FedEx Corp. is doubling down on corporate cost-cutting measures, announcing today that it will close 29 locations in its FedEx Freight division and consolidate those operations into other locations this summer.
After the layoffs and closures become effective August 13, the Memphis-based company said it would “help affected team members find other open positions where possible.”
On top of those changes, FedEx Freight will also enact a “temporary workforce adjustment,” furloughing certain job classes beginning May 28 with plans to recall all furloughed employees by Aug. 25.
The cuts come just a month after the company launched a plan to consolidate most of its operating companies into a single organization in search of additional cost cuts, bringing FedEx Express, FedEx Ground, FedEx Services, and other units into an umbrella unit called Federal Express Corp. The lone exception to that plan was FedEx Freight, which would continue to provide less-than-truckload (LTL) freight transportation services as a stand-alone division.
FedEx Freight will still stay independent, but will tighten its belt significantly, today’s announcement reveals. In a statement, the company said the cuts are necessary as it “continues to adapt to an evolving global business environment.”
“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 several locations to improve customer service levels and improve efficiencies with fewer touchpoints, while lowering our cost to serve,” a FedEx spokesperson said in an email.
The cost-cutting moves come as the entire trucking sector swings through the bottom of a business cycle, with freight rates and volumes at multi-year low points.
But while those soft market conditions are putting pressure on smaller fleets in particular, some large LTL providers are surfing through the waves without much damage. FedEx Freight competitor Saia last week announced a first quarter earnings report that showed its April tonnage was down less than 1% in “an increasingly challenged volume environment,” according to a TD Cowen financial analysis. “1Q results came in above expectations driven by better-than-expected tonnage vs its LTL peers,” the analyst said.