FedEx CEO Raj Subramaniam announced Wednesday that the company is laying off more than 10% of its officers and directors in order to cut costs amid slowing consumer demand.
FedEx stock closed more than 4% higher at the close of trading on Wednesday.
The layoffs come as the shipping industry recovers from the Covid pandemic e-commerce boom.
During the pandemic, the package and shipping industry experienced a surge due to an increase in online consumer spending. However, as consumers’ wallets have shrunk due to inflation, FedEx’s profits have suffered. The stock has dropped roughly 20% in the last year.
As a result, FedEx had a difficult first half of its fiscal year and sought to cut costs while raising prices to compensate.
FedEx’s strategy has included price increases in addition to cost cuts. As another measure to offset a consumer slowdown, the company raised shipping rates by 6.9%, which went into effect in January. Subramaniam predicted a “global recession” at the time.
UPS, like FedEx, is bracing for “a bumpy year,” according to CFO Brian Newman. The shipping company reported a revenue decline for the fourth quarter on Tuesday, as shipping volumes continue to fall. UPS raised its shipping prices by 6.9% at the end of last year to compensate for slowing consumer demand.
