Cummins is shifting part of its Memphis, Tennessee, aftermarket parts distribution operations run by FedEx Supply Chain to a facility in Indianapolis, a company spokesperson told Supply Chain Dive.
The change is driven by the engine manufacturer's "need to improve efficiency and better support our customers," the spokesperson said in an email, adding that a different 3PL runs the Indianapolis facility.
The shift impacts 611 FedEx Supply Chain employees at the Memphis-based operations, which run out of two neighboring facilities, per the Tennessee Department of Labor and Workforce Development. The transition is expected to be complete in October, FedEx said in an emailed statement to Supply Chain Dive.
"We are retaining a portion of the business at this location," FedEx said. "Team members at this facility were notified in advance and many will be eligible for other roles within the company."
Cummins tapped FedEx to run the operations in 2019, distributing component parts, rebuild kits and remanufactured engines for the company's warehouses worldwide, the Commercial Appeal reported at the time. The engine maker previously used XPO Logistics to handle its Memphis distribution operations.
Customers shifting business to other 3PLs often results in layoffs for providers like FedEx Supply Chain. The 3PL employed about 11,500 people as of May 31, down from 13,000 employees the year prior amid steep industry competition.
A customer's shift to a new provider is also the reason FedEx Supply Chain gave for ending its operations at a Lima, Ohio, facility, per a Worker Adjustment and Retraining Notification Act notice on Aug. 25. However, FedEx said in the notice it expects many of its 63 employees at the facility to keep working under the new provider after the transition takes effect on Oct. 31.
