On Wednesday, FedEx Corp said that it would snip off its officer and director ranks by more than 10 per cent as part of a broad cost-reduction effort that has downsized staffing at the delivery giant by 12,000 workers since June, a spokeswoman said.
Shares in FedEx increased by 3.4% to $200.52 as investors praised the move, which signals progress on the company’s plan to cut off expenses by $3.7 billion this year.
In a memo, FedEx informed workforce about the senior-level layoffs, which did not say how many positions would be affected. The company’s total workforce reductions account for a little over 2% of FedEx’s 547,000 full-time and part-time workers reported for the year ended May 2022.
Chief Executive Raj Subramaniam wrote, “Unfortunately, this was a necessary action to become a more efficient, agile organization”, who added that FedEx is consolidating some teams and functions.
A spokeswoman Rachael Simmons said majority of the cuts came through attrition and other headcount management efforts.
In mid-September, FedEx pulled its profit forecast and shares swooned more than 20% – the largest single-day drop in the company’s 50-year history.
Bradshaw said, “They’ve got lots of right-sizing to do.”
For decades, FedEx was motivated by investors over its unionized competitor United Parcel Service because it depended on less costly nonunion and outsourced labor. But more recently UPS CEO Carol Tomé has delivered huge profits and better service from that company’s single network.
With its move on jobs, FedEx will have minimised the number of its full- and part-time employees to around 535,000 – approximately on par with UPS, based on workforce counts in the most recent annual reports for each company.
But those numbers only tell part of the story because they exclude roughly 6,000 FedEx contractors and their workers, who handle most of the FedEx Ground’s home delivery business.
Most Ground contractors employ about nine to 12 employees each, said consultant Satish Jindel, who helped found the company that was rebranded as FedEx Ground. Using an average of 10.5 workers per contractor would add a total of 69,000 jobs at Ground.
The company already has temporarily discharged workers at its trucking division FedEx Freight as the pandemic-fueled e-commerce delivery bubble deflates and an economic downturn threatens, joining transportation-focused companies ranging from delivery upstart Amazon. com and trucking company C.H. Robinson Worldwide to transportation broker Uber Freight and freight forwarding startup Flexport in announcing layoffs.
FedEx Express is the company’s original overnight courier services, providing next day air service within the US and time-definite international service. It operates one of the largest civil aircraft fleets in the world, has the largest fleet of wide bodied civil aircraft, and carries more freight than any other airline.