FedEx to Combine Freight and LTL Divisions

FedEx Corp. plans to combine its FedEx Freight and FedEx National LTL operations under the FedEx Freight banner, effective Jan. 30. FedEx will lay off about 1,700 full-time employees and close about 100 facilities, according to its first-quarter earnings statement.

The company said that the move will help FedEx reduce operational costs, and provide customers a choice of priority or economy less-than-truckload (LTL) freight services from one integrated company.

FedEx estimates the restructuring program will cost $150 million to $200 million, primarily related to severance costs associated with personnel reductions, lease terminations and certain non-cash charges.

Gerard Hempstead, president of Hempstead Consulting, says that FedEx actually added headcount this most recent quarter, "but the LTL division continues to be a drag on earnings,” he says. “Combining the two trucking companies into one will reduce redundancies and eventually result in profit for that division.”

Rob Martinez, president/CEO of supply chain consulting firm Transult, notes that the move will reduce infrastructure and asset redundancies. It provides a truer "one stop shop" convenience to the customer, and provides a competitive advantage since not all LTL carriers offer both priority and economy services.

"Many customers were frustrated with the multiple operating units, each with its own account executive, bill of lading, and separate 800-numbers," he says. "FedEx will capitalize on the convenience and consistency by marketing the new company."