FedEx is laying off 10% of its managers as the pandemic-driven package delivery boom goes bust now that the economy is turning sour
FedEx is cutting executive and director jobs globally by more than 10%, the courier’s latest cost-cutting move, as economic concerns and dwindling e-commerce weigh on demand for parcel delivery.
The company plans to consolidate some teams and functions in addition to downsizing to become a “more efficient, agile organization,” Chief Executive Officer Raj Subramaniam said in a memo to employees on Wednesday. The changes will adjust the size of the network based on customer demand, he said.
“This process is critical to ensuring we remain competitive in a rapidly changing environment, and it requires some difficult decisions,” Subramaniam said in the memo.
The latest cuts bring FedEx downsizing to 12,000 since June, a spokeswoman said.
Shares were up 2.5% as of 12:18 p.m. New York.
Since taking over as CEO from founder Fred Smith in June, Subramamian has announced $3.7 billion in cost reductions for this fiscal year in response to a rapid decline in package demand. The moves include furloughing workers, cutting cargo flights and grounding some planes.
The slump in parcels is industry-wide, with competitor United Parcel Service Inc. reporting lower U.S. volumes on Jan. 31 and a forecast for declining sales in 2023. Couriers are facing a market where consumers are shopping in stores again, inflation is eating away at spending power and companies are shipping fewer goods by air after ocean freight rates have fallen and supply chain delays have been corrected.
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