FedEx to downsize workforce in Express and Services divisions
FedEx Corporation said today it is looking to downsize its workforce within the United States in its FedEx Express and FedEx Services divisions. The Memphis-based company could not say exactly how many staff it is looking to leave through the offer of voluntary buyout incentives, or the total amount it is aiming to save in costs.
The “vast majority” of those set to leave will be US-based “back-end” non-operational staff, rather those on the front line of operations, FedEx told Post&Parcel this morning.
This will include mainly staff from FedEx Express, which has been seeing business shift from more premium air services towards FedEx Ground, particularly with the rise of ecommerce in the US.
And, the incentives also look set to target workers in the FedEx Services division, which includes functions like IT, marketing and sales.
“We are starting a strategic analysis to determine who may be eligible for these incentives, and we’re undertaking this analysis on a workgroup basis – so that we don’t have groups where there is insufficient staff to continue to provide services to the level our customers expect,” said spokesperson Shea Leordeanu.
FedEx said the incentives will not include changes to retirement eligibility or payments, and that staff eligible for the incentives while also eligible to retire will be able to accept the buyout incentive and retire.
Higher costs
Earlier this summer FedEx warned that the global economy was looking “soft” and that higher costs were set to affect its earnings over the next 12 months, including
As customer demand for shipping shifts from premium to economy air products and from air to ground services, the company is also restructuring its air fleet in the United States at present, bringing in more efficient aircraft.
In the latest quarter FedEx Express saw its operating income down 3% year-on-year, not including the costs of restructuring the air fleet, while FedEx Ground saw its operating income up 18% in the fourth quarter compared to the same period in 2011. Package volumes overall grew 6% during the quarter with more Americans shopping online.
Leordeanu said the voluntary incentives programme was all tied in to the same streamlining process at FedEx related to the changes in market trends.
“There is a need to realign our costs with our revenues, particularly with our FedEx Express division – this is just the next step in how we realign our costs,” she said, adding that the company saw it as “extremely important” that the reduction in labour does not affect quality of customer services.
FedEx said it will release further details of its plans to investors in October, while the final shape of participation will be announced no later than May next year, the firm said.
