FedEx to Cut Management Jobs by More Than 10%
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FedEx Corp. is cutting global officer and director jobs by more than 10%, the courier’s latest cost-saving measure as economic concerns and waning e-commerce weigh on demand for package delivery.
The company plans to consolidate some teams and functions in addition to the head count reduction, part of an effort to become a “more efficient, agile organization,” CEO Raj Subramaniam said Feb. 1 in a memo to employees. The changes will align the size of the network with customer demand, he said.
“This process is critical to ensure we remain competitive in a rapidly changing environment, and it requires some difficult decisions,” Subramaniam said in the memo.
The latest cuts bring FedEx’s total employee reductions to 12,000 since June, a spokeswoman said. As of May, the company had 345,000 full-time workers, according to a regulatory filing.
FedEx said the job losses include “executive management,” but didn’t give additional details on which units would be most affected. During an analyst call in December, the company said the Express unit requires more work to improve margins.
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“At Express, the team is transforming the network to be more agile, efficient and digitally led,” Subramaniam said on the call. FedEx is also making changes at its Ground unit to weed out underperforming delivery contractors.
The shares rose 4.3% on Feb. 1 in New York, bringing the gain this year to 17%.
Since taking over as CEO from founder Fred Smith in June, Subramaniam has unveiled $3.7 billion in cost cuts for this fiscal year in response to a rapid decline in parcel demand. The steps include worker furloughs, cutting cargo flights and parking some planes.
The slump in parcels is industrywide, with rival UPS Inc. reporting on Jan. 31 lower U.S. volumes and a forecast for declining sales in 2023. Couriers are facing a market in which consumers have returned to shopping in stores, inflation is eating away at purchasing power and companies are sending fewer goods by airfreight now that maritime shipping rates have plummeted and the supply chain delays have been corrected.
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