At its 2026 investor day last week, FedEx (No. 49 on the Fortune 500) projected 4% annual revenue growth to $98 billion (excluding FedEx Freight) between FY26 and 2029, $8 billion in operating income, and $6 billion in adjusted free cash flow by 2029.

The backdrop is a slower parcel market, normalized e-commerce demand, uneven global trade, and more delivery choices for large customers. For FedEx, the focus now is returns, not just revenue growth.

Rather than expanding its network—which already moves 17 million packages a day and about $2 trillion in goods annually—FedEx plans to monetize it more effectively, Dietrich told me. Priorities are margin expansion, operating income growth, lower capital intensity, and a targeted 11% ROIC. Free cash flow remains key, with capital expenditures near 4% of revenue and aircraft capex capped at $1 billion annually.

Removing $4 billion in structural costs

A big piece of the refocus is operational integration. FedEx is combining Express and Ground under a unified “One FedEx” structure through Network 2.0, aiming for “one neighborhood, one truck” instead of running parallel routes. That means consolidating facilities, linehaul, procurement, and capital planning.

It’s not simple. Express and Ground operate differently, with distinct cost structures and service models. Bringing them together without disrupting customers will be one of the company’s toughest execution tests.

FedEx has leverage as it builds on its multiyear DRIVE program. More than $4 billion in structural cost savings from the program reflects the combined total delivered across fiscal years 2024 and 2025. As Network 2.0 scales, FedEx expects roughly another $1 billion in permanent savings by the end of 2026 and about $2 billion total by the end of 2027, while pushing capital expenditures to a record-low share of revenue.

“We’ve made tremendous progress in establishing KPIs and measuring operational and financial results, which allows better business decisions,” Dietrich said. Clean, reliable data is pivotal.

Some key lessons? A robust, disciplined procurement function is critical, shifting from two buying organizations to a single centralized team leveraging FedEx’s full purchasing power, he explained. Capital allocation has also been centralized, with a capital review board vetting major projects requiring clear business cases and projected returns, he said.

AI, but with guardrails

If the physical network is the backbone, data and AI are the nervous system. FedEx uses AI in forecasting, scenario planning, FP&A analytics, invoice processing, predictive maintenance, and route optimization, Dietrich said. But leadership insists every AI project meet the same financial standards as any other investment before it scales, he said.

Turning AI pilots into measurable returns remains a challenge, which is why the company insists on financial rigor before scaling. Education on AI is a priority. 

“I have a 25-year-old son who I’m constantly preaching to the need to keep up with AI, otherwise you’ll be left behind,” Dietrich said.

The company invests in training so employees at all levels can use AI tools. Dietrich mandates that his own weekly reports be compiled using AI. As steward of capital, he stresses AI projects face the same scrutiny as other investments.

“There should be rigorous financial analysis to ensure appropriate return,” he said, noting the capital review board serves as a gatekeeper for large digital and AI initiatives.

Sheryl Estrada
sheryl.estrada@fortune.com

Leaderboard

David Liu was promoted to CFO of SuccessKPI, a workforce engagement management platform. Liu has more than 20 years of experience within the company and in finance roles at GE Capital, Citigroup and Amazon.  He will oversee finance, corporate development and HR, driving financial strategy. 

Kyle Wager was appointed CFO of Airwavz Solutions, a telecommunications infrastructure company. Current CFO Shawn Kocher will transition to chief financial strategist. Wager has more than a decade of leadership experience across finance, operations, and accounting, including senior roles at Agile Networks, InSite Wireless, and Summit Materials.

Big Deal

The 2026 State of Agentic AI Survey Report, released by CrewAI, finds that nearly three-quarters of enterprises surveyed consider agentic AI a critical priority or strategic imperative. Sixty-five percent of enterprises are already using AI agents today. The report gauges where enterprises stand on agentic AI—and where they’re headed. The findings are based on a survey of 500 C-level executives and senior leaders at organizations with more than $100 million in annual revenue and more than 5,000 employees across seven global regions. 

Going deeper

"Lowe’s CEO used to make $4.35 an hour working at Target. His secret to climbing the corporate ladder was volunteering for jobs ‘nobody else wanted,’" is a Fortune article by Sydney Lake.

"Some professionals got their start working in retail—but not nearly as many of those same workers made it all the way to the top of a Fortune 500 company," Lake writes. "But Marvin Ellison did." Read more here. 

Overheard

"Brands explode onto social media with fairy-tale success. Then the clock strikes midnight, and they are gone."

—Mina Haque, writes in a Fortune opinion piece titled, "I’m the CEO of the 1980s most viral restaurant, Tony Roma’s. We’re still thriving but viral brands keep turning into pumpkins." In addition to serving as chief executive of Tony Roma's, Haque is also an attorney who leads her own law firm, specializing in mergers and acquisitions.