FedEx Forced To Ground Flights & Furlough Workers Over Weak Parcel Delivery Demand

Things are not looking good for FedEx this Q4 as the global courier company has announced it has had to ground aircraft and offer workers furlough due to a much weaker-than-expected parcel delivery demand.

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At the Baird Global Industrial Conference this week, FedEx CFO Miike Lenz announced that the company has canceled eight to nine daily international flights and about 23 domestic flights to help achieve a $2.2 billion to $2.7 billion in accelerated savings after announcing a drop in quarterly earnings.

The measures don’t stop there however as Mike continued by stating how there were plans for further cuts this month of eight to nine more domestic flights and temporarily parking aircraft because fewer are needed. The plan is to structurally lower costs by $4 billion starting in the fiscal year of 2025, with the air network a strong candidate for further streamlining.

FedEx Offering Furlough to Workers

The FedEx Freight arm of the business has also announced that it will be furloughing an undisclosed number of drivers. FedEx Freight is the nation’s largest less-than-truckload shipping provider and is scheduled to start in early December.

According to Freightwaves the FedEx Freight branch of the company hires about 45,000 people it is not clear how many of them are drivers.

“The furloughs are expected to affect a small number of drivers, and not all facilities will be targeted,” said Miranda Yarbro, a FedEx Freight spokesperson.

“Because of our previous experience with furlough and with the incentives we are offering, we are expecting employees to volunteer to meet the business need,” Yarbro said in an email.

The furloughs are due to last for 90 days during which time affected workers will still get their full health care coverage and will also be able to file for unemployment in their state of residence.

At this time of the year, this is a far cry from the normal demand and goes to show the true impact that the economic downturn and inflation are having on consumer spending.

This year we have seen how both Shopify had to make drastic staff cuts and Amazon has been doing their own cost-cutting reports to try and balance the books following the post-pandemic comedown. It seems FedEx is the latest giant being forced to make some tough decisions regarding its future profit and sustainability.