FedEx to roll up its Canadian Ground and Express operations into single operation
Cost-cutting move will consolidate twin first and last mile networks into one solution
Big Three parcel carrier FedEx Corp. took another step in its cost-cutting transformation today, announcing that all FedEx Ground operations and personnel in Canada will transition to FedEx Express Canada starting in April 2024.
Both the Ground and Express service offerings will continue to be provided to customers, but under the plan, the company’s Ground and Express first and last mile networks will be streamlined into a single first and last-mile solution. Meanwhile, the “middle mile” served by the current FedEx Ground linehaul network will continue to play a vital role in the transportation of packages between company locations under the new structure, FedEx said.
Furthermore, following the transition, FedEx will no longer contract with pick-up and delivery service providers in Canada for the pickup and delivery of packages. The company did not detail whether the streamlining plan would include layoffs, but it said that Canada’s FedEx Ground employees will be offered positions at FedEx Express.
The news came as FedEx announced $1.54 billion profit for the fourth quarter, up from $558 million for the same period last year. And the company reported $3.97 billion profit for the year, up from $3.83 billion profit in 2022.
Despite those rosy numbers, Memphis, Tennessee-based FedEx also announced that its executive vice president and chief financial officer (CFO) Michael C. Lenz will retire effective July 31. Lenz will serve as a senior advisor with the company while an external search continues for his successor.
“On behalf of the entire FedEx team, I want to thank Mike for his 18 years of dedicated service to the company,” Raj Subramaniam, FedEx Corp. president and CEO, said in a release. “Mike has successfully led our finance organization for the past three years while helping the company navigate a period of significant change. We are grateful for his dedication and tireless work. He is leaving FedEx well positioned for the future as we continue to execute on our transformation.”
Subramaniam has been leading the company through a broad series of cost-cutting moves called Network 2.0 in recent months. In April he said the company would consolidate most of its operational companies into a single organization, 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 less-than-truckload (LTL) freight transportation FedEx Freight.
And in May, the company said it would close 29 locations in that FedEx Freight division and consolidate those operations into other locations.
Today FedEx said it is making “solid progress” with Network 2.0, having announced optimization plans to streamline pickup-and-delivery operations across networks in 20 markets. In some of these markets, contracted service providers will be handling the pickup and delivery of ground and express packages, while in other markets, pickup and delivery will be handled exclusively by employee couriers. FedEx plans to continue employing both models in the future.