FedEx to cut senior jobs as part of larger staff reduction

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LOS ANGELES — FedEx Corp said Wednesday it would cut its officer and director ranks by more than 10% as part of a broader cost-cutting effort that has reduced the delivery giant’s headcount by 12,000 since June, a spokeswoman said.

FedEx shares rose 3.4% to $200.52 as investors welcomed the move, signaling progress on the company’s plan to cut spending by $3.7 billion this year.

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FedEx informed employees of the executive-level layoffs in a memo that didn’t specify how many positions would be affected. The company’s total workforce reductions account for just over 2% of FedEx’s 547,000 full-time and part-time employees reported for the year ended May 2022.

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“Unfortunately, this was a necessary move to become a more efficient, agile organization,” wrote Chief Executive Raj Subramaniam, adding that FedEx is consolidating some teams and functions.

Most of the cuts came through turnover and other workforce management efforts, spokeswoman Rachael Simmons said.

In mid-September, FedEx withdrew its earnings guidance and shares plunged more than 20% — the biggest one-day drop in the company’s 50-year history.

Subramaniam, the company’s newly appointed CEO, blamed a global business downturn, while critics pointed to a flat-footed response to slowing demand and ongoing profit pressure from FedEx’s expensive, separately managed businesses.

Gary Bradshaw, a portfolio manager at Hodges Capital Management in Dallas, recently told Reuters that job cuts are welcome, especially after FedEx lowered its annual profit guidance.

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“You have to do a lot to find the right size,” Bradshaw said.

For decades, FedEx was favored by investors over its unionized competitor United Parcel Service because of its reliance on less expensive, non-union, and outsourced labor. But in recent years, UPS CEO Carol Tomé has reaped greater profits and better service from that company’s only network.

With the job shift, FedEx will have reduced its full- and part-time employees to about 535,000 — about the same as UPS, based on headcounts in the latest annual reports for each company.

But those numbers only tell part of the story because they exclude some 6,000 FedEx contractors and their workers, who handle most of FedEx Ground’s home delivery business.

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Most ground contractors each employ about nine to 12 people, said consultant Satish Jindel, who helped start the company, which has been renamed FedEx Ground. Employing an average of 10.5 workers per contractor would create a total of 69,000 jobs at Ground.

FedEx has already furloughed employees at its freight forwarding arm FedEx Freight as the pandemic-induced e-commerce delivery bubble collapses and a recession looms, and joins the transportation-focused companies led by delivery upstarter Amazon.com and trucking company CH Robinson Worldwide to the transport broker Uber, the freight and forwarding startup Flexport reached when announcing layoffs. (Reporting by Lisa Baertlein in Los Angeles; Editing by Diane Craft, Aurora Ellis and Jonathan Oatis)