FedEx is closing offices and parking aircrafts to deal with revenue for the first fiscal quarter, which was below expectations due to declining package volumes moving around the world.
CEO Raj Subramaniam said in a press release that he is cutting costs, freezing hiring and closing 90 FedEx offices, along with parking some cargo aircrafts. The company will cut Sunday ground operations and close five corporate offices.
The company said in the release results from its biggest unit Express had been curbed by macroeconomic weakness in Asia and service challenges in Europe, resulting in a $500 million shortfall compared with the company forecast. FedEx Ground saw its revenue around $300 million below the company forecasts.
The company has said it is focused on boosting profit margins and streamlining operations amid higher fuel and wage costs. Package volume has declined because of a cooling-off of pandemic-era online shopping costs.
In late June, as FedEx faced some of the same issues with the decline in online commerce, officials with the company laid out some plans.
Read more: As eCommerce Slows, FedEx Says It Will Rely on Efficiency
“We have dealt with economic crises before,” Subramaniam said at the time. “Cycles come and go. To be very clear, we are not assuming a deep economic recession. If the economy slows down to a mild recession, we can manage through it.”
Subramaniam said in June it would be important to boost efficiency in the next few years. It would co-locate some ground and express sorting facilities and have FedEx Ground handle more packages currently handled with FedEx Express.
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