FedEx Freight, the division of FedEx Corp. for less than truckloads and the country’s largest LTL haulier, announced on Saturday that it will furlough an unspecified number of drivers from early December.
The furloughs are expected to last around 90 days, during which time affected workers will continue to receive healthcare benefits and be able to claim unemployment benefits in their respective states of residence. Some eligible employees will be offered permanent transfer opportunities to other markets with hiring needs, the entity said in a statement.
The furlough is expected to affect a small number of drivers and not all facilities will be targeted, said Miranda Yarbro, a spokeswoman for FedEx Freight. The vacation days are voluntary, Yarbro added.
“Based on our past experience with vacations and the incentives we offer, we expect employees to volunteer to meet business needs,” Yarbro said in an email.
The unit employs around 45,000 people. It wasn’t immediately clear how many drivers it employs.
The measure was taken in response to the slowing macroeconomic conditions that have impacted LTL demand in recent weeks, the entity said. The LTL segment, which has shown very strong growth post-pandemic, has recently seen volumes fall due to economic uncertainty caused by high inflation and recession concerns.
FedEx Freight was the best performer of FedEx’s (NYSE:FDX) three transportation business units. The two larger units, FedEx Express and FedEx Ground, were impacted by high costs and slower-than-expected demand. FedEx Freight, on the other hand, has been focused on profitable growth and has been willing to shed unprofitable tonnage to achieve that goal.
In the first quarter of fiscal 2023, which ended Aug. 31, FedEx Freight’s operating income grew 67%. The gains were driven by measures to improve shipment yields as well as the positive impact of higher fuel surcharges, the parent company reported.