Companies across sectors are tightening their belts to steer through uncertain times.
And the home delivery boom for goods of every sort created by Covid may be seeing its bubble burst.
Further evidence of the cooling trend in the last mile of the logistics chain came on Wednesday when FedEx announced it was cutting 10 percent of its officers and directors as the shipping giant’s stock has fallen by 20 percent in the last year amid waning shipper demand.
FedEx, which operates on a June-May fiscal calendar, sounded the alarm that cost-cutting measures were on the way, announcing on its Q2 earnings call in November it would be slashing an additional $1 billion by reducing 6 percent of domestic flights and 7 percent in international flights. With these latest personnel moves, the total for FedEx’s 2023 reductions is at $3.7 billion.
“Today we are in the process of informing a number of team members across our global enterprise that their positions have been eliminated as we reduce the size of our officer and director team by more than 10% and consolidate some teams and functions,” FedEx president and CEO Raj Subramaniam wrote in a letter to employees on Wednesday. “It is my responsibility to look critically at the business and determine where we can be stronger by better aligning the size of our network with customer demand. While we have already taken many actions to that end, it was necessary to also look closely at the size of our leadership team and functions that could be consolidated.”
FedEx’s stock jumped by 4 percent upon news of the layoffs Wednesday, and by Thursday afternoon it rose another 6 percent.
Fellow delivery giant UPS is experiencing financial challenges as well, though it has yet to announce layoffs, perhaps in part because it reduced its workforce by approximately 9,000 workers in 2021. It said it was looking to hire 100,000 to manage last year’s peak season.
In its fourth quarter 2022 earnings report, UPS grew in revenue by better than 3 percent and adjusted profits were up slightly from Q4 2021.
The Atlanta-based shipper’s stock was up by more than 4 percent on Thursday.
But FedEx’s layoffs weren’t all that affected last-mile delivery service.
Rivian, the California-based EV manufacturer partnered for delivery service with Amazon—which is beginning to lay off 18,000 workers—announced on Wednesday it was eliminating 840 of its 14,000 employees. It didn’t immediately return a request for comment.
Ahead of the 2022 holiday shopping season, Amazon, whose stake in Rivian is around 18 percent, ramped up its fleet of the EV maker’s vehicles to more than 1,000 in north of 100 cities.
An email sent from Rivian CEO to employees and viewed by multiple media outlets and first reported by Reuters, detailed the layoffs as part of a cost-cutting drive to counter a near-90 percent loss in its stock value since going public in November of 2021.
None of the layoffs will affect the company’s manufacturing plant in Illinois, but Rivian is scrambling to settle its bottom line as competitors Tesla as well as Ford, which holds a roughly 10 percent stake in the EV startup, have recently cut the prices of their electric vehicles.
A looming price war for electric vehicles forced Rivian to delay a plan to partner with Mercedes to create a delivery van and truck fleet in Europe, and previously it pushed back until 2026 a $5 billion plant in Georgia to provide delivery vans and trucks, Reuters reported.
But job losses didn’t only affect last-mile delivery services and their manufacturers, as outdoor retailer REI announced in an email to employees on Tuesday that it was restructuring its Seattle branch by “combining several headquarters divisions so that teams are organized around a focused set of priorities,” president and CEO Eric Artz wrote in an email to employees.
The net result is the loss of 167 jobs from the co-op’s headquarters, 8 percent of the home office total and less than 1 percent of REI’s workforce in total. It laid off 400 retail workers in 2020 when the pandemic kept stores closed or limited for months on end.
“It is vital that we get the co-op back to profitability as quickly as possible,” Artz wrote to employees. “I know we can get there, but it will require each of us to work very differently.”
REI said severance packages are extended to all affected full-time workers who qualify. It’s also offering four months of COBRA health care coverage, paying out accrued vacation time and last year’s bonuses, and helping those it’s putting out of a job find new employment.
And last week Foot Locker notified Wisconsin that its closure of an Oshkosh customer care facility slated for April 28 would put 95 employees out of a job, with another two staying until the site fully winds down on May 31. Citing the “evolving omni retail environment,” Foot Locker‘s associate general counsel Sonu Ray wrote in a letter notifying the state’s Department of Workforce Development, Dislocated Worker Unit that the company was consolidating its North American customer care ops at a Wisconsin site in Wausau.
Additional reporting by Jessica Binns.