest back in our people.
What is unique about the last few quarters is the fact that the market itself has been down since the pandemic for about five or six quarters in a row. What we have done really well in this timeframe is continue to gain market share in a down environment.
Would a regular person sending a package notice the changes you’ve implemented at FedEx?
As an end consumer, you’re going to see much more predictability in terms of when the packages arrive at the doorstep. From a shipper perspective, the pickup experience is going to get significantly better as well.
What is the argument for FedEx to continue to be the place that businesses use to send packages, rather than a growing network like Amazon?
Network building is quite hard. We’ve done this [for] over 50 years. We have built this unparalleled network infrastructure around the world that nobody else has got. If you talk about the telephone network, it’s very simple to understand it—you pick up the phone, you call anybody in the world—the physical network is kind of the same thing. You pick up a package anywhere in the world, and get it to anywhere else in the world in a couple of days. FedEx can do that very, very well. And that is something very, very hard to replicate.
You’ve worked for FedEx for your whole career. How can you continue to hear outside perspectives as someone who is very much an insider?
By the very nature of our business, we are essentially in touch with everybody almost every single day. We are a referendum on the global supply chain every single day. For me, talking to our customers is a constant. Because we’re now able to leverage the data and the insights that we have from our customers, they are asking us for the trends that could be helpful for them. So there’s a constant dialogue at different levels, especially for me with all our customers. I make sure that I have a very clear idea of what’s going on in an outside-in perspective.