Business
To Cut Costs, FedEx Will Consolidate Its Operating Divisions
(CTN News) – On Wednesday, FedEx announced that it would merge its freight division with its divisions offering other services into one organization as it strives to reduce costs and increase efficiency.
Due to a cooling demand for deliveries and the threat of a global recession, the freight bellwether firm is racing to reduce overhead costs that have strained profits in the face of direct competitor United Parcel Service and Amazon.com’s growing delivery operations.
Historically, FedEx has been criticized by investors for its poor performance in comparison to UPS, which employs a unionized workforce, last year for its subpar performance compared with FedEx.
In response, announced extensive plans to reduce costs, including the parking of planes and reducing headcount as part of its plans.
As part of its plan to cut $4 billion in permanent costs by the end of fiscal 2025, the Memphis-based package delivery company will be presenting more details on its progress at an event set for Wednesday in Memphis.
According to executives, the company is well on track to hit its 2025 goal of cutting $1 billion in permanent costs this fiscal year, which ends on May 31. This would put FedExwell on its way towards reaching that goal by 2025.
Ultimately, according to the company, after the phased transition announced Wednesday, Express, Ground, FedEx Services, and other operating companies will become part of the Federal Express Corporation, which will be led by Raj Subramaniam, the company’s present Chief Executive Officer.
On April 16th, John Smith will join Express as president and CEO of U.S. and Canada Ground Operations at FedEx Express, and will be responsible for the surface operations across Express, Ground, and Freight operations in the United States and Canada.
According to Federal Express Corp, FedEx Freight will continue to operate as a stand-alone company, operating under the Federal Express Corp banner, as part of the company’s freight transportation services.
It is anticipated that the transition will be completed by June 2024 at the latest.
Prior to the bell, FedEx shares were up 3.2% as the company also announced that it was raising its dividend by 10%.
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