The U.S. delivery giant has said the job cuts will occur over 18 months as it joins former rival TNT which suffered a costly cyberattack in 2017.
FedEx plans to cut up to 6,300 jobs in Europe as the US parcel delivery giant completes the process of combining its own operations with those of a former Dutch rival it bought in 2016.
FedEx said in a statement Tuesday that the cuts will run over 18 months and will affect express delivery operations and TNT Express back office workers across the continent.
FedEx, based in Memphis, Tennessee, said severance pay for between 5,500 and 6,300 layoffs would cost between $ 300 and $ 575 million through 2023, but the job cuts will allow the company to save between $ 275 million and $ 350 million per year starting in 2024.
FedEx’s European express delivery operation chairwoman Karen Reddington said in a statement that the job cuts are crucial to making the company more competitive in a changing market. FedEx had around 245,000 employees worldwide, including around 43,000 at TNT, as of May 31.
FedEx plans to decommission an air services hub in Liège, Belgium, to make Paris its sole main hub. The company compared this setup to its operation in the United States, where Memphis is the primary hub and Indianapolis plays a secondary role.
FedEx paid $ 4.8 billion to buy TNT and expand its presence in Europe against competitors such as Germany-based DHL. TNT had a significant land delivery business in Europe.
By buying TNT, FedEx succeeded where US rival United Parcel Service (UPS) had failed – European regulators blocked an attempt by UPS to buy the company in 2013, arguing that a UPS-TNT combination would face inadequate competition on some routes and would result in higher prices. .
FedEx hoped TNT would help it take advantage of the growth in online shopping in Europe, but the acquisition did not go smoothly.
Europe was in the midst of an economic downturn. Next, TNT’s computer systems were infected in a global cyber attack called NotPetya, disrupting service and forcing FedEx to take a $ 300 million charge on profits in 2017.
FedEx said on Tuesday it had successfully integrated FedEx and TNT’s computer systems and key parts of the air and ground networks.
FedEx shares fell 1.2% on Tuesday in the United States and 3.9% in 2021, compared to 1.1% this year in the Standard & Poor’s 500 index.