New Layoffs Thin the Herd at Supply Chain Companies Project44, GXO
Sagging demand means new job cuts up and down the supply chain.
Supply chain visibility platform Project44 is laying off 130 employees, or 10 percent of its staff, the company confirmed to Sourcing Journal.
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The layoffs are the second batch of job cuts for the tech company in the past year, which also slashed headcount by 63 last summer.
Layoffs have hit companies like logistics giants C.H. Robinson, DHL Supply Chain, and trucking company U.S. Xpress, while digital businesses like Project44, such as Flexport and Convoy have also cut jobs.
Flexport terminated 20 percent of its global workforce, or roughly 640 employees, as the digital freight forwarder adapted to falling shipping volume. And digital trucking marketplace Convoy conducted three rounds of layoffs between June 2022 and February 2023.
In November, Project44 raised $80 million for a $2.7 billion valuation, but the cuts indicate pared-back funding for supply chain tech startups.
A May report from Pitchbook shows that venture capital funding on the decline after a 2022 fourth quarter that saw a 28.2 percent increase. In the 2023 first quarter, the total value of deals for supply chain tech companies fell 45.3 percent sequentially to $2.4 billion, while the number of deals fell 19.4 percent to 195.
Project44 expanded at a rapid pace in 2022, reporting 51 percent revenue growth in the fiscal year that ended Jan. 31, 2023. A total of 411 new customers including Foot Locker, New Balance, Google and Kellogg’s use Project44 to track in-transit shipments across a network of more than 238,000 trucking, rail, ocean and air carriers.
GXO cuts 105 after customer partnership ends
Layoffs aren’t just confined to the tech-driven supply chain companies. Contract logistics giant GXO Logistics is planning to lay off 105 employees at its facility in Fort Worth, Texas, according to a Worker Adjustment and Retraining Notification (WARN) notice.
The layoffs came after the company ended a relationship with a client in Fort Worth, according to a GXO spokesperson. Impacted employees will have the opportunity to transfer to GXO sites nearby, the rep said.
Positions affected include material handlers, inventory specialists, clerks and supply chain operations managers. According to the WARN notice, the layoffs will start on June 30.
Like many companies during the pandemic, GXO went on a North American hiring spree in 2021 to prepare for a surge in holiday e-commerce sales, recruiting 9,000 new workers, including 650 in North Texas. Now falling demand is forcing several companies to cut back.
GXO had at least four rounds of layoffs in 2022. In September, it shut down a facility near Milwaukee, affecting 144 workers. The next month, it announced the closures of two Dallas-area warehouses, impacting 262 workers. And in December, it shut down another Wisconsin facility, laying off 123 workers.
The company has remained on solid footing in spite of declining demand, seeing revenue grow 12 percent to $2.3 billion in the first quarter.
Coyote axes more as UPS cuts costs
And the ongoing “freight recession” has led to a second round of layoffs in 2023 for freight brokerage firm Coyote Logistics. While the number of job cuts hasn’t been disclosed, Coyote laid off about 200 workers in February.
The Chicago-based UPS subsidiary attributed the cuts to months of truckload rate deflation, which saw year-over-year spot market rates drop 65.8 percent in April 2023, according to DAT Freight & Analytics.
Coyote reported an estimated 2022 revenue of $3.8 billion, a nearly 20 percent decline from 2021’s $4.7 billion during the year. UPS acquired the business in 2015 for $1.8 billion.
The layoffs come as UPS, like its competitors, has been pushing cost cuts as it looks to offset the decline in shipping volumes. In the first quarter, the parcel giant reduced purchased transportation expenses, which includes the costs of services purchased from contractors, by $100 million. It made this cut while reducing trailer loads per day by 7.5 percent year over year.
Brian Newman, chief financial officer at UPS, said during an April earnings call that the company will continue to align headcount with volume levels to offset costs per parcel.
“We’re certainly getting after a lot of the non-operating costs,” said Newman. “We’re taking consulting spend out of the business. We’re taking headcount out of the business.”
