FedEx says it’s rerouting more than 600,000 packages a day because it can’t find enough staff to process them


FedEx is rerouting more than 600,000 business packages a day, its president said Tuesday.It can’t find enough workers to process them at some sites, Raj Subramaniam said.FedEx estimated that the labor shortage cost it around $450 million in the quarter.10 Things in Tech: Get the latest tech trends & innovations Loading Something is loading.

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FedEx is rerouting more than 600,000 business packages each day because it doesn’t have enough staff to process them, FedEx president and COO Raj Subramaniam said.

The labor shortage was the company’s “biggest issue” and the “key driver” of its lower-than-expected results, he said at the company’s earning call Tuesday.It cut its yearly outlook, causing FedEx stock to tumble to its lowest in a year .

Subramaniam said that the labor shortage , which is hitting multiple US industries, had cost FedEx an estimated $450 million in the quarter ended August 31 because of wage rises and inefficiencies.Most of this came from FedEx Ground, the company’s service that ships packages to businesses, he said.

“The competition for talent particularly for our frontline workers have driven wage rates higher and pay premiums higher,” he said.

The company spent around $7.8 billion on employee salaries and benefits in the quarter, up 13% from the same period last year.Earlier this month it announced plans to hire an additional 90,000 workers for the peak season.

Subramaniam said that FedEx Ground’s hub in Portland, Oregon, was down about 35% of the staff it needed to handle its normal volume.

As a result, staff were diverting about a quarter of packages because the parcels “simply cannot be processed efficiently to meet our service standards,” he said..

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