FedEx combination will see 1,700 staff axed
FedEx will combine its FedEx Freight and FedEx National LTL operations. The company said the move will take place on January 30, 2011, and will result in FedEx’s workforce being reduced by 1,700 staff.
By combining the businesses, FedEx hopes to increase efficiencies and reduce operational costs.
Additionally, it will provide customers a choice of priority or economy less-than-truckload (LTL) freight services across all lengths of haul from one integrated company.
This change, along with the company’s ongoing yield management initiatives, is expected to “substantially improve” the profitability of the FedEx Freight segment in fiscal 2012.
A spokesman said: “The estimated cost of this program is $150m to $200m, primarily related to charges that will be recorded in the second and third quarters of fiscal 2011.
“These charges will include severance costs associated with personnel reductions, lease terminations and certain non-cash charges. The net cash effect from the one-time cost of these actions is expected to be immaterial over time due to anticipated proceeds from asset sales. As a result of this combination, headcount is expected to be reduced by approximately 1,700 full-time employees and approximately 100 facilities will be closed.”
The announcement came in the same day that FedEx said group operating income rose by 99% for Q1 year-on-year.
