FedEx Profits Increase, but Plans to Layoff Workers
Package delivery company FedEx has announced that its net income doubled during the first quarter pushed by its international air shipments.
But despite this improvement, the company said it will lay off about $1,700 workers as part of its cost-cutting measure.
Despite doubling its net income during the first quarter, FedEx Corp. on Thursday has announced its plan to lay off more than 1,700 workers, about 5 percent of the freight’s division, in an effort to cut its operational costs particularly on its trucking business.
The delivery company said the revenue generated by its international air shipments has increased by 24 percent in the second quarter but added that its freight segment has pegged significant losses due to a weak demand for large items like televisions, refrigerators, and other large household appliances.
According to earlier reports, FedEx has reported a $380 million earnings in the first quarter this year but has suffered $16 million losses from its freight unit. The company has not yet been increasing its rate in an effort to help some of its divisions to grow.
Analysts said the growing competition in the package delivery industry has affected FedEx which is the second largest delivery company in the world, adding that its rival companies including YRC Worldwide and Arkansas Best are gaining momentum in the market.
In a statement, FedEx said that its cost-cutting measure will ensure the profitability of the trucking business next year. To further reduce its operational costs, the company added that it will consolidate certain divisions to effectively transport goods through fewer shipments without affecting its service.
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