MEMPHIS, Tennessee: FedEx Corp has said that in an effort to cut costs and compete with United Parcel Service and Amazon.com, it will consolidate its various delivery units into a single company.

After activist investor D.E. Shaw pushed for change and won two additional board seats, the company announced it decision to integrate FedEx Ground, its outsourced package delivery arm, with the FedEx Express overnight air delivery business, which was announced almost one year later.

During a company meeting in New York City, Chief Executive Officer Raj Subramaniam said, “We believe now is the right time to reorganize how we work together. We will be leaner, more agile and better positioned to execute our mission to help customers compete and win with the world’s smartest logistics network.”

As part of the wider drive to cut $4 billion in permanent costs by the end of its 2025 financial year, the Memphis-based company’s consolidated business is expected to handle all deliveries beginning in June 2024.

“FedEx Freight will continue to provide freight transportation services as a standalone company under the Federal Express Corp banner,” the company said in a statement.

The company is testing the new combined service in Minneapolis, and is already handling FedEx Ground’s pickups and deliveries in Alaska and Hawaii, where air service dominates.

However, ground contractors who are worried about their ongoing role at the company, have expressed concerns about the recent changes.

Subramaniam stressed that FedEx will remain non-union and use a “hybrid” employee and contractor model for deliveries.

“FedEx has been looking at this project for the last couple years, but analysts noted that the company’s standstill agreement with activist D.E. Shaw was set to expire at the end of May,” company executives said.