Cargo profits were cut in half! Many logistics giants around the world have laid off employees one after another.
C.H. Robinson, Amazon, USPS, freight forwarding giants Geodis and Ceva Logistics have all announced layoffs before. On January 11, Flexport suddenly announced a global layoff of 20% of its employees, and the announcement was immediately implemented. In the face of huge uncertainties in the world economy, in order to reduce costs as soon as possible, global logistics supply chain giants continue to lay off workers this year.
Following the removal of President and CEO Robert Biesterfeld on January 1, 2023, C.H. Robinson, the largest third-party logistics service provider in the U. S., said in a conference call held that although the company has just laid off about 650 employees, more layoffs are on the way after another tough quarter. Announcing its fourth-quarter 2022 results, C.H. Robinson said the problem with the company’s finances would come primarily from its global forwarding segment. The company achieved a record annual financial performance in 2021, and 2022 saw a significant decline in performance.
Total revenue in the global forwarding segment fell 52.7%, adjusted gross profit fell 39%, and income from operations fell 80.8%. The numbers are as follows: total revenue fell to $1 billion from $2.14 billion; adjusted gross profit fell to $188.7 million from $309.6 million; and income from operations fell to $28.2 million from $146.8 million. Both ocean freight and air freight declined: ocean-adjusted gross profit was down 42.7%, adjusted gross profit in the air was down 51.5%, and customs-adjusted gross profit was down 3.3%. Shipments and transactions were down in all three segments.
When it comes to ground transportation, C.H. Robinson does a pretty good job. NAST’s revenue fell 8.5% to $3.6 billion, but adjusted gross profit rose 5.7% to $502.3 million.
In a down market, carriers tend to benefit from shifts in market structure, and C.H. Robinson is no exception. In its quarterly report, the company said the average long-haul rate per mile, excluding fuel, fell about 21% in the quarter, but its cost per long-haul mile fell 24%. Truckload adjusted gross profit increased 2.2% to $346.85 million from $339.51 million, as adjusted gross profit per shipment increased 6.5%, mostly more than offset by a 4% decline in truckload volume. NAST’s total adjusted profit rose to $502.26 million from $475.1 million.
The company’s interim CEO Scott Anderson said C.H. Robinson annualized cost reductions of $150 million were achieved at the end of the quarter. Chief Financial Officer Mike Zechmeister confirmed that the number of job cuts in November was about 650, with more than 600 leaving in January. He expects personnel spending in 2023 to fall by about 7% year-on-year compared with 2022.
More FedEx cuts: A FedEx spokesman said on Wednesday it would cut executive and director positions by more than 10%, part of a broad cost-cutting effort that has seen the delivery giant cut 12,000 jobs since last June. Investors applauded the move, which marks progress in the company’s plan to cut expenses by $3.7 billion this year. FedEx notified employees of the top-level layoffs in a memo but did not say how many positions would be affected. Of the 547,000 full-time and part-time employees that FedEx reports for the year ending in May 2022, the company’s overall job cuts are just over 2%. Spokeswoman Rachael Simmons said most of the job cuts were achieved through natural attrition and other ways.
The company’s newly installed chief executive, Raj Subramaniam, blamed the global business slump for the downturn. But critics point to FedEx’s slow response to slowing demand and the high cost of operating independently of its business units. With the layoffs, FedEx will reduce its full-time and part-time workforce to about 535,000 people. But those numbers tell only part of the story since they don’t include FedEx’s roughly 6,000 contractors and their employees, who make most of the home deliveries at FedEx’s ground centers.
In the context of the global economic downturn and the slowdown in corporate revenue growth, logistics personnel and logistics companies are experiencing pains such as layoffs, salary cuts, and bankruptcy:
On January 11, 2023, Flexport suddenly announced that it would lay off 20% of its employees worldwide, affecting about 600 people, and the layoff plan will be implemented immediately.
On January 5, 2023, the retail giant Amazon would lay off more than 18,000 employees in the group and technical teams after a few weeks of layoffs in November last year, the largest layoff in Amazon’s 28-year history.
In November 2022, Freon Logistics, a California-based logistics giant, formally filed for bankruptcy with the court.
In July 2022, there were media reports that the US logistics giant USPS (United States Postal Service) planned to lay off at least 50,000 employees in the next few years.
In June 2022, the logistics giant DB Schenker announced that it would lay off 130 employees in the United States.
