Former Founder, Chairman & Chief Executive Officer, FedEx
FedEx founder Fred Smith: An "overnight" success
When Fred Smith started his next-day delivery company Federal Express in 1973, flying packages to customers, it was not an overnight success. Today FedEx moves 15 million packages a day aboard its fleet of aircraft, through hubs in Memphis and other cities, to more than 200 countries around the world. CBS News national security correspondent David Martin talks with Smith about how the former Marine captain and decorated Vietnam veteran transformed the shipping industry.
@FedEx #FredSmith
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About Frederick Smith
Frederick Smith, founder and former CEO of FedEx, has continued to comment on trade, economic policy, and supply chain issues in public appearances. In a January 2023 conversation at MIT, Smith said he was personally disappointed by China's shift toward a "state directed Mercantile path" after he had pushed for its entry into the WTO. He also stated that "work is now optional" in the U.S., attributing inflation and slow growth to a lack of blue-collar labor willing to work. Smith expressed support for a carbon tax and said FedEx does not view Amazon as a direct competitor. In earlier appearances, Smith advocated for infrastructure investment, calling the 2021 bipartisan infrastructure bill "a step in the right direction." He said the U.S. should not abandon the Trans-Pacific Partnership but improve it, and warned that withdrawal from NAFTA would have "massive repercussions." Smith has repeatedly called for lowering the U.S. corporate tax rate and adopting a territorial tax system, arguing that the current code discourages investment. He also stated that 85% of U.S. job losses over the past 25 years were due to automation, not trade.
Transcript (67 segments)
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Narrator0:00
It started with a revolutionary idea: shipping packages overnight. 50 years later, you might say FedEx delivers. David Martin catches up with its founder, Fred Smith.
Once you see it, you will never again take overnight delivery for granted.
The sorting center at FedEx headquarters in Memphis: elbow grease and computerized conveyor belts routing packages around the world. The Fred Smith... well, I am here. Here's the man behind it all.
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David Martin0:39
Good to see you.
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Frederick Smith0:41
Good to see you.
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Narrator0:43
Fred Smith founded the company that revolutionized business 50 years ago.
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David Martin0:47
I expected you somewhere to be following your planes around the world.
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Frederick Smith0:50
Well, I can. I've got a map right there and I can pull it up. There they are, heading across the Pacific.
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David Martin0:57
Is that what it looks like every day?
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Frederick Smith0:59
Yeah, we serve 220 countries around the world today.
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Narrator1:03
FedEx employs more than 530,000 people and moves 15 million packages a day aboard a fleet of 700 airplanes, including the wide-bodied Boeing 777.
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David Martin1:15
So how many of these guys do you own?
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Frederick Smith1:17
We have 59 either on hand or on order.
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Narrator1:22
The engine of a 777 would not fit inside the cargo hold of his first plane, now on display at the Smithsonian Air and Space Museum. It is the flagship of the air express industry Smith created to meet the needs of the coming Information Age.
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David Martin1:38
Your computer goes down, you have to have the part to fix it, or you're out of business. That's the whole principle of FedEx.
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Frederick Smith1:44
Yeah.
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Narrator1:45
Smith saw the future when he was still an undergraduate at Yale, moonlighting as a charter pilot flying computer parts.
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Frederick Smith1:51
What I was looking at was the first stages of automation of our society, moving to a computer-based society. It was just the recognition society was automating.
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David Martin2:03
Did it feel like an aha moment to you at the time?
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Frederick Smith2:06
Well, I suppose that would be a good way to describe it. But first, there was Vietnam.
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Narrator2:11
Two combat tours, a Silver Star, Bronze Star, and two Purple Hearts.
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David Martin2:17
Looking around here, it looks a little more military than it does FedEx.
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Frederick Smith2:21
People don't come back here very often, so I guess this is more personal in the front office.
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David Martin2:27
Is this you in the Marines?
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Frederick Smith2:29
That's me. And we were platoon leaders. Two of them didn't come back.
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Narrator2:37
Smith rose to the rank of Captain and came home a changed man.
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Frederick Smith2:41
The Vietnam experience was the defining part of my life. Everything I ever accomplished in business is mostly what I learned in the Marine Corps, particularly about leading people.
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David Martin2:50
Are you still Captain Smith?
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Frederick Smith2:52
He comes out every once in a while if necessary. I found out only in the last three years that all my children called me behind my back Stalin. I didn't know that.
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David Martin3:07
So I'm sure there were a couple of disciplinary episodes there. So we saw some of your front-line troops at the sorting center.
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Frederick Smith3:16
Oh, did you?
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David Martin3:18
Your vast network couldn't function without them.
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Frederick Smith3:21
Absolutely.
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David Martin3:22
How do you reward them?
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Frederick Smith3:24
Well, the most important way we reward them is good pay and benefits. So if you work for us, we'll put you through college.
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David Martin3:31
But I thought those were part-time workers.
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Frederick Smith3:33
Well, they are, but they still get medical benefits and tuition refund.
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David Martin3:38
Okay. Fly safe. Say 'Fred' around here and everybody knows who you're talking about.
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Frederick Smith3:43
Well, you hadn't hardly aged at all.
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David Martin3:45
Right, it's because of you. Audrey Phifer went to work for him in year one.
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Audrey Phifer3:50
Thank you. Fred came to this computer training school I had begun taking. He came himself and talked about his dream, and it was so vivid and so real that I went the next day and got hired on the spot.
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David Martin4:06
What year did you start delivering?
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Frederick Smith4:08
We started April 17th, 50 years ago. I think we had 189 pieces that day.
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David Martin4:16
Did you deliver all of those packages overnight?
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Frederick Smith4:19
Oh, 100%. Yeah, it was pretty easy when there were only 189.
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Narrator4:25
In the first three years, the company lost 29 million dollars.
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David Martin4:31
So there's stories from the early days where he had to ask employees not to cash their paycheck.
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Frederick Smith4:39
Yes, I was one of them. You know, it happened a couple of times that we had to hold our checks.
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Narrator4:47
But his hub-and-spoke system—planes flying into a central location and back out to their final destination—proved overnight delivery was possible. It was just stunning to people that you could do that. Within months, there was a tenfold increase in the number of packages. Keeping track of them became the next hurdle.
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Frederick Smith5:08
The problem was that there was no technology that did that. This was the solution: a small scanning device he calls the SuperTracker.
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Narrator5:18
You scan the package upon delivery or pickup, transmitting the information back into our computer system. The barcodes on the outside of the package became as important as what was inside. That flashing blue light scans those codes and tells the conveyor belt where to drop off the packages. So it changed logistics forever.
On the night we visited the Memphis hub, planes were landing at one-minute intervals. It's met by a team of cargo handlers.
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David Martin5:48
How long does it take to unload a plane like this?
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Joshua Rhodes5:51
We're doing really well, probably about 35-40 minutes.
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Narrator5:56
Joshua Rhodes is the team leader.
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Joshua Rhodes5:59
There are days where it can be a little stressful, but I mean, that's every drop. You feel like you're always working against the clock, but I mean, that is the life of FedEx.
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Narrator6:09
Crunch time. The FedEx life came to the big screen in the person of Tom Hanks, who played a time-obsessed manager in the movie Cast Away.
Oh wait a minute, Wilson! Wilson! That's Wilson! All right. A replica of Wilson, his best and only friend, marooned on a desert island.
They may never find us. I'll be right back. The FedEx brand name was everywhere, but the plot had public relations disaster written all over it.
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Frederick Smith6:50
When I told our senior VP of marketing that I'd agreed to let a FedEx plane be crashed with Tom Hanks in it, he almost passed out.
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Narrator7:03
It became what Smith calls a 100-million-dollar infomercial for a company that is always racing the clock.
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Frederick Smith7:10
Those packages, yeah, you don't want them to sit there because it's just idle cost.
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Narrator7:17
Within hours of landing, the planes are loaded and ready to take off again. In the control tower, Al Coleman needs to get each one airborne within 15 minutes of pushing back from the gate.
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Al Coleman7:30
We like burning our fuel in flight and not taxiing.
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David Martin7:34
Is there a difference between controlling cargo planes and passenger planes?
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Al Coleman7:38
No, sir. The only difference is packages don't complain that much.
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Narrator7:43
That was true before Fred Smith. He came along and changed everything else.