Fredex ✈️

Las Vegas is where Lady Luck resides, but not everyone gets to meet her. So, in 1973, when Frederick W. Smith flew there with just $5,000 — the last money FedEx had — it was the biggest gamble of his life. But, like all gamblers, Fred Smith thought it was a decision that was backed by reason and logic. 

He bet the last $5,000 of his young and ambitious company in a Blackjack game. Lady Luck shook hands with Fred Smith that night, and he won $27,000. He used the money to pay off $25,000 in overdue fuel bills. It bought FedEx one more week to survive — just enough time to keep the planes flying, and the business alive.

That night in Vegas didn’t just save a company — it helped build one of America’s greatest success stories. FedEx would go on to become a global logistics superpower, and its charismatic founder, Frederick W. Smith, an American icon.

Fred Smith passed away on June 21, 2025, at his home in Memphis, Tennessee, at the age of 80. And in this issue of CrossDock, we revisit the extraordinary journey of Fred Smith — the Marine turned entrepreneur who defied the odds, built an empire, and changed the logistics industry forever.

Frederick Wallace Smith was born on August 11, 1944, in the small town of Marks, Mississippi. His father, James Smith, had built a fortune in bus lines before passing away when Fred was just four years old. 

As a child, Fred was diagnosed with a bone disease that kept him on crutches until he was 10. After spending years on crutches as a kid, when Fred Smith recovered, he did not just run; he flew. By fifteen, he had a pilot’s license, and airplanes had already become his first love — a lifelong fascination that shaped everything he built.

In 1962, he entered Yale University to study economics. It was here that the first seeds of his logistics vision were planted. At Yale in 1965, Fred Smith wrote an economics paper proposing a bold idea: a nationwide overnight delivery service built on a central hub and aircraft carrying freight — a blueprint for what would become FedEx. His professor, skeptical of its feasibility, gave him a “C”. 

Smith never contested the grade. However, the idea never left him. An idea that would eventually transform global commerce.

But before he could build a company, the country came calling.

America in the 1960s was undergoing both political and cultural transformation. Young men and women, dressed in bell-bottoms and sporting long, wavy hair, filled the streets protesting against the war. But while some marched, others enlisted. Many graduates were dropped into the heart of the Vietnam War. Fred Smith was one of them. 

Fred served two tours with the U.S. Marines in Vietnam and, by the time he was discharged in 1969, he had risen to the rank of captain and earned some of the military’s highest honors: the Silver Star, the Bronze Star, and two Purple Hearts.

In fact, Fred credits his time in the Marines more than his Ivy League education for his business success. In his 2022 interview with CBS, he said, “The Vietnam experience was the defining part of my life; everything I have ever accomplished in business is mostly what I learned from the Marines.” 

When Fred Smith returned home from Vietnam in 1969,  he purchased Little Rock Airmotive, an Arkansas firm that specialized in aircraft modifications and engine overhauls. This was also the time he was trying to shape the practical framework for the air-cargo system he had once envisioned in his Yale term paper. 

So, his concept was simple: people would be willing to pay more to have their packages delivered overnight, reliably, and on time. However, in the early 1970s, such a service didn’t exist. Packages moved slowly through a patchwork of trucks, trains, and passenger airlines. 

The second problem was timing. Most passenger flights operated during the day and shut down overnight, which meant there was no way to move packages across the country overnight. 

Fred Smith wanted to fix that. 

He believed that air freight would only work if the system was built entirely around packages, not passengers. It had to be purpose-built for speed, reliability, and volume. And it had to reach everywhere, not just the major hubs, but smaller cities that traditional airlines overlooked.

But that was easier said than done. 

Building a national delivery network from scratch wasn’t just bold — it was expensive. Planes, hubs, staff, infrastructure, fuel  — all of it needed serious capital. Fred Smith knew that if the idea was going to work, he had to fix the money problem first.

And he did.

Over the next two years, he raised nearly $80 million in venture capital and $4 million from his family — a staggering sum at the time, and one of the largest early-stage investments in American business history. 

He had crossed the bridge halfway; the rest was figuring out the hub for this network. 

Enter, Memphis. 

Fred Smith didn’t just need a place to base his planes. He needed a city that could make his entire model work. And that model was different from anything the logistics industry had seen before.

Instead of connecting every city to every other city — the way most carriers operated — Fred proposed a hub-and-spoke system. Everything would flow to a single central hub, where packages would be sorted overnight and then flown back out to their final destinations by morning. It was faster, more efficient, and scalable.

But for that to work, the hub had to be perfect.

Hence, he chose Memphis. But why Memphis? 

Memphis had one obvious advantage: its central location made it easy to connect the entire country overnight. Next was the weather. The city rarely experiences bad weather that can affect flight operations. Finally, the airport was never overcrowded, which meant FedEx’s operations could proceed without any hassle or inconvenience. 

And finally, on April 17, 1973, Federal Express, as it was then known, launched its first official operations from Memphis. The company used 14 Dassault Falcon jets, which had been specially converted to carry cargo. That night, they delivered 186 packages to 25 U.S. cities. A total of 389 employees had a hand in pulling off the historic feat. 

But then came the shock. ​​

Just because the planes took off didn’t mean the business did. In its first two years, FedEx was bleeding cash. The model was sound, but the volume wasn’t there yet — not enough packages, not enough customers, and way too many expenses. And add to this the oil embargo imposed by the Arab countries, which skyrocketed the jet fuel price. 

In just 26 months, FedEx had burned through $29 million, and the pressure was mounting. The company was falling far short of Fred Smith’s projections, and investors were getting restless. Some even began discussing whether it was time to push Smith out.

Even his own family was losing faith. Smith’s sisters filed a lawsuit, accusing him of mismanaging the family inheritance that he had invested in the company.

FedEx was in the middle of a full-blown financial crisis.  The situation was so dire that Businessweek ran a headline in July 1974 that read: Federal Express Takes a Nosedive. 

However, FedEx employees remained loyal to the company, even though their paychecks were sometimes postdated. In some cases, pilots used their own credit cards to purchase jet fuel, simply to keep the planes airborne.

And, Fred Smith refused to quit.

He hustled to secure more funding, leaned hard on his team, and kept pushing volume. Slowly, things began to turn. By 1976, FedEx finally broke even. 

Much of the credit for the turnaround goes to Arthur Bass, the company’s president and chief operating officer at the time. He focused relentlessly on improving delivery schedules and tightening the efficiency of the hub-and-spoke system.

These operational upgrades began to pay off. By late 1976, FedEx was moving an average of 19,000 packages per night. As reliability improved, so did trust, and more businesses came on board. 

Two years later, Fred Smith took Federal Express public. And when he did, he didn’t forget the people who stuck with him through the rough years.

When the company went public in April 1978, 220,000 shares were set aside for employees, offered at $22 a share, two dollars below the market price. It was a small way to say thank you to the team that helped keep the dream alive.

And when it rained, it poured in FedEx’s favor.

Before 1977, U.S. regulations limited what routes air cargo carriers could fly and required them to seek government approval for rate changes. Additionally, air cargo carriers like FedEx were restricted to using smaller aircraft (under 7,500 pounds payload) unless they got special approval. This severely limited efficiency and volume.

Fred Smith vehemently opposed these regulations. 

In 1977, the deregulation of the U.S. air cargo industry, which Smith spearheaded brilliantly, lifted key restrictions that were stunting its growth. It enabled FedEx to purchase larger aircraft, such as the Boeing 727, thereby expanding its fleet and overnight reach. 

With bigger planes going to more cities, FedEx’s sales jumped to $110 million in 1977, generating $8 million in profit. By 1979, revenue had more than doubled to $258 million, with profits rising to $21.4 million. By the early 1980s, FedEx operated 170 Boeing 727s at its peak, making it one of the world’s largest 727 freighter operators. 

Fred Smith’s brilliance wasn’t limited to the skies — he made equally pioneering moves on the ground.

Fred Smith never saw FedEx as just a delivery company. He saw it as a platform for precision, speed, and customer control — and that meant constantly reinventing how packages moved, how people used the service, and how the entire system ran.

In 1975, FedEx introduced something deceptively simple: the drop box. For the first time, customers could send an overnight package without visiting a FedEx office. They could drop it in a secure, street-side box before the last pickup — and still get guaranteed next-day delivery. It was a quiet revolution in convenience. No lines, no agents, just a box and a deadline. That small shift reshaped how people thought about access and urgency in logistics.

In 1986, FedEx introduced SuperTracker, a handheld barcode scanner system that captures detailed package information. With each scan, the SuperTracker could capture a package’s location, status, and movement through the network, updating FedEx’s central system in real-time.

In fact, it laid the foundation for one of FedEx’s groundbreaking features and the most significant move in the logistics industry.

In 1994, FedEx became the first delivery company to offer real-time online tracking. It introduced the pioneering move that allows customers to track their packages in motion, from pickup to delivery. 

What had been an internal operations tool was now made public. For the first time, people could “see” their shipments moving through the network. 

And soon, it wasn’t just a FedEx feature — it became an industry standard. Customers no longer hoped a package would arrive. They expected proof.

Under his leadership, FedEx was the first to integrate its own air fleet with ground operations under a single brand and network. This seamless integration enabled faster and more reliable delivery — a template still used by global players such as UPS, DHL, and even Amazon. 

By the early 1990s, FedEx was a major global cargo player, but Japan was standing in its way. The country was still using an old 1952 air agreement that limited what FedEx could do. Japan blocked FedEx from flying shipments from Tokyo to other Asian countries like Malaysia or Indonesia. 

Fred Smith pushed back hard.

Smith lobbied U.S. lawmakers and the Department of Transportation, linking FedEx’s denied access to broader trade imbalances with Japan. His efforts worked. In 1995, the U.S. Senate introduced a resolution threatening retaliatory sanctions on Japanese carriers.

The pressure paid off. Japan later granted FedEx expanded access, allowing it to use Tokyo as a regional cargo hub.

Fred Smith was admired across party lines in Washington.

President George W. Bush, a fellow Yale alum, wanted to make Smith his Secretary of Defense in 2000. Smith declined for medical reasons, but Bush later called him “a brilliant businessman, a Marine, and a patriot” in his memoir Decision Points.

Even President Obama praised him. When asked by Bloomberg Businessweek in 2010 to name a CEO he admired, Obama singled out Smith:

“He’s an example of somebody who is thinking long-term,” President Obama said.

In an era of political division, Fred Smith was one of the few business leaders respected on both sides of the aisle.

More than five decades since Fred Smith bet it all on overnight delivery, FedEx remains one of the most powerful logistics companies in the world — and a living embodiment of its founder’s vision. Fred Smith stepped down as CEO in 2022, but the company still runs on his philosophy  of “ People, Service, and Profit.”

As of 2024, FedEx operates in more than 220 countries and territories, employs over 530,000 people worldwide, operates approximately 650 aircraft, and handles over 16 million packages daily. In fiscal year 2024, the company posted $88 billion in revenue, ranking it among the top transportation firms on the planet.

Despite technological leaps, global expansion, and fierce competition, the core promise hasn’t changed: speed, reliability, and visibility. FedEx still stands by the mantra coined in its earliest days: “Absolutely, Positively Overnight.” 

“I’m very focused on the here and now,” Smith told The Wall Street Journal in 2019. “I don’t care about any legacy. The legacy will be the success of the company.”

And yet, whether he sought it or not, his legacy is stitched into every shipment, scan, and delivery FedEx makes. From a blackjack table in Las Vegas to the boardrooms of global trade, Frederick W. Smith didn’t just build a company — he reshaped the very fabric of modern commerce.

This newsletter was written by Shyam Gowtham

Thank you for reading. We’ll see you at the next edition!