FedEx stock tanks amid recession warning
A FedEx Express delivery vehicle is seen in Long Beach, California, U.S., September 16, 2022. Reuters

FedEx Corp on Wednesday said it would cut its officer and director ranks by 10% as part of a broad cost-reduction effort that has reduced staffing at the delivery giant by 12,000 workers since June, a spokeswoman said.

Shares in FedEx rose 2.4% to $198.47 as investors applauded the move, which signals progress on the company's plan to slash expenses by $3.7 billion this year.

FedEx did not say how many positions would be affected by the new layoffs. Its overall workforce reductions account for a little over 2% of FedEx's 547,000 full-time and part-time workers reported for the year ended May 2022.

Most of the cuts came through attrition and other means, spokeswoman Rachael Simmons said.

In mid-September, FedEx pulled its profit forecast and shares swooned more than 20% - the largest single-day drop in the company's 50-year history.

The company's newly minted Chief Executive Raj Subramaniam blamed a global business downturn, but critics pointed to a flat-footed response to slowing demand and ongoing profit pressure from FedEx's expensive, separately run business units.

Gary Bradshaw, a portfolio manager with Hodges Capital Management in Dallas, recently told Reuters that job cuts would be welcome, particularly after FedEx lowered its annual profit forecast.

"They've got lots of right-sizing to do," Bradshaw said.

For decades, FedEx was favored by investors over its unionized competitor United Parcel Service because it relied on less costly nonunion and outsourced labor. But in recent years UPS CEO Carol Tom? has delivered bigger profits and better service from that company's single network.

With its move on jobs, FedEx will have reduced the number of its full- and part-time employees to around 535,000 - roughly on par with UPS, based on workforce counts in the most recent annual reports for each company.

But those numbers only tell part of the story because they exclude roughly FedEx 6,000 contractors and their workers, who handle most of the FedEx Ground's home delivery business.

Most Ground contractors employ roughly 9 to 12 employees each, said Satish Jindel, who helped found the company that was rebranded as FedEx Ground. Using an average of 10.5 workers per contractor would add a total of 69,000 jobs at Ground.

FedEx already has temporarily furloughed workers at its trucking division FedEx Freight as the pandemic-fueled e-commerce delivery bubble deflates and recession threatens, joining transportation-focused companies ranging from delivery upstart and trucking company C.H. Robinson Worldwide to freight broker Uber Freight and freight forwarding startup Flexport in announcing layoffs.