Raj Subramaniam, FedEx, speaks at the US Chamber of Commerce’s Aviation Summit in Washington, D.C. on March 5, 2020.
Christopher Triplar | Sipa via AP Images
fedex deduct more than 10% from its officers and directors, CEO Raj Subramaniam announced on Wednesday, as the company cut corporate jobs to cut costs amid slumping consumer demand.
“Unfortunately, this was a necessary measure to become a more efficient and agile organization. It is my responsibility to look critically at the business and determine where we can be stronger by better matching the size of our network to customer demand,” Subramaniam said in his letter to FedEx team members.
FedEx shares were up 2% at midday Wednesday.
The layoffs come as shipping momentum slows after a pandemic e-commerce boom.
The parcel and shipping industry has seen a boom during the pandemic amid a surge in online consumer spending. But as inflation slashed consumer portfolios, it also hurt FedEx’s earnings. The company’s stock is down nearly 20% over the past year.
As a result, FedEx has had a rough first half of the fiscal year and has sought to cut costs while also raising prices to offset slowing volume.
After being reported Second Quarter With sales and profits slumping due to global declines in volume, FedEx announced it would cut an additional $1 billion in costs by parking planes and closing some of its offices. In 2022, the company will reduce its US and international flight time by 13% combined.
During the second-quarter earnings call with analysts, Subramaniam outlined what he called “a firm and decisive cost-cutting plan in fiscal 2023.” The company aims to cut a total of $3.7 billion during this fiscal year.
Besides cutting costs, the company’s path forward also included price increases. The company raised freight rates by 6.9%, which took effect last January, Another measure to offset consumer sluggishness. At that time, Subramaniam said he expected the caliber “Global recession”.
UPS also expects to compete with FedEx “Bumpy year,” According to its Chief Financial Officer Brian Newman. On Tuesday, the shipping company reported lower revenue in the fourth quarter, as freight volumes continued to decline. To counter slowing consumer demand, UPS also raised freight rates by 6.9% at the end of last year.
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