Fred Smith passed away on 21 June 2025 at the age of 80. He leaves behind a legacy of innovation, but also a company that faces many challenges ahead.
When Frederick Smith, founder of FedEx, died in June 2025, the giant shipping corporation lost more than a chief executive. It lost a man with many titles and descriptions, including combat veteran, risk taker, renegade, and zealot.
Many adjectives also apply to Smith, including determined, confident, adaptable, and, according to Smith himself, crazy. Following his death, FedEx faced an uncertain and challenging future without its leader.
Fred Smith Overcame Challenges His Whole Life, and Still Achieved Success
Fred Smith faced many challenges at a very young age. His father died when he was just four years old. Then, at eight years old, he was afflicted by Calvá-Perthes, a disease that interrupted blood flow to his right thigh bone. This affected the leg’s development, and he was on crutches for the next two-and-a-half years. He overcame this and later played football, learned to fly at age fifteen, and became a Marine Corps infantry officer.
Prior to becoming a Marine, Smith entered Yale University in 1962. While taking an economics class, he demonstrated he had a clear eye for future business opportunities. He wrote a paper outlining an overnight delivery service in the computer information age, an original concept that would later become his idea for FedEx. His professor found Smith’s idea “improbable” and gave him a C on the paper.
Smith Joined the US Marine Corps as a 2nd Lieutenant and Served Two Tours in Vietnam
After graduating from Yale in 1966, Smith joined the US Marine Corps as a second lieutenant. He served two tours in Vietnam and received decorations for bravery and wounds received in combat. While in the Marines, Smith gained experience that he would directly apply when he started FedEx.
Smith later said he had “the opportunity to observe the military’s logistic system first hand,” and “carefully observed the procurement and delivery procedures,” an experience that fine-tuned his “dream for an overnight delivery service.”
Decades later, during a 2023 interview with the Associated Press, Smith said that everything he did running FedEx came from his experience in the Marines, and not from what he learned at Yale. Smith served for four years and left as a captain.
Smith Used Trust Funds to Start First Business
Smith wanted to start a business and began developing a reputation as a risk taker. He returned to the US and used a family trust distribution of $750,000 to partner with a friend and purchase Arkansas Aviation Sales at Little Rock Municipal Airport.
Smith led the small company to success, earning $9 million in revenue in the first two years. He also became frustrated by the late delivery of spare parts by air freight, which his business desperately needed. This only made him more determined to start an overnight delivery service.
In the years that followed, Frederick Smith developed the idea for FedEx and raised $80 million to get started. He received some funds from investors and others from his brothers and sisters. The new company began with 14 aircraft carrying just 186 packages on the first day.
As the company began to grow, rising fuel costs took its profits. In the first two years, it lost $27 million and neared bankruptcy. Things got so bad that the company had only $ 5,000 left. During a trip to California, where he tried and failed to receive funding from General Dynamics, Smith was on his way home and made a detour to Las Vegas.
Smith Bet Company’s Last $5,000 in Las Vegas
He used the $5000 to play Blackjack and won $27,000, which he immediately wired back to FedEx. “The $27,000 wasn’t decisive, but it was an omen that things would get better,” said Smith.
It was not in Smith’s nature to give up, and he eventually renegotiated his bank loans and raised an additional $11 million to keep the business open.
“I was very committed to the people that had signed on with me, and if we were going to go down, we were going to go down with a fight,” he said. “It wasn’t going to be because I checked out and didn’t finish.”
Fred Smith showed no regret for gambling the company’s last $5,000. “No business school graduate would recommend gambling as a financial strategy, but sometimes it pays to be a little crazy early in your career,” he said.
FedEx Becomes World Shipping Leader
In the following decades, FedEx became, by every measure, a massive success. Under Smith’s leadership and vision, it became an $87.7 billion global corporation with more than 500,000 employees, 705 aircraft, and 5,000 operating facilities. FedEx also handles approximately 17 million shipments each day.
Smith Faced Tragedy and Even A Possible Prison Sentence
Despite all his success in growing FedEx into one of the world’s leading corporations, Fred Smith also dealt with some dark times, and his ability to overcome them may say the most about his determination. He was 30 years old, and FedEx was struggling to survive, when the FBI accused him of forging documents to secure a $2 million bank loan. He was facing the loss of his company and going to prison. According to some accounts, he was considering suicide.
On the same day that he was indicted, while driving home, he struck and killed a 54-year-old man. Even worse, Smith continued driving, unaware that he had hit the man. Luckily, an off-duty police officer happened to be driving directly behind Smith and witnessed the accident.
He verified that Smith had not been aware of the accident, and the hit-and-run charge was later dismissed. He was also found not guilty of the bank loan charge. Smith overcame these challenges and continued to move FedEx forward.
Smith Calls FedEx an Information Business
Fred Smith demonstrated his adaptability and ability to innovate in his approach to organizing FedEx. From its earliest days, Smith said it was in the information business, not just the shipping business. He was one of the first corporate heads to recognize how having current, accurate information about package origin, present whereabouts, destination, price, and shipment costs was as important as prompt deliveries.
Smith always pushed for continuous improvement at FedEx and recognized the potential of the Internet and digital systems. In the 1990s, the corporation installed computer terminals in the offices of 100,000 customers and gave its proprietary software to more than 500,000 others. Smith also led FedEx through the acquisitions of Kinko’s and TNT Express and into a deal with the United States Postal Service.
Fred Smith Passes Away
Fred Smith grew FedEx into a multibillion-dollar business that achieved success wildly beyond expectations. Smith stepped back from FedEx in 2022 but retained the title of executive chairman.
He passed away on 21 June 2025 at the age of 80, leaving behind a legacy of a successful multi-billion-dollar business that employs over half a million people worldwide.
FedEx Faced Numerous Challenges Without Its Founder
Whenever a strong leader passes away or steps down, the unit or organization left behind must adapt. FedEx faced significant decisions and challenges, and for the first time, had to manage without its visionary leader.
1.) FedEx Canceled Contract With USPS
FedEx lost its long-running air cargo contract with the US Postal Service in 2024, ending a partnership that began in 2001. UPS has now taken over the deal, which generated about $1.9 to $2 billion in annual revenue for FedEx Express. This accounted for about 4 percent of FedEx’s total revenue and about 10 percent of its domestic Express business.
Losing the contract was a tough blow for FedEx. The company saw an immediate drop in air shipments and expected a $500 million impact for fiscal year 2025. FedEx also lowered its revenue forecast as it tried to make up for the lost business. To adjust, the company retired some planes, reduced domestic flight hours by about 24 percent, and cut back on daytime operations.
However, there is more to the story. The USPS contract had become less profitable over time, with some estimates saying it reduced earnings by up to $400 million each year. Leaving the deal gives FedEx a chance to cut costs in a big way. By reducing excess capacity used for USPS shipments, FedEx expects to save up to $1.5 billion a year and make its network more flexible.
In short, FedEx is taking a short-term revenue hit but hopes that letting go of less profitable business will improve its margins and help it focus on better opportunities in the future.
2.) Major Competition From Amazon
Another issue for FedEx is its competition from Amazon, which has quickly built up its own logistics network. While FedEx has many years of shipping experience, Amazon has become the largest parcel carrier in the US by volume. The two companies ended their main partnership in 2019 when FedEx chose not to renew its $850 million annual contract with Amazon.
After that, FedEx focused on other e-commerce opportunities and worked with retailers like Dollar General and Walgreens. In 2025, Amazon Logistics delivered 6.7 billion packages in the US, about 10% more than the previous year. This put Amazon ahead of USPS (6.6 billion), UPS (4.4 billion), and FedEx (3.6 billion, up 5.9%).
Amazon’s growth comes from both its Prime shipments and contracts with other companies. In early 2025, FedEx and Amazon signed a new multi-year deal where FedEx delivers certain large and bulky packages to homes for Amazon. This smaller partnership gives FedEx some targeted revenue and helps Amazon manage its delivery capacity.
As Amazon keeps pushing for faster delivery, it raises expectations across the industry and puts pressure on traditional carriers. FedEx is responding by improving its network to focus on higher-margin services rather than competing for low-profit residential deliveries.
3.) Tariffs Pose a Risk For FedEx
US tariffs continue to put pressure on FedEx, which operates in more than 220 countries and relies heavily on China-US shipping routes.
In fiscal 2026, FedEx expected a $1 billion drop in adjusted operating profit due to a sharp decline in China-to-U.S. shipment volumes. The end of the de minimis exemption and higher tariffs led to a $150 million revenue loss in the first quarter alone, prompting the company to reduce its Trans-Pacific capacity by up to 25%. This change especially affected small e-commerce businesses that depend on low-cost direct imports from China.
The situation got better in February 2026 when the US Supreme Court ruled that key tariffs under the International Emergency Economic Powers Act (IEEPA), which had reached nearly 145% on some Chinese goods, were unlawful. The government stopped collecting these duties on 24 February 2026. FedEx has sued to recover the IEEPA tariffs it already paid and said it will return any refunds to affected customers.
However, other tariffs, such as Section 301 duties and a temporary 10% import surcharge, still pose challenges. FedEx is responding by focusing on stronger domestic US volumes and other international shipping routes.
4.) Strained FedEx Pilot Negotiations
Finally, FedEx has settled a long-running labor dispute with its pilots. After almost five years of negotiations under federal mediation, FedEx and the Air Line Pilots Association (ALPA), which represents more than 5,000 pilots, reached a tentative contract agreement on 8 April 2026.
The deal includes a nearly 40% increase in hourly pilot pay starting in 2026, with 3% annual raises from 2028 to 2030. Pilots will also receive significant retroactive pay, up to $150,000 for captains and $102,500 for first officers, as well as improvements in scheduling, vacation, per diem, hours of service, and retirement contributions.
This agreement follows pilots’ rejection of a previous tentative deal in 2023. The current contract from 2015 will be replaced if the new agreement is ratified. The tentative deal is now being reviewed by the FedEx ALPA Master Executive Council. If approved, it will move to a full membership vote from 12 May to 9 June 2026.
If ratified, the new contract will take effect on 29 June 2026. This agreement removes the immediate risk of a pilot strike and is expected to help stabilize the workforce as FedEx works on optimizing its network.
EDITOR’S NOTE: This article first ran on 24 June 2025 and was updated in April 2026 with the latest information on labor negotiations and current operating performance.
