FedEx stock performance

[HedleyLamarr]

The last paragraph says it all. Wake up Memphis before it’s too late.

It is a good article. It is interesting to me that the author thinks the company should combine into an all employee model. As an Express employee, I would love it, but my head tells me Dano is right about that. Way too expensive, and since Ground gets more volume than Express it does make more sense to continue to slowly dissolve Express into Ground.
Keep in mind, UPS has a lot more volume than FedEx. They are a much larger company so they can more easily afford the higher wages.

 

[It will be fine]

It is a good article. It is interesting to me that the author thinks the company should combine into an all employee model. As an Express employee, I would love it, but my head tells me Dano is right about that. Way too expensive, and since Ground gets more volume than Express it does make more sense to continue to slowly dissolve Express into Ground.
Keep in mind, UPS has a lot more volume than FedEx. They are a much larger company so they can more easily afford the higher wages.

The author doesn’t even address the capex that an all employee model would involve. It’s entirely impractical. There is just an obscene amount of waste in running the 2 networks, some towns still have 3 networks with Ground and HD separate. Raj better get on it or he’s out soon.

 

[Fred's Myth]

The author doesn’t even address the capex that an all employee model would involve. It’s entirely impractical. There is just an obscene amount of waste in running the 2 networks, some towns still have 3 networks with Ground and HD separate. Raj better get on it or he’s out soon.

Especially since an all employee FedEx would put you out of business.

 

[zeev]

Here is a really good article that explains what frontline employees sees wrong with FedEx daily. FedEx’s Problems Are About FedEx, Not the World

 

[zeev]

It’s all FedEx not the economy, revenues were unchanged but the income at Express was way down, based n this idiotic computer programs ,response, and hiring contractors at AGFS.

 

[bacha29]

This has nothing to do with Amazon OR UPS and everything to do with the people running FedEx. I’ll say it again, they’re running the company into the ground with gross incompetence. Poor service was excusable during Covid. They have no excuse for the horrible service now. Shareholders are finally realizing that all the BS they’ve been sold is smoke and mirrors. Fred S was an expert at the game. Raj, not so much. It’s finally catching up to them.

And to think just a couple of months ago at the Investor Day meeting Raj was telling everyone there that things were going smoother than a 16 year old thigh. After this debacle nobody's going to take anything he says at face value.

 

[bacha29]

This has nothing to do with Amazon OR UPS and everything to do with the people running FedEx. I’ll say it again, they’re running the company into the ground with gross incompetence. Poor service was excusable during Covid. They have no excuse for the horrible service now. Shareholders are finally realizing that all the BS they’ve been sold is smoke and mirrors. Fred S was an expert at the game. Raj, not so much. It’s finally catching up to them.

The whole company is like an early design prefabricated house. Just a bunch of boxes nailed together and nobody worried about whether or not they actually fit together. They might hold together for awhile but they were cheap and quick to erect but longevity was not their strong suit.

Just as was the case with that prefab house the corporation as it exists today is coming to the end of it's life span in it's current form. And there is no half assed way to fix it and fix it the right way without a near total disassembly and rebuilding . And I think that they know that they have an impossible situation on their hands and they just don't know what the hell to do. And it's going to take an outsider CEO who knows what needs done and come hell or high water they will do it without fear.

 

[MAKAVELI]

It is a good article. It is interesting to me that the author thinks the company should combine into an all employee model. As an Express employee, I would love it, but my head tells me Dano is right about that. Way too expensive, and since Ground gets more volume than Express it does make more sense to continue to slowly dissolve Express into Ground.
Keep in mind, UPS has a lot more volume than FedEx. They are a much larger company so they can more easily afford the higher wages.

The volume gap really isn't that big as it once was, especially with Amazon delivering most of there own packages. The bottom line is UPS is is light years ahead of FedEx in efficiency and that shows in the earnings reports. That is the sole reason UPS is more profitable than FedEx.

 

[MAKAVELI]

The author doesn’t even address the capex that an all employee model would involve. It’s entirely impractical. There is just an obscene amount of waste in running the 2 networks, some towns still have 3 networks with Ground and HD separate. Raj better get on it or he’s out soon.

It's not impractical. UPS does it and is more profitable than FedEx. FedEx doesn't have a problem with spending capital just look at Kinkos and TNT. They have a problem with upper management being short sighted and refusing to change.

 

[bacha29]

It's not impractical. UPS does it and is more profitable than FedEx. FedEx doesn't have a problem with spending capital just look at Kinkos and TNT. They have a problem with upper management being short sighted and refusing to change.

They could have floated a new bond issue when interest rates were low or a secondary stock offering when the market was hopping and X had the returns to support it, then used the money to reform and restructure. Too late to do anything about it now. That opportunity is long gone . It would appear that Ground contractors aren't the only ones trapped in an impossible situation.

 

[It will be fine]

It's not impractical. UPS does it and is more profitable than FedEx. FedEx doesn't have a problem with spending capital just look at Kinkos and TNT. They have a problem with upper management being short sighted and refusing to change.

UPS built their network over decades, they didn’t buy all their trucks at once, they didn’t hire all their drivers in a day. For FedEx to switch to an all employee model would be completely impractical. They’d be rebuilding their entire network. If they tried to do it slowly, Ground contractors would shut down even faster than they are now. Service would be non existent.

 

[bacha29]

UPS built their network over decades, they didn’t buy all their trucks at once, they didn’t hire all their drivers in a day. For FedEx to switch to an all employee model would be completely impractical. They’d be rebuilding their entire network. If they tried to do it slowly, Ground contractors would shut down even faster than they are now. Service would be non existent.

If you think that company is going to worry about contractors...you've been seriously misled. The preservation of the corporation and shareholder equity will always come well before people like you. Right now I think Raj is looking for a golden parachute. If so then hopefully the new guy will be a fearless outsider and given the freedom to do whatever that person deems necessary. If so that person is not going to worry about what the future holds for some little route contractor with a completely undeserved sense of self importance.

 

[It will be fine]

If you think that company is going to worry about contractors...you've been seriously misled. The preservation of the corporation and shareholder equity will always come well before people like you. Right now I think Raj is looking for a golden parachute. If so then hopefully the new guy will be a fearless outsider and given the freedom to do whatever that person deems necessary. If so that person is not going to worry about what the future holds for some little route contractor with a completely undeserved sense of self importance.

What are you rambling about? I swear it’s like you hit your head before every post. The impracticality of replacing 100k vehicles has nothing to do with FedEx corporate giving a rat’s about their contractors. It’s just an impractical solution to their current problem.

 

[MAKAVELI]

UPS built their network over decades, they didn’t buy all their trucks at once, they didn’t hire all their drivers in a day. For FedEx to switch to an all employee model would be completely impractical. They’d be rebuilding their entire network. If they tried to do it slowly, Ground contractors would shut down even faster than they are now. Service would be non existent.

FedEx has the network built already. Yes converting to an all employee model would be expensive and painful but that's ultimately the best choice for the future. The time of having 2 bloated systems has come and gone. That stock dropping like a rock is proof

 

[It will be fine]

FedEx has the network built already. Yes converting to an all employee model would be expensive and painful but that's ultimately the best choice for the future. The time of having 2 bloated systems has come and gone. That stock dropping like a rock is proof

They have buildings, they don’t own the equipment that moves the packages between their buildings. They don’t have the network built already. They’ve contracted out the network. If they told the contractors they are going to be out of business within a few years as they acquire the equipment to move their boxes, the contractors would all leave and the network would collapse. They can’t flip a switch and have 100k trucks and drivers.

 

[NC man]

keep the shareholders happy, lol. I bet they were crapping their pants yesterday. I kept telling people on fdx msg board at yahoo finance that the ship was sinking and get out but they just laughed. oh well.

 

[MAKAVELI]

They have buildings, they don’t own the equipment that moves the packages between their buildings. They don’t have the network built already. They’ve contracted out the network. If they told the contractors they are going to be out of business within a few years as they acquire the equipment to move their boxes, the contractors would all leave and the network would collapse. They can’t flip a switch and have 100k trucks and drivers.

They have the ability to buy out contractors and their trucks. They could even offer employment. It's not impossible just expensive. The company needs a major overhaul and combining the OPCOs is the most solvent way for the future.

 

[bbsam]

They have the ability to buy out contractors and their trucks. They could even offer employment. It's not impossible just expensive. The company needs a major overhaul and combining the OPCOs is the most solvent way for the future.

This is possible. Now consider making it profitable.

How many Express and/or Ground drivers can come anywhere near UPS driver performance levels? Maybe 10-15%? That’s assuming that the company would pay them enough to want to stay.

 

[bacha29]

FedEx has the network built already. Yes converting to an all employee model would be expensive and painful but that's ultimately the best choice for the future. The time of having 2 bloated systems has come and gone. That stock dropping like a rock is proof

Mak, IWBF is simply scared of the fact that he could very well find himself on the outside looking in especially if they were to bring in this bare knuckles outside CEO who the board has entrusted with the task of reforming the entire company. Converting to company employed rivers can be done on a region by region basis.

Put together a group of zips and tell contractors " Those contractors who operate in the following zips will have their service agreement terminated on a certain date. Delivery, pickup and related duties will be assumed by company employed drivers. Those contractors and contractor employed drivers affected can if they wish to do so apply for company positions . Contractor owned vehicles that meet condition and appearance requirements will be purchased by the company at book value"

You simply go region by region. Yes, you will have a significant charge against earnings for a number of years but given that they ain't going to make any money with the damn poor setup they've got now while it's certainly not the best time to do it , that time has passed them by it might very well be the last chance they have to do it.

It goes with out saying that you'll never get the dependable consistent high precision service out of a bunch of contractors each of whom has their own unique service area and the troubles that go with it. For example the woman at the terminal I was at just 3 years ago badly overpaid for routes. Overwhelmed by the problems that went with it she loses her contract in just 3 years. However she did have a payment formula that allowed he drivers to earn in the range of up near $30 an hour.

So now the next new unsuspecting slug comes in and takes over. He offers her well experienced route savvy drivers $17 an hour with zero benefits. Their reaction?...."Hasta La Vista baby".

 

[MAKAVELI]

This is possible. Now consider making it profitable.

How many Express and/or Ground drivers can come anywhere near UPS driver performance levels? Maybe 10-15%? That’s assuming that the company would pay them enough to want to stay.

With routes becoming much smaller and dense, productivity automatically increases. Getting UPS productivity would take time to achieve and yes better compensation for workers. Like many analysts have pointed out the company is too top heavy with management having 2 separate OPCOs along with infrastructure that could be shared like UPS could make FedEx very profitable.