FedEx is planning to cut between 1,700 and 2,000 back-office jobs in Europe, in its latest push to cut costs as the parcel delivery giant combats a slump in freight demand.
The cuts will be spread over 18 months and would result in a pre-tax cost of $250 million to $375 million related to legal fees and severance benefits, FedEx said.
The downsizing will help save between $125 million and $175 million a year from fiscal 2027.
Faced with soft freight demand and slow margin growth in the air-based Express unit, its largest segment, the company has embarked on cost cuts to boost profit.
The Memphis-based firm had outlined plans to cut $4 billion in costs by the end of fiscal 2025, including $1.8 billion in fiscal 2024, as part of a plan to restructure delivery networks and tighten capacity.
“I think what it’s telling us is that a broad-based macro recovery remains elusive,” said Stewart Glickman, deputy research director at CFRA Research.
“Both Europe and U.S. are struggling to achieve volume growth and at the moment, cost cuts are the lever available to work with,” Glickman added.
FedEx, rival United Parcel Service and other delivery companies saw a boom in demand during the early days of the pandemic when home-bound consumers shopped online.
But as travel and dining resumed that trend reversed and was also exacerbated by higher inflation.
UPS has also implemented plans to reduce $1 billion in cost this year. It said in January it would cut 12,000 jobs and explore strategic options for its volatile truckload brokerage business Coyote amid weak demand and overcapacity in the trucking industry.
FedEx had in March raised its fiscal 2024 profit forecast, as cost cuts helped its earnings per share exceed market expectations.
FedEx operates in more than 45 countries and territories in Europe and employs over 52,000 people, according to its website.