FedEx is planning to cut thousands of jobs in Europe as it continues to struggle with sluggish market conditions.
The express giant said that it would let go between 1,700 and 2,000 members of its back-office team on the continent – around 3-4% of its 52,000 European employees.
It hopes the move will generate annual savings of $175m starting from the fiscal year 2027.
The cost of the layoffs in legal fees and severance packages is expected to amount to between $250m and $375m, FedEx said.
The company said layoffs were part of ongoing measures to reduce structural costs.
FedEx explained that the cuts would remove and consolidate admin and commercial positions.
“Certain activities performed across the region will also be consolidated to be located in select shared activity centers that are in countries that are best aligned with our needs and the existing FedEx real estate footprint,” FedEx said.
They would not have an impact on customers or delivery service levels.
In line with European and local labour laws, the consultation process will be conducted at the country level with differing timelines across the region.
FedEx has been tackling softer market conditions by implementing its Drive cost-saving programme that aims to generate annual savings of $4bn.
In its fiscal third quarter, FedEx’s ground network achieved savings of $290m, air costs were down $110m and general/admin expenses reduced by $150m.
The savings in the air network are down to a “focus on structural transformations and reduction of flight hour costs” and optimising its network in Europe, the company said.
FedEx has also parked aircraft to help reduce costs and in response to weaker demand levels.
Last year, FedEx said it planned to reorganise its air network to better suit the demands of various shipment types as part of efforts to cut costs.
The cost-saving initiatives are starting to show improvements; in its fiscal third-quarter results, operating income improved by 19% on last year to $1.2bn and net income was up 14% to $879m.
Richard Smith, chief operating officer, international and chief executive, airline, Federal Express, said: “Alongside the work we’ve done to optimise 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 is not alone in looking to make cost savings due to changing market conditions, with customers opting for lower-cost express solutions in light of inflation.
In January, UPS announced it will cut more than 12,000 jobs as part of efforts to reduce costs in light of continuing market weakness.
The express giant’s chief executive Carol Tomé said the job cuts would save the company $1bn per year.