FedEx, a leading US logistics company, has announced plans to cut up to 2,000 jobs in Europe over the next 18 months. This decision aims to reduce costs as the demand for delivery services normalises following the pandemic. The layoffs are expected to incur pre-tax costs, including legal fees and severance packages, amounting to between $250 million and $375 million.
The job cuts are projected to save FedEx between $125 million and $175 million annually starting in fiscal 2027. The company operates in more than 45 European countries, and employs over 52,000 people.
The layoffs are part of FedEx’s broader strategy to cut costs by $4 billion by the end of the next fiscal year, including $1.8 billion in fiscal 2024, which ended in May. This cost-cutting initiative is expected to increase earnings per share.
During the pandemic, FedEx and competitors like UPS experienced a surge in demand for delivery services as lockdowns drove consumers to shop online. However, with the recovery of travel and a return to in-store shopping and dining, demand for delivery services has decreased. Inflation has further complicated the sector’s recovery.
UPS is also planning cost reductions, aiming to cut $1 billion in expenses this year. In January, UPS announced it would cut 12,000 jobs and consider strategic options for its truckload broker, Coyote, due to weak demand and overcapacity in the sector.
