FedEx announces 6,300 lay-offs, dual-hub in Europe

FedEx Express (FX, Memphis Int’l) plans to lay-off up to 6,300 employees in Europe as it nears the completion of its network integration with TNT Express and establishes a dual-hub air network on the continent. The European Commission in 2016 approved FedEx’s acquisition of European operator TNT, which specialises in shipments between businesses, as part of FedEx’s European expansion plans. The companies since integrated their IT systems and key parts of the air, road, and ground networks. Following the FedEx Express and TNT air networks’ physical integration, FedEx Express would establish a dual-hub air network model in Europe, with Paris CDG serving as its primary hub; with Liège in Belgium as its secondary hub. FedEx Express currently operates two duplicate air networks out of two main hubs at Paris and Liège. The company in a statement said its dual hub network in the US had been proven over decades with Memphis Int’l as the universal hub and Indianapolis Int’l as the secondary hub. FedEx Express Europe Chief Operating Officer Dave Canavan explained: “Moving towards a dual-hub model is a strategic advantage for us: improving the competitiveness of our Express business, providing us flexibility, and enhancing our growth opportunities”. Duplications resulting from operating two large European networks connecting similar geographies would result in redundancies across operational teams and back-office staff, the company said in a statement. A range of support measures would be discussed with affected employees and works council representatives from across the region during a consultation period over the next 18 months. These measures would differ by country and may include voluntary redundancy, reassignment to other roles, and priority access to open positions. “We understand that while these intended changes are absolutely necessary to put us on the right path, our team members, particularly in Liège, will be concerned about the future. We will do everything we can to conduct these consultations constructively, with a mindset of collaboration and care for those impacted,” Canavan said. Over the past few years, weak shipment sales in Europe have led to sluggish growth in the TNT unit and have weighed on FedEx’s results. The plan is expected to result in savings of between USD275-350 million on an annual basis beginning in the fiscal year of 2024, FedEx said, adding that it expects to incur severance charges of between USD300 million and USD575 million through the fiscal year 2023, Reuters reported.