Fred Smith obituary: billionaire founder of FedEx

Times

2 days ago

Fred Smith was near the end of his junior, or third, year at Yale in 1965 when he dashed off an essay proposing a 'hub-and-spoke' system for parcel delivery. His plan involved collecting parcels from local depots and transporting them to a central hub for overnight sorting before delivering them to their destination the following day. 'If a hospital in Texas needs a heart valve tomorrow, it needs it tomorrow,' he said, recalling a time when American parcel deliveries routinely took days or even weeks.
The idea was not original. 'It had been done in transportation before: the Indian post office, the French post office. American Airlines had tried a system like that shortly after the Second World War,' he said. However, his professors were lukewarm and supposedly awarded his paper a C grade, although the essay itself was lost and its author later claimed not to remember the details.
Smith turned his paper into Federal Express, making its headquarters in the centrally located city of Memphis, Tennessee. On the first night of operations, April 17, 1973, the company shipped 86 packages to 25 US cities using 14 Dassault Falcon 20 jets, one of which, called Wendy, is now at the Smithsonian National Air and Space Museum in Washington.
It was far from an overnight success, quickly burning through investors' money. An oft-told tale is that Smith once flew to Las Vegas to gamble the company's last $5,000 on blackjack and won $27,000, enough to cover that week's fuel bill. Air crew were asked to delay cashing their pay cheques; one courier in Cleveland pawned his watch to pay an aircraft fuel bill; and a pilot in Indianapolis paid for his hotel room with a personal credit card.
Under the mantra 'People, Service, Profit', Federal Express grew steadily, expanding more rapidly after the deregulation of US air cargo in 1977. The following year it adopted the advertising slogan 'Absolutely Positively Overnight', a phrase that has passed into popular parlance and is the title of a 1988 unofficial history of the company. In 1983 it became the first US company to achieve a $1 billion turnover within a decade without mergers or acquisitions. Three years later it landed in Britain, buying Lex Wilkinson, the domestic parcels carrier, and set up a base in Nuneaton, Warwickshire. By 1989 Federal Express was second only to Royal Mail in terms of volume of packages carried.
Today FedEx, as the business was rebranded in 1994, is so synonymous with logistics that the name has become a verb, as customers 'fedex' more than 17 million parcels a day to 220 countries and territories. The company boasts of its role in delivering ancient Egyptian artefacts, parts salvaged from the Titanic and the first Covid-19 vaccines in 2021.
Although Smith lobbied hard for President Trump's first-term corporate tax cuts, which reduced FedEx's tax bill from $1.5 billion to zero, he did not see eye to eye with the president on international trade. 'An increasing percentage of manufactured goods are high value-added and technology products and these tend to be easy to transport,' he once told The Daily Telegraph. 'Because of that, globalisation continues inexorable. My guess is that the vast majority of manufactured goods will cross at least one border in the future.'
Frederick Wallace Smith was born in Marks, Mississippi, in 1944, the son of Sally (née West) and her husband James Smith, also known as Fred, who had made his fortune with a regional bus company that became part of the Greyhound line and the Toddle House restaurant chain, but died when Fred was four. He was raised by his mother and several uncles who 'were very good to me in terms of teaching me a few things about life'.
As a child he suffered from Legg-Calvé-Perthes disease, a form of juvenile arthritis, and was forced to use crutches and watch sport from the sidelines. It cleared up by the time he was ten and, with the family having moved to Tennessee, he was educated at Memphis University School. In his teens he was a keen reader, especially of military and aviation history, and took up flying despite his mother's objections. 'You can always say if anything happens to me, I died doing what I wanted to do,' he told her.
While studying economics and political science at Yale he was a member of the Skull and Bones secret society and re-established the Yale flying club, which had first been organised in the 1910s by Juan Trippe, the founder of Pan Am. He was friendly with George W Bush, a fellow student and the future president, and John Kerry, Bush's rival in the 2004 election. However, in the summer of 1963 he crashed while driving to a lake in Memphis, killing Michael Gadberry, his passenger. Charges of involuntary manslaughter were dismissed by a judge.
Between 1966 and 1969 Smith served two tours of Vietnam with the US Marine Corps, on one occasion narrowly surviving a Viet Cong ambush. He received the Silver Star, Bronze Star and two Purple Hearts, but later told an interviewer: 'I got so sick of destruction and blowing things up … that I came back determined to do something more constructive.' Meanwhile, his observations of military delivery systems galvanised his belief that the world needed a reliable, overnight parcel service. 'In the military there's a tremendous amount of waste,' he explained. 'The supplies were sort of pushed forward, like you push food on to a table. And invariably all the supplies were in the wrong place for where they were needed.'
In 1969, he married Linda Grisham, his high-school girlfriend. The marriage was dissolved in 1977 and in 2006 he married Diane Avis, his long-term partner, who survives him. He had two children from his first marriage and eight from his second. They include Windland, known as Wendy, a photographer who predeceased him; Molly, a film producer who worked for Alcon, a film company in which he invested; Arthur, a former head coach of the Atlanta Falcons, an American football team; and Richard, an executive at FedEx.
On demobilisation Smith joined his stepfather, a retired air force colonel called Fred Hook, at Arkansas Aviation Sales, a struggling operation providing services for visiting aircraft at Adams Field airport (now known as the Clinton national airport) in Little Rock, Arkansas. He used an inheritance from his father to buy out Hook and moved into private jet maintenance and sales, but quickly grew disenchanted with the unscrupulous characters in aircraft brokerage.
His thoughts turned to transporting cheques between clearing banks, a notoriously slow and inefficient process. The plan was to collect cheques every day from regional branches of the Federal Reserve Bank, fly them to a central hub for processing and dispatch the sorted bundles to the correct branch the following morning. Because his only client was the Federal Reserve he named his fledgling business Federal Express, but the bank pulled out at the last minute and he turned his attention instead to parcels.
The business was just taking off when Fredette Smith Eagle and Laura Ann Patterson, half-sisters from one of his father's previous three marriages, brought legal action alleging that he had sold shares from the family's trust fund at a loss of $14 million. He was also accused of forging documents to obtain a $2 million bank loan. However, on the night that he was indicted on the federal forgery charge he was involved in a fatal hit-and-run accident involving George Sturghill, a car-park attendant. Once again, the driving charges were quietly dropped. Meanwhile, he secured an acquittal in the federal case and in 1979 reached a settlement with his half-sisters.
Trouble also emerged from Smith's refusal to accept unionisation. He stood his ground when pilots threatened to strike, isolating their leadership and arousing the fears of its members, some of whom declared 'I've got purple blood', a reference to the company's corporate colours. FedEx also suffered difficulties with Zapmail, a loss-making business that involved faxes being sent to a local hub for onward delivery before the widespread use of fax machines in homes and offices, and its acquisition of the rival Flying Tiger Line. Yet its annual income continued to grow, reaching $7.7 billion in 1991 and $87.7 billion in 2024.
After Bush's victory over Al Gore in the 2000 presidential election Smith was considered for the post of defence secretary, but withdrew on health grounds and the position went instead to Donald Rumsfeld. He declined the post again in 2006 to spend time with his terminally ill daughter. In 2008 he co-chaired John McCain's presidential campaign and a decade later was a pallbearer at McCain's funeral.
Smith, who was sometimes described as the biggest celebrity in Memphis since Elvis Presley, played himself in the disaster-survival film Cast Away (2000), welcoming home Tom Hanks's Chuck Noland, a FedEx employee stranded on a tropical island after a cargo aircraft crashed. The scene was filmed at FedEx's home facilities in Memphis.
Meanwhile, the company and its founder were the subject of countless business school case studies and several books, including Overnight Success: Federal Express and Frederick Smith, Its Renegade Creator (1993) by Vance Trimble and Changing How the World Does Business (2006) by Roger Frock. However, Smith, who according to Forbes was worth $5.3 billion, had a straightforward explanation for the success of FedEx, telling interviewers: 'It was just like Pogo the Possum [a postwar US comic-strip character] said, 'If you want to be a great leader, find a big parade and run in front of it.''
Fred Smith, founder of FedEx, was born on August 11, 1944. He died from natural causes on June 21, 2025, aged 80