FedEx announces $450 million investment in Memphis hub; total investment hits $1.5 billion

FedEx is investing an additional $450 million into the FedEx Express World Hub in Memphis, company officials announced Friday.

The hub based at the Memphis International Airport is in the midst of a modernization plan announced in 2018 to pivot the hub more toward new technologies and automation. With the additional investment announced Friday, that plan will total $1.5 billion.

FedEx said the additional investment is because of “growing customer demand" in a news release. The project is expected to wrap up by 2025 “with significant job creation along the way,” according to the Tennessee Department of Economic & Community Development.

“As we announced in 2018, the hub project represents the next chapter in a long-term commitment in investing in the city of Memphis and the state of Tennessee,” said FedEx Express CEO Don Colleran.

The project calls for the construction of a large new sorting facility, “state-of-the-art” sort systems, construction of a bulk truckload building and a new area to better handle oversized shipments in-demand due to the e-commerce boom, Colleran said.

FedEx employs around 11,000 people at the hub, who support an operation that handles hundreds of thousands of items every hour.

Gov. Bill Lee, who was on hand for the announcement, said the additional investment solidifies the logistics giant’s presence in the Memphis community.

“Not only do they employ 40,000 people in the state of Tennessee, but companies come here in greater measure because of the commitment of FedEx and the expansion of this commitment,” Lee said.

Over the past year, FedEx Express has pointed to a slowing global economy as the driver of less-than-stellar financial results.

FedEx Express hub activity showed a year-over-year decline in June, the same month it cut U.S. ties with Amazon. FedEx attributed the drop to a variety of factors.

Gov. Lee: FedEx tax breaks are appropriate

In May, Lee signed a bill awarding FedEx more than $21 million in tax breaks over seven years for the hub project. The legislation, which saw an amendment introduce the FedEx tax break, means the state loses $16 million in tax revenue while local government would lose $5.1 million, the Tennessean reported.

Lee said with the investment FedEx is making in its Memphis hub and what it does for the state overall, incentives are appropriate.

“They are a major contributor to what happens in this state,” Lee said of FedEx. “So our office, our administration, has regular communication about what they’re doing and what their plans are and what we can do to create a business environment not only for FedEx, but for every company.”

FedEx officially began operations at the Memphis International Airport in 1973, employing fewer than 400 people at the time. Memphis International Airport remains North America’s busiest cargo airport thanks to FedEx, which handles the vast majority of cargo there.

FedEx’s second national hub facility in Indianapolis is also getting a big investment: $1.5 billion for a significant expansion.

Max Garland covers FedEx, logistics and health care for The Commercial Appeal. Reach him at max.garland@commercialappeal.com or 901-529-2651 and on Twitter @MaxGarlandTypes.