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December 10, 2018 6:00 PM, EST

FedEx Express President David Cunningham to Retire Dec. 31

Raj Subramaniam Named Successor
David Cunningham and Rajesh Subramaniam David Cunningham (left) and Rajesh Subramaniam via FedEx

FedEx Corp. named Raj Subramaniam, its chief marketing and communications officer, the new president and CEO of its FedEx Express division to replace David Cunningham, who retires Dec. 31.

Subramaniam will take the helm Jan. 1.

He began his career at FedEx headquarters in Memphis, Tenn., then moved to Hong Kong, where he oversaw marketing and customer service for the Asia Pacific region. Then he took over as president of FedEx Express in Canada before moving back to the United States to lead international marketing, the company said.

Subramaniam, 52, was named chief marketing and communications officer at FedEx Corp. in 2017.

“Raj’s global vision and broad experience make him uniquely qualified to lead our largest operating company. We look forward to the continued growth of FedEx Express within our global portfolio as Raj takes on this critical role,” David Bronczek, president and chief operating officer of FedEx Corp., said in the announcement on Dec. 7.

FedEx Corp. officials declined to expound on the retirement, which comes after Cunningham spent only two years at the helm of FedEx Express.

“Throughout David’s distinguished 36-year-career at FedEx, he has contributed to the growth of our company around the globe, and we wish him the best in his retirement,” said Bronczek.

Cunningham, 57, began his FedEx career in 1982 in operations at the FedEx Express World Hub in Memphis. His other leadership positions include FedEx Express Asia Pacific chief financial officer.

The company did not explain the executive change, coming as the holiday shipping season approaches high gear and just before it reports financial results.

FedEx has scheduled a conference call on Dec. 18, following its release of second-quarter earnings.

Also, the news follows a 23% decline in FedEx shares compared with an 8% slide in the broader Standard & Poor’s 500 over the past three months, according to Goldman Sachs, whose analyst, Matt Reustle, wrote to investors on Dec. 10 that he sees “added risk with the retirement of the segment CEO after less than two years in the role.”

But Keith Schoonmaker, director of industrial equity research at Morningstar, said he doesn’t expect profit margins for the Express unit to alter drastically.

“We have a little bit more of a long-term perspective, and (the retirement) won’t likely change margins,” Schoonmaker told Transport Topics.

The FedEx Express division is vital to the overall company, Schoonmaker said, as it is the legacy business and it provides for about half the profits. And it is more likely FedEx profit margins can be improved within Express rather than the trucking unit, making the division all the more important, Schoonmaker said.

The investment community knows Subramaniam and trusts him to take the Express helm, Schoonmaker said.

“I think (Subramaniam) is somebody the company views as a good strategic thinker,” said Schoonmaker. “It comes as no surprise to us.”

In September, the company reported FedEx Express earned $367 million in operating income for the first quarter ended Aug. 30, compared with $433 million in the same period the year before.

FedEx filed an 8-K statement with the Securities and Exchange Commission after announcing Cunningham’s retirement showing he will receive a $1.78 million payment next year. He also signed a two-year noncompete agreement to not serve as an officer, employee or consultant with the U.S. Postal Service, UPS, Amazon.com or DHL.

Brie Carere, a 17-year FedEx official, will succeed Subramaniam as chief marketing and communications officer of FedEx Corp.