Thursday, October 11, 2012
FedEx to cut budget by $1.7 billion, slash thousands of jobs
Shipping giant FedEx Corp. announced its intention to decrease its budget by $1.7 billion a year by reducing jobs, planes and other underused assets, intending to reach this goal in three years through cost cutting and increased efficiencies.
The restructuring move is due to a consumer shift to lower-cost, slower methods of shipping in a listless world economy.
Founder and CEO Fred Smith said most cost cuts will be implemented in the company's Express and Services units, which have suffered the most from the global economic downturn. He said a voluntary buyout program should reduce the company's "fixed head count by several thousand people." Most of those employees are in the U.S.
The Express division reported revenue of $26.5 billion in fiscal year 2012 and has more than 146,000 employees worldwide. It's been adversely affected by the shift to cheaper, slower delivery methods, and is also hit by the lower cost of shipping lighter, new tech gadgets such as Apple's new iPhone, 17 percent lighter than the original. Express is also reducing flights and getting rid of older planes.
Services is the company's logistics arm, and includes FedEx Office, which used to be Kinko's. Its revenue was $1.7 billion in FY 2012, and at 13,000 employees, is one of the smallest divisions at FedEx.
Enhancing the flow of FedEx staff and operations through improved technology, and reducing overhead in selling, general and administrative expenses are also ways the company plans to reduce overhead, according to Smith.
For more of the Huffington Post story: huffingtonpost.com
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