Amazon says "ADIOS" to Express?

[zeev]

What a gift for UPS air more high margin packages for routes that are set up for ground. Fdx stock look out below!

 

[59 Dano]

Pretty obvious. Why continue to deliver packages for a competitor, helping to put yourself out of business, that you’re making very little money off of

A package that you don't make a lot of money on is preferable to no package.

 

[59 Dano]

Because it would be like Target loaning the Walmart next door cash register tape so they can stay open for business.

It isn’t in their own best interest.

Horrible analogy. We aren't loaning anyone anything. We're providing a service because we make money by doing so. The fact that they are a competitor is irrelevant. We provide service for the USPS - should we stop?

 

[59 Dano]

Makes me feel queasy, but I agree. If fedex has excess capacity, and makes even modest profit, then delivering is srill a good decision. If fedex can slowly shed excess capacity, then it will make more sense to drop a paying customer. With more and more retailers getting into delivering- like Walmart and Target- fedex would not want to cut capacity, and later have to add it back. So at this point, why should fedex drop Amazon where it is still making a profit. It isn't like Fred S is working overtime, or losing money.

What I was addressing was the specific idea that FedEx should have stopped servicing Amazon when they announced their intentions to compete. You don't cut off a profitable revenue stream simply because it comes from a competitor, especially when they aren't a threat.

Some here were swearing that Amazon would stick Express with the most expensive of the last-mile Prime deliveries because of the cheap rates they get from Express and ZOMG AMAZON BEZOS GENIUS. I said then that that wouldn't happen because Express isn't dumb enough to let it. And here we are.

 

[59 Dano]

Do you prefer minimum wage, or $25-30/hr?

Another bad analogy. It's not a choice between a high margin profit and a low margin profit -- we can do both and make money on both. It's not like we were turning down high margin shipments because we took too much Amazon.

 

[59 Dano]

I predict in the next 5 years Amazon will be buying FedEx.

You read it here first, LOL!!

 

[MAKAVELI]

You read it here first, LOL!!

You have to admit the upper brass doesn't know their ass from a hole in the ground right now.

 

[59 Dano]

In theory, yes. It will also make Bezos realize just how expensive and complicated (not to mention the infrastructure required) it is to get into the ship-by-air business.

Exactly!

What people are missing is that FedEx could have found itself in a situation where it would be, for lack of a better term, subsidizing the rollout of Amazon's delivery service. Amazon was hoping for a new contract that would allow that to some degree but there's no contract at all.

I'm guessing the rate structure we gave Amazon in the past was just enough to help fill the plane to capacity and pay for the jet fuel, not much more. Amazon gets to try to do it cheaper than that now. Not saying they won't be able to, but it's not going to be easy.

The assumption is that we made nothing from Amazon. We made plenty, enough that Amazon thinks it can be done just as well for a significantly cheaper price.

 

[59 Dano]

You have to admit the upper brass doesn't know their ass from a hole in the ground right now.

I can admit that Maka doesn't.

 

[bbsam]

With all shipping companies obsessed with driving down "final mile" costs by trying to grab up as much of that easy in town stuff they can get while trying to sucker the other guy into taking their bankrupting rural boxes as a so called "partner" this is going to be a real cluster expletive deleted going forward. Bezos will take his easy stuff while wanting Fat Freddy or one of the other Big 3 to get " jiggy" with it. As in taking his jing weed boxes and lose a fortune on it.

This could get so bad that an industry that once was one of the most regulated in the nation could find itself back in the good old days .
Caught in the middle of all this some unfortunate contractors could discover the hard way that they stayed too long hoping for that big cash out but instead have to settle for a "take it off your hands" kind of deal.

This would be an excellent point of made 3 years ago. And it was.

But I think we’re past that now. Now we’re on to push back against Amazon and we’ll see how they do.

If Bezos were ever serious about buying Ground, now would be the time that makes most sense.

 

[bbsam]

A package that you don't make a lot of money on is preferable to no package.

No. It really isn’t.

If that were the case, Ground would have been delivering massive amounts of Amazon in the last few years.

We weren’t.

 

[MAKAVELI]

And yet that stock still hasn't recovered. Face it, this company is a dumpster fire and Amazon has the will and $ to Outlast FredEx.

 

[59 Dano]

And yet that stock still hasn't recovered. Face it, this company is a dumpster fire and Amazon has the will and $ to Outlast FredEx.

Sounds like you went to the same Saturday seminar at the Airport Ramada Inn that bacha attended.

 

[MAKAVELI]

Sounds like you went to the same Saturday seminar at the Airport Ramada Inn that bacha attended.

Sounds like you are sour about not getting a bonus this year.

 

[59 Dano]

No. It really isn’t.

Profit is maximized when you keep providing service up until the point where marginal cost equals marginal revenue.

 

[59 Dano]

Sounds like you are sour about not getting a bonus this year.

No reason to be sour.

 

[bbsam]

Profit is maximized when you keep providing service up until the point where marginal cost equals marginal revenue.

You know that Ground could have “bought” a lot of the business UPS had and made a profit. Not worth it.

 

[59 Dano]

You know that Ground could have “bought” a lot of the business UPS had and made a profit. Not worth it.

Accounting profit, yes. Economic profit, no.

 

[Star B]

We provide service for the USPS - should we stop?

The post office is going to exist whether we assist them or not. They were here before us. We also have the empty airplanes during the day to shuttle the mail around, so it makes sense to maximize what we have.

To assist another private, non-governmental enterprise to profit, learn about what we do, mimic what we do, and then directly compete... and then give them one hell of a rate while letting them run us into the ground possibly failing our other customers..... nah.

The assumption is that we made nothing from Amazon. We made plenty, enough that Amazon thinks it can be done just as well for a significantly cheaper price.

That's why they said it was only 1% or so of our revenue in Frontline? I was expecting a bigger number than that, honestly.

 

[bacha29]

More capacity coming on every day. Slowing economic growth. Not enough boxes to go around. At least not enough good stuff to go around. Now you guys have been throwing out there every possible outcome except the one staring you right in the face......... A rate war......And the first shots could be fired when the next X quarterly report comes out later this month. As for X stock I saw one target price as low as 136.