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DHL, U.S. Xpress Layoffs Mount Amid Falling Freight Demand

Layoffs continue to rock logistics amid the “freight recession” characterized by lackluster demand, spending cutbacks and trucking overcapacity.

The contract logistics division of DHL is planning to cut 152 employees at three facilities in Texas, according to two Worker Adjustment and Retraining Notification (WARN) notices sent to the Texas Workforce Commission on May 3.

DHL Supply Chain is looking to terminate 123 employees in Missouri City, Texas and 29 employees at two Sugar Land, Texas locations on June 30. The employees are not represented by a union, according to the notice.

DHL said 80 of the planned job cuts stem from an unnamed customer terminating its service contract. Additional employees could be laid off depending on the outcome of ongoing customer negotiations.

“Since this WARN notice has been issued, we are in active dialog with our customer which may impact the outcome of our business,” a DHL Supply Chain spokesperson told Sourcing Journal. “We will work to support the impacted employees to explore opportunities with the new provider or within DHL Supply Chain’s operational footprint.”

News of the layoffs comes four months after DHL Supply Chain eliminated 394 employees at two San Francisco Bay Area facilities. At the time, the company said the decision came in response to a “planned strategic change in one of our customer’s business.” In March, DHL’s parcel delivery business, DHL eCommerce, announced it was shuttering a St. Louis-area facility on June 3, laying off 75 employees but giving them the opportunity to transfer to a Kansas City, Mo. warehouse.

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Job cuts at DHL Supply Chain come as the segment invests in warehouse automation. The company is expanding its partnership with Locus Robotics to deploy 5,000 of its autonomous mobile robots (AMRs) across its 1,400-site global warehousing and distribution network.

U.S. Xpress layoffs

After net losses reached nearly $44 million last year and ahead of an impending acquisition by fellow trucking company Knight-Swift Transportation, U.S. Xpress is cutting staff for the third time since it started shedding jobs last year.

While the Chattanooga, Tenn.-based trucking company cut roughly 140 jobs last year during two layoffs—or nearly 10 percent of its then-1,400 corporate employees—U.S. Xpress has laid off 150 more, according to FreightWaves.

Within the past week, posts from multiple LinkedIn users indicated that employees at the firm were being laid off. Their job functions include engineering, human resources and administrative roles, but U.S. Xpress has not confirmed where positions are being cut.

Another Chattanooga-based company, freight forwarder Lipsey Logistics, also laid off staff. FreightWaves reported that rhe company cut 20 jobs but Lipsey hasn’t confirmed the total.

U.S. Xpress and Lipsey Logistics did not immediately return requests for comment.

Layoffs have hit the logistics side of the supply chain hard over the past year, with FedEx and Amazon cutting jobs along with other freight transportation businesses like C.H. Robinson, XPO Logistics and Old Dominion.

Digital freight platform Convoy conducted its third round of layoffs in a year and also closed its Atlanta office as part of a larger restructuring. And Shopify abandoned its logistics ambitions altogether, selling the business to digital freight forwarder Flexport. Both parties laid off 20 percent of their respective staffs, with Flexport shedding staff in January and Shopify announcing the employee dismissals this month.

The layoffs come and poor freight demand, with U.S. Xpress incurring a $27.1 million net loss in its most recent quarter. In February, the trucking company said it expects the challenging freight market to continue at least through the first half as shippers clear through elevated inventory.

Fourth-quarter freight shipments fell to the lowest since the first quarter of 2014 as consumer spending continued to shift to services, from goods, according to the Q4 2022 U.S. Bank Freight Payment Index. Fourth quarter truck freight shipments contracted 7.1 percent year-over-year—the largest drop since the third quarter of 2020—and 4.6 percent compared to the third quarter of 2022. The slowdown was driven by a significant contraction in the Western U.S., where volumes dropped 8.9 percent year-over-year and 10.6 percent compared to the third quarter.

Even with the drop in shipments, spending by companies shipping goods didn’t decline much in the fourth quarter. Spending fell just 0.2 percent compared to the third quarter and was up 1.8 percent over the 2021 fourth quarter.   

“With shipments dropping considerably and lower diesel fuel prices, we would have expected to see a larger decline in spending this quarter,” said Bobby Holland, director of freight data solutions at U.S. Bank, in a statement. “This suggests that capacity is getting tighter, potentially due to smaller carriers leaving the market as cost pressures remain high, especially when coupled with lower spot market volumes and rates.” 

If consumer demand improves, U.S. Xpress expects volumes to pick up in the second half with a typical busy peak season possible in the fourth quarter.

In one potential sign that this bounce back could occur, April container import volume into the U.S. increased over March for the first time since 2020 amid the Covid-19 outbreak, according to data from Descartes Datamyne. In both 2021 and 2022, April saw a dip in container imports after a strong March before escalating again in May.

April 2023 U.S. container import volumes increased 9 percent from March 2023 to 2.02 million TEUs. When tallying year-over-year changes, TEU volume was down 17.8 percent from April 2022, but up 5.3 percent from pre-pandemic levels during April 2019.