Friday, September 17, 2010

FedEx Freight Combines Less Than Truck Load Operations

100 Depots to Close 1700 Laid Off
Shipping News Feature

US – After announcing share earnings up 107% from last year to $1.20 the FedEx Corporation have stated they are to lay off 1700 permanent staff and close 100 freight handling facilities effectively from the end on January next year. The changes are to take place when the group combines its FedEx Freight and FedEx National LTL operations.

FedEx say the changes will cost them between $150 and $200 million which will include severance costs and the cancellation of leases. The statement comes after the group revealed overall revenue up 18% to $9.46 billion and operating income jumped 99% to $628 million with net income at $380 million, up 110%.

Despite these figures FedEx say growth was principally because of FedEx International Priority (IP) growth at FedEx Express, continued growth at FedEx Ground and a benefit from the net impact of higher fuel surcharges. Revenue in the freight sector was up 28% but an operating loss of $16 million recorded.

The changes mean the amalgamation of FedEx Freight and FedEx Less than Truckload (LTL) operations (now all to be known as FedEx Freight) with the freight facilities formerly owned by Watkins Motor Lines, an acquisition four years ago, forming most of the closures. Despite FedEx announcing swingeing cuts last year to prop up the company including lay offs and restrictions in bonuses it seems the announcement surprised many analysts in the States who use the group as a benchmark of financial health and had predicted better figures. The results caused a drop in stock value of around 4% after the announcement.

Photo: Courtesy of Modec – Low Emission Vehicles