Fedex to lose 2 Billion

[bacha29]

They will. It’s not the contract that’s the problem. It’s the operation. And FedEx is wanting out of the expensive airline model. They want a trucking company, with a very small airline fleet. Watch UPS fly postal at a profit for the next 50 years while this company turns into a 3rd or 4th choice trucking option for customers.

I like your analysis. In a few years they'll be a package and LTL line that flies a little air freight every once in awhile.

 

[59 Dano]

This company is so stupid at the top, they blamed the contract on not being able to profit enough from it. FedEx signed the contract. And it’s Fedexs fault for not being able to adjust its own operation to turn a profit. This company should know by now you can’t rely on volume. It can’t just keep going up. It’s up and down. And this place has no idea how to operate in the down. The loss of this contract is a utter disaster for this company.

The postal service has been shifting away from using air transport for the past several years and will continue to do so as much as possible. FedEx and the USPS went into negotiations quite a while ago. For those of you who missed it, FedEx wanted guarantees of volume that the USPS was unwilling or unable to provide. As a result FedEx wanted higher rates on the basis that the costs of flying the freight was essentially the same whether the planes were full or 2/3's full and that the lack of volume was rendering many of those flights money losers. They said they would not renew the contract if they didn't get favorable terms, just as they did with the Amazon contract.

If you think that the loss of a contract that wasn't making any money is bad, well, OK.

 

[shartpost]

Have the ground drivers deliver the air stuff too.

This has been a thing since 2022. Guess how that's going

 

[MAKAVELI]

The postal service has been shifting away from using air transport for the past several years and will continue to do so as much as possible. FedEx and the USPS went into negotiations quite a while ago. For those of you who missed it, FedEx wanted guarantees of volume that the USPS was unwilling or unable to provide. As a result FedEx wanted higher rates on the basis that the costs of flying the freight was essentially the same whether the planes were full or 2/3's full and that the lack of volume was rendering many of those flights money losers. They said they would not renew the contract if they didn't get favorable terms, just as they did with the Amazon contract.

If you think that the loss of a contract that wasn't making any money is bad, well, OK.

It wasn't making money because FedEx didn't have a combined network like UPS. They will turn a nice profit from it because they are better than FedEx at efficiency.

 

[Fred's Myth]

It wasn't making money because FedEx didn't have a combined network like UPS. They will turn a nice profit from it because they are better than FedEx at efficiency.

AGFS has nothing to do with ground transportation of freight outside of shuttles once it has reached its destination. Postal freight is/was flown on idle planes. If they don’t fill UPS planes either, UPS will struggle to profit from the contract, as did FedEx.

Your post is comparing apples to coconuts.

 

[MAKAVELI]

AGFS has nothing to do with ground transportation of freight outside of shuttles once it has reached its destination. Postal freight is/was flown on idle planes. If they don’t fill UPS planes either, UPS will struggle to profit from the contract, as did FedEx.

Your post is comparing apples to coconuts.

https://www.reuters.com/business/ups-sees-profit-us-postal-service-work-that-dragged-down-fedex-earnings-2024-04-23/

Apples to apples.
While some analysts and investors worry that UPS is sweeping up a money-losing business, the delivery firm said it can profit from the new deal because it has a unified network that lowers costs by reducing the distances postal service shipments travel.
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"In contrast to traditional hub and spoke models, we don't have to run all of the air volume through our main air hub" in Louisville, Kentucky, Tome said.
That means short-distance USPS shipments can be moved locally or regionally. FedEx was built on a hub and spoke model.
The unified network at UPS makes it easier for the company to make money from the work, said Satish Jindel, an industry expert who helped found a company purchased by FedEx.

 

[yadig]

Anyone heard about announcement on May 18? Then another one in September?

 

[zeev]

Mail contract provided revenue for planes that would sit idle during the day no planes no postal contract needed. Amazon used FedEx mostly for positioning product where needed, not to be delivered, I would pickup furniture and bed frames in a 53’ trailer. Freddy got mad at Bezos that’s why contract was cancelled.

 

[bacha29]

It wasn't making money because FedEx didn't have a combined network like UPS. They will turn a nice profit from it because they are better than FedEx at efficiency.

Perhaps FDX by bailing out put UPS in a stronger bargaining position. With Fat Freddy having headed for the showers who else but UPS is left on the field with enough capacity to take on USPS business even with it's scaled down volume?

 

[59 Dano]

That means short-distance USPS shipments can be moved locally or regionally.

As was done at FedEx.

 

[IVE GOTTA PACKAGE 4U]

Perhaps FDX by bailing out put UPS in a stronger bargaining position. With Fat Freddy having headed for the showers who else but UPS is left on the field with enough capacity to take on USPS business even with it's scaled down volume?

Maybe ups with its integrated Network where ground and air are delivered by the same drivers give them some more options besides flying it and being a cost advantage for both companies

 

[Fred's Myth]

Maybe ups with its integrated Network where ground and air are delivered by the same drivers give them some more options besides flying it and being a cost advantage for both companies

Do you have any clue what USPS is shipping with FedEx? Overnight Priority Express and Priority Mail, which have money back guarantees.

How does having a UPS combined delivery service have anything to do with getting freight from point A to B for the USPS to deliver on time?

 

[IVE GOTTA PACKAGE 4U]

Do you have any clue what USPS is shipping with FedEx? Overnight Priority Express and Priority Mail, which have money back guarantees.

How does having a UPS combined delivery service have anything to do with getting freight from point A to B for the USPS to deliver on time?

A lot of our next Day Air goes through the ground Network


FedEx store basically has two separate companies so they caught integrate in the same way

 

[FedupExpress]

Anyone heard about announcement on May 18? Then another one in September?

What announcement?

 

[zeev]

UPS has always had the advantage in delivering air their extensive ground network allows air to be way ahead of FedEx especially in AM and PM areas. Rural areas have been always a money loser, small planes to isolated areas staffed by a small courier group . 70 to 80 percent of the cost of a package is that final mile.

 

[Fred's Myth]

UPS has always had the advantage in delivering air their extensive ground network allows air to be way ahead of FedEx especially in AM and PM areas. Rural areas have been always a money loser, small planes to isolated areas staffed by a small courier group . 70 to 80 percent of the cost of a package is that final mile.

UPS won’t be delivering USPS Priority mail, so your advantageous delivery network is moot.

UPS will fly USPS freight and forward it to USPS for final destination delivery. If USPS doesn’t render sufficient freight for UPS to carry at a profit, UPS will find itself in the same situation FedEx did.

And USPS mail volume has been dropping.

 

[zeev]

FedEx does not deliver Postal now it just goes for a plane ride, UPS will not directly deliver mail but their ground linehaul can be used with the planes.

 

[Artee]

FedEx does not deliver Postal now it just goes for a plane ride, UPS will not directly deliver mail but their ground linehaul can be used with the planes.

Same thing FedEx was doing. We had many mail runs through the years where we trucked freight and had contracted runs for mail that did not need to fly.

 

[Fred's Myth]

Same thing FedEx was doing. We had many mail runs through the years where we trucked freight and had contracted runs for mail that did not need to fly.

But Carol is smarter than Fred, so take THAT!

 

[Aquaman]

The postal service has been shifting away from using air transport for the past several years and will continue to do so as much as possible. FedEx and the USPS went into negotiations quite a while ago. For those of you who missed it, FedEx wanted guarantees of volume that the USPS was unwilling or unable to provide. As a result FedEx wanted higher rates on the basis that the costs of flying the freight was essentially the same whether the planes were full or 2/3's full and that the lack of volume was rendering many of those flights money losers. They said they would not renew the contract if they didn't get favorable terms, just as they did with the Amazon contract.

If you think that the loss of a contract that wasn't making any money is bad, well, OK.

Why in gods name would the USPS guarantee volume? If there’s one thing in this industry that can’t be guaranteed… it’s volume. FedEx had built this mega daytime operation around flying planes full of postal and when the postal volume dropped, they had zero clue on how to adjust or consolidate flights and employee hours to adapt to the lower volume. UPS clearly took the contract without guaranteed money or volume.