WFCN –
A large US corporation is currently laying off 2,000 employees abroad as part of a cost-cutting strategy as the behemoth deals with a significant drop in demand.
FedEx is preparing to eliminate 1,700 to 2,000 back-office positions in Europe as part of its most recent cost-cutting measure as the massive package delivery company battles a decline in freight demand.
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According to FedEx, the reductions will take effect over an 18-month period and will incur pre-tax expenses of $250 million to $375 million for severance payments and legal fees.
Between $125 million and $175 million would be saved annually from fiscal 2027 because to the downsizing.
In order to increase profit, the company has started cutting costs because of the weak freight demand and the poor margin development in its largest division, the air-based Express unit.
As part of a plan to restructure delivery networks and limit capacity, the Memphis-based company had detailed goals to slash $4 billion in expenditures by the end of fiscal 2025, including $1.8 billion in fiscal 2024.
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“I believe the message is that a widespread macroeconomic recovery is still elusive,” stated Stewart Glickman, CFRA Research’s deputy research director.
“The lever available to work with at the moment is cost cuts, as both Europe and the U.S. are struggling to achieve volume growth,” Glickman continued.
During the early stages of the pandemic, FedEx, UPS, and other delivery businesses experienced a surge in demand due to homebound people making purchases online.
However, as dining and travel picked up again, that tendency reversed, made worse by rising inflation, according to CNBC.
Additionally, UPS has put strategies into place to cut expenses by $1 billion this year.
In the face of sluggish demand and overcapacity in the trucking industry, the company announced in January that it would eliminate 12,000 positions overall and investigate strategic options for its unstable freight brokerage business, Coyote.
On their website, FedEx states that they employ over 52,000 people and operate in over 45 nations and territories around Europe.
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