Fedex’s workforce reduction impacted $450 last quarter
of fedex Hard work The shortage is having dire consequences on the company’s supply chain.
Shortages of truck drivers, package handlers and other workers have resulted in longer delivery times and higher costs for US companies that are passing prices on to US consumers at the time.
The constrained labor markets are causing “widespread inefficiencies in our operations,” said Rajesh Subramaniam, FedEx’s chief operating officer, who said the labor shortage had a $450 million impact on the company’s quarterly results.
FedEx’s ground network is reshipping more than 600,000 packages daily due to the difficulty in finding workers.
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Subramaniam said the company’s ground operation in Portland, Oregon, has 65% of the workforce required to handle normal package volumes. As a result, it cannot process normal package loads efficiently and must divert 25% of the volume that would normally flow through the facility, leading to longer delivery times and higher costs as the company needs more third- Must use side transport.
Despite FedEx paying package handlers an hourly rate in its ground division, staffing continues to be 16% higher than before. The company’s express division is paying an hourly rate 25% higher than previous levels.
FedEx declined to offer Granthshala Business specifics on land and wages for Express because wages depend on the market and job function.
Rival UPS is having similar difficulty finding employees.
“This is definitely one of the toughest labor markets we’ve seen,” UPS spokesman Dan McMakin told Granthshala Business.
FedEx and UPS transport about 14% of the GDP of the United States.
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Labor shortages are also troubling Costco Wholesale Corp, which on Thursday announced plans to limit purchases of paper goods, water and other household goods because of supply-chain problems.
Sneaker giant Nike Inc. also said on Thursday that labor shortages have resulted in longer transit times.
“The pace and intensity of this recession — and the pace of recovery in many areas — are without modern precedent,” Federal Reserve Chairman Jerome Powell said in his press conference on Wednesday.
According to the Department of Labor’s most recent Job Openings and Labor Turnover Survey, or JOLTS, there were a record 10.934 million job openings in July.
There’s no better time than now for companies like FedEx and UPS to find employees because ongoing supply-chain problems will result in product shortages as the holidays draw closer.
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Ahead of the holiday season, FedEx has unveiled a plan to hire 90,000 frontline workers, hoping to entice them with perks like targeted pay premiums and increased tuition reimbursement.
UPS wants to hire more than 100,000 employees for the holiday season, many of whom will receive job offers 30 minutes to apply In an effort to stop them from going anywhere else.