Fedex Is Rerouting 600K Packages A Day Due To Worker Shortage

FedEx Crop FDX’s Ground network is rerouting more than 600,000 packages a day due to a shortage of workers.

What Happened: The staffing problems at FedEx are occurring even as the company has increased the hourly pay for package handlers in its ground division by 16%. Workers in FedEx’s express division have seen an hourly pay increase of 25% from previous levels.

A lack of workers is causing "widespread inefficiencies in our operations," said FedEx Chief Operating Officer Rajesh Subramaniam, who adds that the labor shortages had a $450 million impact on the company’s quarterly results. "The competition for talent, particularly for our frontline workers, have driven wage rates higher and pay premiums higher."

The company spent around $7.8 billion on employee salaries and benefits in the quarter, up 13% from the same period last year. FedEx Ground handled an average of 9.3 million packages a day in the quarter.

Why It’s Important: Ahead of the holiday season, FedEx plans to hire 90,000 frontline workers, with incentives like targeted pay premiums and increased tuition reimbursement.

Meanwhile, United Parcel Service Inc UPS wants to hire more than 100,000 workers for the holiday season. In many cases the company is issuing a job offer within 30 minutes of application in an effort to prevent potential employees from going elsewhere.

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