Dive Brief:
- FedEx plans to cut between 1,700 and 2,000 back-office and commercial jobs in Europe as it pursues further cost reductions in a weak demand environment, the delivery giant announced in a news release Wednesday.
- FedEx expects to save between $125 million and $175 million annually starting in fiscal year 2027 from the plan, which is subject to an 18-month consultation process in accordance with local laws and regulations, according to a securities filing.
- The changes also entail consolidating certain activities performed across Europe into "select shared activity centers that are in countries that are best aligned with our needs and the existing FedEx real estate footprint," the company said in the release. FedEx didn't specify what those activities are.
Dive Insight:
FedEx continues to find ways to trim costs in its network to boost its bottom line amid a soft market for parcel carriers.
Beyond its ongoing DRIVE program and the merger of its separate Express and Ground networks, the company is also shrinking its employee ranks. In a March earnings call, FedEx Executive Vice President and CFO John Dietrich said the delivery giant reduced its workforce by nearly 22,000 over the past year and that it expected "additional opportunities in the future as we move forward with our transformation."
In Wednesday's announcement, FedEx International COO and Airline CEO Richard Smith described the upcoming layoffs in Europe as "necessary actions" that would streamline company functions and reduce structural costs.
"We do not take these decisions lightly, but they are essential to putting FedEx on the right path for the future," Smith said.
Despite the planned layoffs and consolidations, FedEx said customers won't see a change in the service they can expect from the company in Europe.
FedEx has been pushing to gain a stronger foothold in the region for years, particularly in the ground delivery market following the company’s 2016 acquisition of TNT Express. At a Bernstein conference last month, FedEx President and CEO Raj Subramaniam said Europe offers upside for the company going forward.
"Europe is a significant opportunity for FedEx," Subramaniam said. "It is a high amount of focus for me personally."
