FedEx has announced plans to reduce its workforce in Europe by 1,700 to 2,000 back-office positions, representing about 3-4% of its 52,000 European employees. This move comes as the company continues to face sluggish market conditions and aims to generate annual savings of $175 million starting from the fiscal year 2027.
The layoffs, expected to incur costs between $250 million and $375 million in legal fees and severance packages, are part of FedEx’s ongoing efforts to reduce structural costs. The company plans to consolidate admin and commercial positions and relocate certain activities to shared activity centers in strategically aligned countries.
FedEx assured that these cuts would not impact customer service or delivery levels. The consultation process will adhere to European and local labor laws, with timelines varying across different countries.
These job cuts are a component of FedEx’s broader Drive cost-saving program, which aims to save $4 billion annually. In its fiscal third quarter, FedEx’s ground network achieved savings of $290 million, air costs decreased by $110 million, and general/admin expenses were reduced by $150 million. These savings stemmed from structural transformations and a reduction in flight hour costs, along with optimizing its European network and parking aircraft in response to weaker demand.
Despite these challenges, FedEx’s cost-saving measures have shown positive results. In its fiscal third-quarter results, the company reported a 19% improvement in operating income, reaching $1.2 billion, and a 14% increase in net income, totaling $879 million.
Richard Smith, FedEx’s chief operating officer, international, and chief executive of Federal Express, stated, “Alongside the work we’ve done to optimize our networks, we’re taking necessary actions to streamline many of our functions to reduce structural costs while continuing to deliver outstanding service to our customers. We do not take these decisions lightly, but they are essential to putting FedEx on the right path for the future.”
FedEx’s decision reflects a broader trend among logistics companies facing similar market pressures. For instance, in January, UPS announced it would cut over 12,000 jobs to save $1 billion annually in response to market weakness and customers opting for lower-cost express solutions amid inflation.