FedEx Announces Job Cuts in Europe to Offset Slumping Freight Demand

FedEx is set to eliminate between 1,700 and 2,000 back-office jobs across Europe as part of a broader strategy to streamline operations and reduce costs in response to persistently weak freight demand. The job cuts, which will be implemented over the next 18 months, are expected to incur pre-tax costs ranging from $250 million to $375 million, covering legal fees and severance benefits.

This downsizing initiative is projected to save the company between $125 million and $175 million annually starting in fiscal 2027. The cuts come as FedEx confronts softening demand and sluggish margin growth in its air-based Express unit, its largest business segment. In an effort to boost profitability, the Memphis-based logistics giant has previously announced plans to slash $4 billion in costs by the end of fiscal 2025, including significant reductions of $1.8 billion in fiscal 2024 alone. These measures are part of an overarching plan to restructure delivery networks and tighten operational capacity.

Stewart Glickman, deputy research director at CFRA Research, commented on the situation, stating, “I think what it’s telling us is that a broad-based macro recovery remains elusive.” He noted that both Europe and the U.S. are struggling to achieve volume growth, making cost reductions a critical focus for major delivery companies.

FedEx and its competitors, including United Parcel Service (UPS), experienced a surge in demand during the early stages of the pandemic as lockdowns prompted consumers to increase online shopping. However, this trend has reversed with the resumption of travel and dining, compounded by high inflation. In response, UPS also announced a cost-cutting initiative aiming to save $1 billion this year, which includes the elimination of 12,000 jobs and strategic reviews of its volatile truckload brokerage business, Coyote.

Despite these challenges, FedEx reported a positive adjustment to its fiscal 2024 profit forecast in March, thanks to the impact of ongoing cost control measures that helped its earnings per share surpass market expectations. FedEx operates in over 45 countries and territories in Europe and employs more than 52,000 people across the region. These steps are part of FedEx’s efforts to adapt to changing market conditions and ensure long-term sustainability in a competitive industry.