Dive Brief:

• Thanks to an anticipated impact of the Tax Cuts and Jobs Acts, FedEx has dedicated more than $200 million for compensation increases, at least two-thirds of which being earmarked for hourly staff, according to a FedEx press release. Pay increases will occur six months earlier than usual, while the remainder of surplus funds will go toward performance-based incentive plans for salaried personnel.
• The company is also investing $1.5 billion in its Indianapolis hub as a seven-year initiative. The main SuperHub in Memphis will be modernized and further enlarged, details of which will be announced this spring.
• A $1.5 billion voluntary contribution will go to the FedEx pension plan to secure its funding and future. 

Dive Insight:

Reinvesting in itself through staffing, capital investment and retirement funding will help FedEx maintain its status as a leading 3PL. 

Besides engaging in competition with UPS to reclaim packages previously sent to the USPS for last mile delivery, FedEx was already set on hub expansion in order to reduce sorting time, an effort which likely contributed to its 98.7% on-time delivery rate during 2017's peak season.

The FedEx decision to invest not only in its sorting hubs but also in its workers, whether through raises or pension security, indicates that the company is set on long-term growth.

Though plagued by losses from the Nyetna attack during when the company was revealed to be underinsured, the 3PL appears to be aligning itself to branch out from its traditional, many small-customers model in avoidance of UPS' "big players" style. 

FedEx and its competitors continue to invest in distribution centers largely in part due to the rise of e-commerce. The 3PL's investment also comes on the heels of Indianapolis being announced as a top 20 candidate for Amazon's HQ2 destination, with the city responding with proposed legislation to make it more friendly to employers and the thousands of workers needed to run operations.

While the two events are likely unrelated, the city's response to the companies via incentives and real-estate friendly policies continues to shape how cities and business partner together in the e-commerce age.