FedEx announces $1 billion expansion of Memphis hub

FedEx on Wednesday announced a $1 billion upgrade of its world hub in Memphis, an investment that will ensure its future as the nerve center of a $62 billion a year global network.

FedEx Express president and chief executive David Cunningham said the hub transformation project would begin in 2019 and run through 2025.

It ranks among the city's biggest capital investments and rivals St. Jude Children’s Research Hospital’s current $1 billion-plus expansion.

Cunningham and FedEx founder Frederick W. Smith joined Tennessee Gov. Bill Haslam for the announcement, with a backdrop of a FedEx wide-body air freighter.

"A billion dollars is the capital investment that we’re making," Cunningham said. "You’re talking about six years of construction. You’re talking about jobs that are going to be much more oriented towards technology, automation, modernization. And it’s going to be transformational for Memphis and the state."

Haslam, who said there were no new state incentives for the project, hailed the company’s investment as good news for Tennessee.

"If we were here today announcing that a new company was going to invest a billion dollars, there would be balloons and fireworks and everything in the world," the governor said.

Read More: FedEx hub transformation project would raze 24 outdated buildings, add new secondary sort

“I want to make certain that no one ever takes FedEx for granted,” Haslam said. “Eleven thousand employees work here. Thirty thousand FedEx employees work in the greater Memphis area. You can not overstate their importance.”

Haslam added, “When a company like this decides to...increase their investment to the tune of $1 billion, we want to make certain we recognize that for the significant step it is.”

“They can land these planes and transfer these packages anywhere in the country. We’re thrilled and grateful that that happens in Memphis and we don’t want to let a significant investment like this happen without taking due notice of it," Haslam said.

Memphis Mayor Jim Strickland tweeted that the project would continue Memphis' momentum. "FedEx is choosing to invest in Memphis, making ours the most sophisticated cargo hub on the planet," the mayor said.

The project will transform portions of a hub that has grown up over the past 45 years on the north side of Memphis International Airport .

It involves taking out older, obsolete buildings, some dating to the World War II era, and building new buildings, conveyor ramps, aircraft gates and facilities to handle oversize shipments.

"We will be investing in new sort systems, new automation, new capabilities, modernization of the facility, expanding our truck and unload capabilities here substantially but we’re also going to be making this a much better place to work for our employees," Cunningham said. "We’re putting in a lot of modern capabilities to this facility to improve the quality of life and the environment that our employees will have when they’re here working.

“Our growth in our business is driving this investment. What we see happening with e-commerce, oversized shipments, is a key part of this investment."

The Memphis hub will remain the company’s No. 1 hub in the U.S. and globally, Cunningham said. The company previously announced a $1.5 billion project at its No. 2 hub in Indianapolis.

"The Indy hub is an important hub to us," Cunningham said. "It is a hub that’s much smaller than the Memphis hub. This will remain the largest, most complex, most capable hub that we have anywhere in the system.”

The Memphis hub covers about 880 acres and has about 3.7 million square feet of facilities under roof. It’s served by about 240 flights a day and can handle up to 475,000 shipments an hour.

FedEx is the Memphis-Shelby County Airport Authority's prime tenant, and the company has anchored the airport through rocky times after a Delta hub wound down and the airport pushed to rebuild passenger airline service.

"The Memphis International Airport team applauds our wonderful partner, FedEx, and looks forward to assisting them as they embark on their investment to upgrade and expand the Memphis Superhub," airport president and CEO Scott Brockman said.

The Tennessee General Assembly three years ago enacted a cap on state tax on aviation fuel that was expected to save FedEx more than $20 million a year when fully implemented.

Memphis airport officials supported the legislation, even though it reduced available funding for airport improvements statewide, because they believed FedEx would pump the savings back into projects at the airport.

The FedEx project would be more than double the next-largest for-profit investment in the city since 1995, Valero’s $400 million refinery expansion, said Phil Trenary, Greater Memphis Chamber president.

It sends a message to the outside business community that FedEx has full confidence in Memphis, and it will help the city recruit companies that rely on FedEx services, Trenary said.

“Think of all the companies that are based here because of FedEx and all the companies that are considering moving here because of FedEx. This just sends a message that those facilities are going to be enhanced going forward,” Trenary said.

Reach reporter Wayne Risher at (901) 529-2874 or wayne.risher@commercialappeal.com.