Press reports suggest that FedEx’s voluntary redundancy programme has accounted for 10% of the company’s senior management. Local press sources state that over 20 vice-presidents and managing directors will be leaving the company, although this has not been confirmed by FedEx to Transport Intelligence at the time of publication.
The move is being described as a “buyout” programme and is assumed to be part of a cost reduction plan announced in October 2012. The objective of the scheme is to achieve an “annual profitability improvement of $1.7bn during the next three years, with a significant portion of the benefits achieved by fiscal 2015”. The reductions were to be focused on FedEx Express and FedEx Services and were in addition to further cost control measures at FedEx Freight and FedEx Ground.
The news service Bloomberg quoted a FedEx spokesman who described the loss of jobs as a move to a new organisational structure, but would not confirm the number of jobs to be lost. It appears that the offers of voluntary redundancy will be extended to other parts of the workforce from the middle of this month.
Bloomberg linked the redundancy move to the shift from airfreight to sea and road transport by major shippers; however this has not been confirmed. Fred Smith, FedEx’s founder and CEO said in an explanation in October that the costs reduction strategy was “closely tied to effective yield management” and “[the] key is striking the right balance between volume growth and yield improvements. With slow economic growth, however, the cost reduction programmes are essential to achieve our financial goals.”
Further press reports suggest that as many as 5,000 people could leave FedEx over the next eighteen months.