FedEx's network streamlining efforts are heating up.
The logistics giant confirmed six more ship center closures and two facilities cutting staff in Tennessee, Illinois, Virginia and West Virginia as part of its Network 2.0 initiative. The changes will take place between March and June, spokesperson David Westrick said in an email.
As of Wednesday, no Worker Adjustment and Retraining Notification (WARN) Act notices had been filed for the affected facilities except for a location in Blountville, Tennessee. Per the notice, 88 employees will be impacted by the March 31 closure.
“Given the complexity of these reorganizations, the fact employees typically have several options, and the extended period between announcement and operational changes, we are not able to provide final impacted numbers for every facility,” Westrick said.
The closures and staffing cuts build upon previous layoffs FedEx has confirmed with Supply Chain Dive for 14 other ship centers since 2023, bringing the total affected sites in that timeframe to at least 22.
FedEx closing facilities amid Network 2.0 plan
FedEx accelerating the cadence of closures under Network 2.0 makes sense as the company refines its approach to shuttering facilities and shifting the volume elsewhere, said Jeremy Tancredi, a partner in West Monroe’s operations excellence practice.
"Once you do those first few sites, you kind of have the playbook written," Tancredi said in an interview with Supply Chain Dive.
Network 2.0 is a multiyear plan FedEx unveiled in 2022. Through the initiative, FedEx is merging the operations of its separate Express and Ground networks to trim costs and boost efficiency. Network 2.0 has led to a 10% pickup and delivery cost reduction in areas where FedEx has fully rolled out the plan, President and CEO Raj Subramaniam said on a December earnings call.
FedEx has “optimized 200 stations so far and including 130 in Canada,” via the initiative, Subramaniam said. At the end of fiscal year 2025, the carrier expects 250 stations will be integrated.
"We will complete the rest of the Canada integration early in 2025 with the last major market being Montreal," Subramaniam said.
FedEx has provided advance notice to customers during the market-by-market rollout, as clients want to understand the plan even if service levels aren't impacted, EVP and Chief Customer Officer Brie Carere said in March 2024. Shippers will benefit from the results, she added, as a unified FedEx network means they won't have to juggle separate Express and Ground pickup times.
Sales account representatives and drivers are key in FedEx's Network 2.0 communications with customers, West Monroe's Tancredi said. The sales side gives shippers, particularly larger ones, a point of contact for any updates or service concerns. Drivers can reinforce that the changes will result in an easier shipping process.
"In some cases, they may have a different driver," Tancredi said. "Ensuring that that customer experience feels the same even with a new driver is going to be critical."
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