Cost-cutting takes centre stage for UPS, FedEx in 2009

EXPRESS package and mail delivery giants UPS and FedEx are expected to be preparing for the tough year by implementing cost-cutting and maintaining conservative operations amid the current climate of global economic uncertainty.

Estimated to respectively control 52 per cent and 31.5 per cent of the US$61 billion express delivery market, FedEx is planning to reduce expenses by $1 billion in 2009 by introducing a hiring freeze and slashing the salaries of existing staff, reports the Press-Enterprise of Riverside, California.

It said that from January 1, FedEx was reducing salaries five percent, with senior executives facing cuts of between 7.5 and 10 per cent, while chief executive Frederick Smith plans to take a 20 per cent cut.

This comes as experts claim that overnight shipping has become a luxury that manufacturers and consumers don't need and instead of same-day shipping, the tendency is to lean now towards shipping the next day delivery by trucks, trains and ships preferred over airfreight.

This is an emerging trend supported by statistics from the US Bureau of Transportation which showed that as of September the volume of domestic air cargo had fallen by 7.3 per cent year on year to 13.7 million tons.

As for rival UPS, it has been cutting down on unnecessary travel and training, with a general view towards keeping costs down. Company spokesman Mike Mangeot was cited as saying that layoffs are not yet a part of the plan.

Source: Schednet