FedEx Corp on Monday named its operating chief, Raj Subramaniam, as the new chief executive officer effective June 1, succeeding company founder Fred Smith, who started the global delivery conglomerate with more than a dozen planes in the 1970's.

Subramaniam, 54, joined FedEx in 1991 and is also a company director. He moves into the role as the company faces mounting competition from historical rival United Parcel Service and former customer Amazon.com.

Higher labor costs and internal missteps have weighed on margins, while UPS has sharpened its operations.

Shares of FedEx rose 2.5% to $235.75 in extended trading.

Smith, 77, will transition to the role of executive chairman, overseeing sustainability, innovation, public policy and other global issues, FedEx said.

Smith, who served as an officer in the U.S. Marine Corps in Vietnam, officially launched Federal Express in 1973 with 389 team members and 14 small planes that flew 186 packages from Memphis to 25 U.S. cities.

FedEx now has some 600,000 employees around the globe and it moves millions of packages a day with one of the biggest air fleets in the world.

(Reporting by Lisa Baertlein in Los Angeles and Niket Nishant in Bengaluru; Editing by Shounak Dasgupta and Bernard Orr)