American multinational delivery services company, FedEx, has decided to reduce its workforce by about 6,300 employees in Europe. The job cuts will be carried out over a period of a year and a half. The Memphis-based company will cut jobs in the express-delivery department as well as in the back office.
The Company will spend $300 to $575 million in paying out severance packages and has committed to handling the layoffs with utmost sensitivity. The Company will support the affected employees and help place them or reassign them to other roles.
However, the aim is to start saving about $275 to $350 million annually, in three years’ time. With a leaner workforce, the Company hopes to gain a competitive edge in the market.
Four years ago, it had acquired TNT in deal worth $4.8 billion. This had enabled it to expand across Europe and compete with DHL. However, the acquisition did not really help FedEx gain from the growth in e-commerce and online shopping in Europe. Not only did Europe’s economy slow down, but TNT fell victim to a global cyberattack, causing huge losses.
FedEx is now in the process of integrating FedEx Express and TNT air cargo networks. Henceforth, Paris will be its primary hub in the Continent and Belgium will be the secondary hub. This shift to a dual-hub model will not only give a competitive edge to its Express business, but will provide the much required flexibility and help enhance growth opportunities.