Publicly traded corporations want news to go two ways – positive news during the trading day to boost share prices and bad news after markets close to hopefully avoid being seen by investors. Well, FedEx could not hide a poop emoji this big under the carpet, and it has really made a mess ahead of the annual shareholders meeting.
Has the “Curse of Patton” come true?
All jokes aside, and highly doubtful that former mega-contractor and founder of Route Consultants, Spencer Patton, had anything to do with this, but you just know he’s in some remote part of the world smiling so hard it hurts. This is a situation that many have been waiting for and it appears the domino has finally dropped.
FedEx made the announcement Thursday after the markets closed that there were some problems the Memphis, Tennessee-headquartered package delivery giant had to sort out – and fast. So in classic “cut off the arm to save the finger” fashion, the company made a list of changes to try and cut spending in some “unprofitable” areas.
While I’m going to leave the more technical explanations of the chaos to Mark Solomon over at FreightWaves (who wrote a great article with the breakdown of the breakdowns at FedEx), I’m going to focus on the ground-pounding driver-level details and how it might affect them.
How the FedEx news affects drivers
For the tens of thousands of contractors driving with FedEx’s logo emblazoned on their vehicles, clothing, and coffee mugs, you have to wonder if you will be on the chopping block. The closure of 90 FedEx Office locations and five corporate offices will make some sweat a bit about their continued employment.
Inside the fence, FedEx is pausing hiring activities, so anyone hoping to become a dock worker or team member behind a desk will have to re-think their plans and send out some more resumes to prospective employers.
Many freight experts, including FreightWaves, predict that a surge of holiday freight is not coming like it has in the last few years.
This has led to what I am personally calling the “package delivery bubble” to pop, and the other delivery companies (UPS, DHL, etc.) are themselves looking to slim down and cut fat in some places. UPS cut some of its workforce in 2021, returning to its seasonal workforce surge model of hiring.
FedEx to ground cargo aircraft to save fuel
In the biggest move, FedEx is grounding some of its cargo aircraft. That speaks volumes about the volume of packages that are moving through its system currently. Here’s a list of cost-cutting measures that the leadership at FedEx are planning:
- Reduction in flight frequencies and temporarily parking aircraft
- Volume-related reductions in labor hours and other linehaul expenses
- Consolidation of certain sort operations to drive productivity
- Reduction of Sunday operations at a number of FedEx Ground locations
- Cancellation of certain planned network capacity and other projects
- Deferral of staff hiring
- Closure of over 90 FedEx Office retail locations
- Identification of five corporate office facilities to be closed, with additional real estate rationalization planning underway
This is a developing story and BackTheTruckUp and FreightWaves will report on details as they develop.