FedEx Diverts Packages As Labor Shortage Bites Into Service Levels

FedEx is rerouting more than 600,000 packages a day in its Ground network to keep up with service standards due to staffing shortages at company hubs, President and COO Raj Subramaniam said during the company’s Q1 earnings call Tuesday. FedEx Ground’s hub in Portland, Oregon, for example, has just 65% of the workers needed to handle normal volume, Subramaniam said. Around 25% of packages had to be diverted because they “simply cannot be processed efficiently to meet our service standards,” he said. Diverting package volumes makes operations less efficient and more costly, Subramaniam said, as the company has to add additional linehaul and delivery routes and rely more on third-party transportation. CFO Mike Lenz said operational challenges due to labor shortages are expected to persist for the remainder of the calendar year. Read more at Retail Dive.