From The Chairman: Transition to Ground

[bacha29]

I think the point is Ground is already in those areas too so why have two different people out there when one can get it done for less cost. I'm assuming that FedEx will pay the contractors more to do this but the overall savings will be substantial. An analyst in one article I saw somewhere said it should save FedEx about $600 million a year.

Saving 600M? That represents an earnings improvement of around $ 2.25 per share. Come on ......really?

 

[vantexan]

Saving 600M? That represents an earnings improvement of around $ 2.25 per share. Come on ......really?

So save $600 million or don't do it at all?

 

[bbsam]

Saving 600M? That represents an earnings improvement of around $ 2.25 per share. Come on ......really?

To begin with. Now if they reverse course, how much would that affect stock predict? Positive or negative?

 

[bacha29]

To begin with. Now if they reverse course, how much would that affect stock predict? Positive or negative?

The announcement only moved the stock up from 149 to 163. Closed today at 154. A savings? Yes, there will likely be a savings but 600M might be a bit of a stretch. BTW How profit per stop do you think you'll make off that e-commerce rate?

 

[Maui]

According to that little chart Ground is taking over all resi SO, 2 day, 3 day, and International Economy that aren't one of the exceptions listed. If Ground is only doing area freight around origin stations, and not taking the incoming freight from out of the area, then in many if not most markets they won't be doing that much and everyone can relax.

This is mostly correct. It never said ALL resi SO, E2, XS, and IE.
This is ORIGIN based regional. SO and IE are not included in phase 1 at all. People here are making this bigger than it is.
It is only GSO now, but will rollout in more markets beginning in April. Those haven’t been announced. Phase 1 will be complete by fall. So this will move quickly through the first phase. We’re talking about 200k packages a day. That is less than Amazon was on a daily basis.

The selected packages must be able to make the Ground night sort the day of pickup then move through their network to make the commit. Nothings been said about anything about diverting everything. Too much panic when this overall a good move for FXE and FXG.

 

[bbsam]

The announcement only moved the stock up from 149 to 163. Closed today at 154. A savings? Yes, there will likely be a savings but 600M might be a bit of a stretch. BTW How profit per stop do you think you'll make off that e-commerce rate?

There is no more e commerce rate. You’re behind the times...again.
We’ll see though. Density is good. I still have drivers done in six hours. That’s a lot of capacity to fill.

 

[yadig]

I believe that eventually express is gonna be like the ground model.

 

[Maui]

I believe that eventually express is gonna be like the ground model.

What makes you believe that?

 

[MAKAVELI]

What makes you believe that?

Fred is gone nobody here to protect his baby.

 

[Working4the1%]

This is mostly correct. It never said ALL resi SO, E2, XS, and IE.
This is ORIGIN based regional. SO and IE are not included in phase 1 at all. People here are making this bigger than it is.
It is only GSO now, but will rollout in more markets beginning in April. Those haven’t been announced. Phase 1 will be complete by fall. So this will move quickly through the first phase. We’re talking about 200k packages a day. That is less than Amazon was on a daily basis.

The selected packages must be able to make the Ground night sort the day of pickup then move through their network to make the commit. Nothings been said about anything about diverting everything. Too much panic when this overall a good move for FXE and FXG.

So how does a Wall Street big shot say we saving $600,000,000 off 200k packages???

 

[vantexan]

So how does a Wall Street big shot say we saving $600,000,000 off 200k packages???

The savings comes from hourly pay including OT, fuel, less money spent on 401k matches, and probably quite a few other items.

 

[Maui]

So how does a Wall Street big shot say we saving $600,000,000 off 200k packages???

It’s 200k per day. Usually about 255 working days.

I don’t know what formula that analyst used, but once complete the savings will be substantial.

 

[59 Dano]

According to that little chart Ground is taking over all resi SO, 2 day, 3 day, and International Economy that aren't one of the exceptions listed. If Ground is only doing area freight around origin stations, and not taking the incoming freight from out of the area, then in many if not most markets they won't be doing that much and everyone can relax.

There's more to it than the chart.

 

[bacha29]

There is no more e commerce rate. You’re behind the times...again.
We’ll see though. Density is good. I still have drivers done in six hours. That’s a lot of capacity to fill.

What did they replace it with? Something even lower?

 

[59 Dano]

What did they replace it with? Something even lower?

As much time as you spend watching Cramer and posting random stock prices, you don't know?

 

[bbsam]

What did they replace it with? Something even lower?

Nah. Something about in between so it’s all a single rate

 

[vantexan]

There's more to it than the chart.

Explain away.

 

[vantexan]

I hope you are correct. That’ll be a nice boost in volume. It feels like that’ll be a phase 2 of this rollout though, doesn’t make sense for every ramp to have Ground pickups with only Freight from NC being diverted.

Got to thinking about this. Ramps run a sort in the morning after inbound arrives to get containers, doc bags, and loose freight on the right trucks and sent off. On the outbound side they are trying to get planes loaded as fast as possible. So freight sent to them to go to Ground would most likely be held until the inbound arrives. They can then sort it into Ground containers. Either a Ground truck will be there, or a number of them, to be loaded, or the Express RTD drivers are going to drop off Ground containers after delivering the Express containers to Express stations. Maybe both. So I don't think there would be two sorts.

 

[MAKAVELI]

It’s 200k per day. Usually about 255 working days.

I don’t know what formula that analyst used, but once complete the savings will be substantial.

200k is first phase. That number will be much larger when this goes Nationwide with all P2.

 

[bacha29]

No matter how you slice it, it only stands to reason that the guy who will run 4 more miles for 40 more stops is going to make out a hell of a lot better under this new plan than the guy who will run 40 more miles for 4 more stops. ......and there's going to be a lot who will end up doing just that.