Dive Brief:
- FedEx will lay off employees in North Carolina as the delivery giant continues its push to merge its separate Express and Ground networks, according to Worker Adjustment and Retraining Notification (WARN) Act notices filed this week.
- The company is permanently closing its ship center in Durham, impacting 123 employees. The company is also reducing its workforce at its Raleigh ship center by 218 employees. Layoffs at both facilities will primarily impact couriers and will take effect Feb. 3.
- "Certain team members will be offered opportunities at other FedEx locations," FedEx said in an emailed statement. "Decisions of this nature are the result of much thought and consideration for maintaining the high level of service expected from our customers and other needs of our business."
Dive Insight:
The closure and layoffs are part of FedEx's Network 2.0 initiative to merge the company's separate Express and Ground operations, a spokesperson said in an email to Supply Chain Dive. In the process, FedEx is cutting facilities and routes that overlap with others.
The overhaul, which aims to save FedEx $2 billion by fiscal year 2027, has seen steady progress. President and CEO Raj Subramaniam said in September that nearly 200 FedEx facilities in the U.S. and Canada will be handling consolidated Ground and Express volume by early calendar year 2025.
"We continue to see roughly a 10% reduction in pickup and delivery costs in markets where we have fully rolled out Network 2.0," Subramaniam added. "Service levels in these markets are meeting or exceeding our network average."
FedEx is maintaining its service levels despite personnel challenges associated with merging two networks that were long kept separate. Company-employed couriers are having to adjust to handling larger packages, while contracted delivery providers are now encountering more time-definite shipments, EVP and CFO John Dietrich said at a November investor conference.
FedEx has enacted other layoffs this year in the thick of its Network 2.0 rollout, including one tied to the closure of its Conover, North Carolina, ship center. Rival UPS is also closing facilities and shifting more volume to automated hubs as it looks to reduce expenses.
