How did FedEx's employee count, turnover rate change amid the labor shortage? - Memphis Business Journal (2024)

Look at FedEx’s recent annual reports, and you’ll see that its worldwide employee count usually increases each year, sometimes significantly.

Here's FedEx's headcount, as quantified in their annual reports:

In FY 2022, however, the number dropped. The latest annual report report said, “FedEx employed approximately 345,000 permanent full-time and approximately 202,000 permanent part-time employees” as of May 31, 2022. That puts its total number of employees at about 547,000. And that means it had a year-over-year (YOY) decline of around 23,000.

Breakdown by business

At most of FedEx’s subsidiaries, the employee count either grew or stayed the same. At FedEx Ground, the number of part-time workers rose from about 125,000 to 134,000 YOY, and the number of full-time employees rose from 56,000 to 66,000.

At FedEx Freight, the number of employees increased from 44,000 to 47,000. At FedEx Office, the number was around 13,000 both years, and at FedEx Logistics, the line was held at approximately 21,000 in both FY 2021 and FY 2022.

The subsidiary that did see a notable decrease was its largest, FedEx Express, which also has its biggest international footprint and number of workers spread across the globe. As of May 31, 2021, it employed about 289,000. Exactly a year later, that number was put at “nearly 250,000.”

Like many companies, FedEx Express faced its share of challenges during its fiscal year, in part because of the Omicron variant of COVID-19. In January, its crew absentee rate was over 15%, which caused flight cancellations. And the variant further exacerbated staffing shortages with many of the company's customers, lowering demand for its services. Overall, ramifications of Omicron reduced FedEx's third quarter earnings by about $350 million. The brunt of this was felt by FedEx Express.

A turnover uptick

While FedEx’s employee count saw a slight decrease in FY 2022, its turnover rate saw an increase. In FY 2021, the turnover rate — excluding TNT Express employees and U.S.-based FedEx Supply Chain employees — was 23% for full-time workers and 183% for part-time workers, primarily package handlers.

In FY 2022, the turnover rate for full-time employees was 32%, and the rate for part-time employees, again mostly package handlers, was 200%.

High turnover rates are common among part-time workers in FedEx’s industry, as, according to the latest annual report, “many part-time workers pursue temporary employment opportunities that allow them to exit and re-enter the workforce more frequently based on their needs.”

It also notes that these traditionally higher rates have been “exacerbated by the highly competitive labor market and the conditions created by the COVID-19 pandemic.”

FedEx was hampered by the labor shortage throughout much of its fiscal year, with the lack of workers creating operational inefficiencies and impacting its financial results. In Q1, for example, the labor issues contributed to a YOY cost increase of about $450 million. In Q2, costs had gone up $470 million YOY; and in Q3, it was up $350 million from the year before.

Execs have noted, though, that the labor situation is improving, and in a Q4 earnings call, FedEx EVP and CFO Mike Lenz said the company would see benefits from a stabilizing labor market.

MBJ reached out to FedEx, and asked about the overall employee count, the decrease at FedEx Express, and the higher turnover rates. A spokesperson provided the following statement:

“We regularly ramp up and scale back our recruiting as the needs of the business dictate. During the pandemic years, staffing levels fluctuated as we addressed labor shortage issues that impacted many industries, including ours."