Amid what it describes as a “weaker demand environment,” Memphis-based FedEx has announced that it will close 29 freight locations as part of its plan to cut more than $1 billion in expenses.
In the closing of the locations, the company will furlough certain employees for at least three months.
The following statement was attributed to a FedEx spokesperson:
As FedEx continues to adapt to an evolving global business environment, FedEx Freight has announced a decision to close 29 freight locations and consolidate its operations into other locations, effective Aug. 13, 2023. We continuously review our network to ensure we have the right design to address changing market dynamics. Through that process, we identified opportunities to consolidate operations in certain locations to improve customer service levels while lowering our cost to serve.
FedEx Freight is enacting an additional furlough for certain job classes beginning May 28, 2023. Eligible employees will be offered permanent transfer opportunities to other markets that have hiring needs. FedEx Freight will maintain health benefits for furloughed employees. This is a temporary workforce adjustment, and all furloughed employees will be recalled on or before Aug. 25, 2023.
In September, the company warned of a global recession after its stock plunged 21 percent in a single day, the largest one-day drop in company history.
Asked whether that drop resulted from a looming recession, the company’s CEO Raj Subramaniam, responded affirmatively.
“I think so. But you know, these numbers, they don’t portend very well,” he told CNBC’s Jim Cramer.
“I’m very disappointed in the results that we just announced here, and you know, the headline really is the macro situation that we’re facing,” Subramaniam said. “We’re going fully into cost-management mode.”
Meanwhile, the company employs independent contractors to deliver its packages in the United States.
Those contractors are unhappy with the rise in fuel costs, labor, and new vehicles, which they said is hampering their ability to turn a profit.
Late last year, some threatened to refuse deliveries on Black Friday, the largest consumer holiday in the United States.
“We recognize that current economic conditions are posing new challenges,” FedEx Ground said in a statement at the time. “We remain committed to working with service provider businesses individually to address the challenges specific to their situation. Our goal is to enable success for both FedEx Ground and service providers.
– – –
Pete D’Abrosca is a reporter at The Tennessee Star and The Star News Network. Follow Pete on Twitter.
Photo “Fedex Freight” by Tomás Del Coro. CC BY-SA 2.0.
