FedEx labor crunch gut punch to economic recovery

FedEx’s labor shortage is having dire consequence’s along the company’s supply chain.

Constrained labor markets are causing “widespread inefficiencies in our operations,” said FedEx Chief Operating Officer Rajesh Subramaniam, who noted worker shortages had a $450 million impact on the company’s quarterly results.

FedEx’s Ground network is rerouting more than 600,000 packages per day due to difficulty finding workers.

The company’s ground operation in Portland, Oregon, for example, has 65% of the staffing needed to handle normal package volumes, Subramaniam said. As a result, it cannot efficiently process the normal package load and must divert 25% of the volume that would normally flow through the facility, leading to longer delivery times and higher costs as the company must use more third-party transportation.

The staffing problems are occurring despite FedEx paying package handlers at its ground division an hourly rate that is 16% more than previously. The company’s express division is paying an hourly rate 25% above previous levels.

FedEx declined to offer FOX Business specifics on wages for ground and express as pay depends on market and job function.

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