Well, well, well, it looks like the once mighty FedEx has fallen on hard times. The logistics giant has announced the end of its SameDay City delivery service after a decade of operation, due to a drop in demand in the transportation industry. Who could have seen this coming?
According to a company spokesman, operations will continue through March 31 and all positions supporting the service will be eliminated. SameDay City had been servicing more than 30 cities in the United States, offering door-to-door delivery to residences and businesses within hours. But apparently, FedEx has “prioritized several other opportunities for growth” and has decided to cut this service.
But wait, there’s more! FedEx has already reduced its U.S. workforce by more than 12,000 positions via a mix of attrition and headcount reductions since the start of fiscal year 2022. And, as if that wasn’t enough, the company has recently announced that 10 percent of its officers and managerial team would face the ax as it seeks to become “a more efficient, agile organization.”
FedEx CEO Raj Subramaniam defended the terminations as a “necessary action,” saying that slashing corporate positions is to cut costs amid cooling consumer demand. In a letter to FedEx team members, he said, “It is my responsibility to look critically at the business and determine where we can be stronger by better aligning the size of our network with customer demand.”
According to reports, the mass layoff came as shipping momentum slowed down after the Wuhan coronavirus (COVID-19) pandemic e-commerce boom. The package and shipping industry experienced a surge during the pandemic amid a spike in online consumer spending. But as inflation has shrunk consumers’ wallets, it has also eaten into FedEx’s profits. The company’s stock is off roughly 20 percent over the past year.
Gary Bradshaw, a portfolio manager with Hodges Capital Management in Dallas, recently told Reuters that job cuts would be welcome, particularly after FedEx lowered its annual profit forecast. “They’ve got lots of rightsizing to do,” Bradshaw said.
So, there you have it folks. FedEx, the once mighty logistics giant, is “prioritizing growth” by cutting jobs and services. The company is facing a drop in demand, shrinking profits, and a stock price that’s off 20 percent over the past year. And, in response, they’re cutting jobs and services. How’s that working out for you, FedEx?