FedEx in 2021: Vaccines, extreme cold weather, higher wages all part of year that was

For FedEx, 2021 was a year of unpredictable events. Consider the stunning spell of bitterly cold weather that disrupted the Memphis-based company's operations for several days in February, forcing the shipping giant to make adjustments as it distributed COVID-19 vaccines and other packages across the nation.

The cold-weather episode lasted only a few days, but cost FedEx hundreds of millions of dollars.

And the COVID-19 pandemic continued to impact many aspects of the company's operations, from its decision to relocate pilots away from Hong Kong to the company's starring role as a deliverer of vaccines in the United States. FedEx also continued to adjust to heavy demand for e-commerce packages.

Amid the national labor market upheaval related to the "Great Resignation," the company spent hundreds of millions of dollars on higher wages, contract labor and rerouting packages around short-staffed areas.

At the end of the year, though, the Memphis-based company reported it was getting on track. Earnings exceeded expectations, the company said it had managed to hire thousands of new workers and demand for the company's services was so high that executives felt confident in raising prices.

Here's a look at the year:

Company played a starring role in vaccine shipments

FedEx played a starring role in vaccine shipments in 2021.

The role that had actually begun late the previous year. On Dec. 3, 2020, then-Vice President Mike Pence and FedEx founder Fred Smith were among the people who gathered in Memphis to tout plans for the vaccine rollout.

Then, on Dec. 13, 2020, a FedEx truck was among the first vehicles to carry COVID-19 vaccines from a Pfizer factory in Portage, Michigan, and a FedEx plane carrying vaccine doses flew from the Grand Rapids airport to the Memphis hub for distribution to points around the country.

The high-profile rollout of the vaccine reflected the company's key role as a partner to the federal government in vaccine distribution — the other key company involved in vaccine distribution efforts is FedEx rival UPS.

Through the course of 2021, Americans saw COVID-19 vaccines gradually transform from a coveted, rare commodity available only to select groups to a commonplace item widely available to almost everyone, even at corner drugstores.

As of December, FedEx said it had delivered more than 300 million vaccine doses in the U.S., to all 50 states, as well as Puerto Rico, the U.S. Virgin Islands and Washington, D.C.

"We are also delivering the kits of supplies required to administer the vaccines. Vaccine distribution includes boosters and pediatric doses," the company said in a statement.

The company also said it has delivered COVID-19 vaccines and supplies to more than 50 countries and territories around the world, and also plays a role in the movement of active pharmaceutical ingredients and therapeutics.

50 years of FedEx: Fifty years ago, FedEx was incorporated. The delivery industry has never been the same.

Extreme weather

When extreme cold, snow and other winter weather hit much of the nation in February, many workers in Memphis and other facilities couldn't get to their jobs.

Some other facilities around the country likewise faced serious disruptions. FedEx worked through the issues in part by relying on hubs that weren't so seriously affected by the cold weather.

The impact of the disruption became clear in March, when the company announced that the winter storm had cut its operating income by an estimated $350 million during the three-month period that ended Feb. 28.

Promise to become carbon-neutral by 2040

The extreme cold weather may have been one of the consequences of climate change. Scientists have concluded that human burning of fossil fuels such as coal and oil has pumped so much carbon dioxide into the atmosphere that it has altered weather patterns, leading to warming temperatures and probably to other extreme events, like the February winter weather.

“There is evidence that climate change can weaken the polar vortex, which allows more chances for frigid Arctic air to ooze into the Lower 48,” University of Georgia meteorology professor Marshall Shepherd told USA TODAY in February.

On March 3, just weeks after the spell of bitterly cold weather ended, FedEx said it wanted to contribute to a solution to the climate crisis.

The company was committing to become "carbon-neutral" by 2040, and launching that commitment with an investment of $2 billion. Among the steps that it was taking was to replace its entire pickup and delivery fleet with electric vehicles and also spending $100 million to help Yale University establish the Yale Center for Natural Carbon Capture.

"The health of our planet is at stake," Smith, the FedEx founder, said before the U.S. House Committee on Transportation and Infrastructure later in March. "FedEx has a long history of keeping sustainability at the center of our business, and we know the future of our operations is tied to the future of our environment."

Airline's high-profile labor issues reflected broader trends in the economy

FedEx relies on thousands of workers to help sort packages, and it saw a dramatic increase in turnover and quit rates among these workers in 2021.

The airline's high-profile labor issues reflected broader trends in the economy.

Among the key steps that FedEx took to address the problems was boosting pay.

Around 2019, frontline FedEx hub workers handling packages in Memphis could earn about $13.92 per hour, Shannon A. Brown, a senior vice president for human resources and chief diversity office, said in a September interview.

The company has increased pay to range of $17 to $20 per hour, plus a benefits package that includes health insurance, 401(k) and tuition reimbursement.

The company said the labor issues and related factors cost the company $450 million during the June-though-August quarter, and another $470 million in the September-through-November quarter.

The company said that between September and December, it had hired more than 60,000 frontline workers.

Other major events of the year

FedEx is a national and international player, and the company experienced many other significant events in 2021. The company made headlines in Hong Kong when it confirmed it had relocated pilots away from the city due to the government's strict COVID-19 measures, which included weeks of mandatory isolation. FedEx continued to deliver to the area, though its pilots no longer live in the city.

Memphis and the nation are facing severe gun violence and the problem has also touched FedEx. A fatal shooting took place at one of the company's Memphis parking lots in September — a police affidavit said a man shot a coworker after an argument. And in April, a 19-year-old went to a FedEx Ground facility in Indianapolis where he had formerly worked, shot and killed eight people, then killed himself, authorities said.

Other events on the global stage were much happier: For instance, the company carried out its usual delivery of the Vince Lombardi trophy to the Super Bowl.

Heavy demand for e-commerce packages

At the end of the year, the company was enjoying heavy demand for its services as the e-commerce boom continued — the COVID-19 pandemic also influenced consumer behavior, with more people ordering goods for home delivery.

FedEx announced that in the three-month period ended Feb. 28, it had delivered nearly 500 million packages, the biggest holiday peak season in the company's history, President and Chief Operating Officer Raj Subramaniam said in an earnings call.

Full numbers are not immediately available for the 2021 holiday peak season, but earlier this month, Subramaniam said the company was seeing "unprecedented levels of shopping and shipping this holiday season." He said FedEx Ground had handled 100 million packages in a single week.

The heavy demand gave the company leverage to continue to raise prices for its services and the company had announced plans to do so in 2022.

Coming soon: a look at what's ahead for FedEx in 2022.

Reporter Daniel Connolly welcomes tips and comments from the public. Reach him at 529-5296, daniel.connolly@commercialappeal.com, or on Twitter at @danielconnolly.

This article originally appeared on Memphis Commercial Appeal: A look back at FedEx in 2021: Delivering vaccines to holiday shipping