FedEx to combine delivery divisions as part of $5.3b cost cuts
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The deflating e-commerce delivery bubble and spectre of potential recession have intensified pressure on FedEx to streamline operations.
PHOTO: REUTERS
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LOS ANGELES – FedEx will consolidate its separate delivery companies into a single entity, it said on Wednesday, as the group slims its bloated infrastructure to compete better with United Parcel Service and Amazon.
The move to integrate FedEx Ground, its outsourced package delivery arm, with the FedEx Express overnight delivery business comes almost a year after activist investor D.E. Shaw pushed for change and won two additional board seats.
The deflating e-commerce delivery bubble and spectre of potential recession over the past year have intensified pressure on chief executive Raj Subramaniam to streamline operations.
“We believe now is the right time to reorganise how we work together,” Mr Subramaniam told a company meeting in New York.
“We will be leaner, more agile and better positioned to execute our mission to help customers compete and win with the world’s smartest logistics network,” he said.
The combined delivery business is expected to handle all deliveries from June 2024 as part of the wider plan by the Memphis-based group to cut US$4 billion (S$5.3 billion) in permanent costs by the end of its 2025 financial year.
FedEx executives in March said they were on track to hit US$1 billion in permanent cost cuts in the financial year to May 31.
Mr John Smith will become president and CEO of US and Canada ground operations at FedEx Express and assume leadership of surface operations across the FedEx Express, FedEx Ground and FedEx Freight businesses from April 16.
FedEx Freight will continue to provide freight transportation services as a standalone company under the Federal Express Corp banner, the company added. REUTERS
