FedEx Freight confirmed Saturday it is enacting furloughs in some U.S. markets.
The move is due “to current business conditions impacting volumes,” the LTL said in an emailed statement. “The company will continue to evaluate the environment and bring back furloughed employees as business circumstances allow.”
FedEx Freight employed approximately 47,000 people as of May 31. The company said furloughed employees will maintain health benefits, and the company also said it would provide other financial incentives for them but didn’t provide specifics.
The LTL said it expects “many employees will volunteer to participate in the program.” It will also offer permanent transfer opportunities for eligible employees to other markets with hiring needs.
Parent company FedEx has been cutting costs in anticipation of reduced demand for the next several quarters.
In recent quarters, FedEx Freight has pursued more profitability per shipment rather than pure volume growth. In its most recently reported quarter, it saw 21% growth in revenue and a 67% rise in operating income compared to the prior year. Meanwhile, average daily shipments over the same time period fell by 5%.
Fellow FedEx operating companies are also prioritizing more profitable shipments, but cooling demand this year has resulted in excess capacity.
“While peak season this year is underwhelming thus far, it will only hasten the capacity correction that is already underway,” Werner CEO, President and Chairman Derek Leathers said on a Nov. 3 earnings call.