Ground to absorb Express

[The Youngin' Of It All]

It's certainly a long way off. Full transition to ISP won't be done until 2020. After that they'll force the integration of Ground and HD. That'll take a few years. Then they'll need to pilot some ground contractors doing low priority express volume. So I'd say at least 10 years and who knows what things will look like then.

What we do know is FedEx is getting a lot of experience integrating networks. By the time this would be reasonable they'll have integrated Ground, HD and smartpost. They'll have integrated Express and TNT. They'll be pretty good at integration by then.

First public post guys, but IWBF has the correct answer here. They aren't going to do this right away. Why would they add more work onto the pile of changes going on right now and risk having it blow up and fail almost immediately. They want you to go into a 3 year ISP because they need the time to properly structure all this out. Consider your first 3 year ISP agreement a practice run if anything. The real fun will begin in 2020 when you go to renegotiate and get all the added objectives (Express Saver). They even say "By 2020" for a specific reason. What I do know according to my sources is you will have to own the entire town by zip. Better start working with your counter parts to make some sort of deals and not wait last second if you don't own overlap. People in my hub have no idea how it's going down and seem to feel going under 1 contractor will solve the problem for single route owners. Feel very sorry for them, but they specifically told you merging would not guarantee the same incentive as it did back then under the new metric system of being paid.

 

[MemphisHubFedExer]

Sounds good, then ground can take all this bull Walmart freight that is almost doubling our normal volume for this time of year.

Brother, they almost killed us in Memphis the last two nights. Trucks missed the day flights were rolled to us at night because there were to many for the day sort to handle or the just left Bentonville too damn late. It's been a sort nightmare because we can't judge volume based just on when our normal trucks and flights arrived.

 

[bacha29]

You seem so caught up in your fantasies that you won't entertain rational discourse that disagrees with you. I speak from a disinterested point of view, and from over 40 years in the industry. Your scenario only works if FDX is willing to damn the torpedoes and hand UPS a publicity coup. When that happens, your business security will be at total risk, because Amazon and other clones will fill the void. Reputation is the foundation of any viable enterprise, not a disposable fad.

Clearly you're from a bygone era in the shipping business. Yes, it is important that people employed in the business behave in a civilized manner. What is also quite clear is that you resented the addition of Fedex Ground in 1997 and do so to this very day.Well get used to it pal. It exists, it growing and once again IT MAKES MONEY. Why didn't X create it's OWN dedicated ground package delivery business? The answer is simple. It didn't have the money to start up one of it's own or even the money to to buy RPS outright . It had to print new shares of stock to buy it.So instead of looking down that smug little nose of yours at FXG enjoy the run up in the stock price for which ground has contributed mightily , which in turn will help make you're retirement much more comfortable. And don't forget the fact that FXG contractors have considerable sums of their OWN money much of it BORROWED at risk in that venture. How much BORROWED money do you have at risk?

 

[bacha29]

First public post guys, but IWBF has the correct answer here. They aren't going to do this right away. Why would they add more work onto the pile of changes going on right now and risk having it blow up and fail almost immediately. They want you to go into a 3 year ISP because they need the time to properly structure all this out. Consider your first 3 year ISP agreement a practice run if anything. The real fun will begin in 2020 when you go to renegotiate and get all the added objectives (Express Saver). They even say "By 2020" for a specific reason. What I do know according to my sources is you will have to own the entire town by zip. Better start working with your counter parts to make some sort of deals and not wait last second if you don't own overlap. People in my hub have no idea how it's going down and seem to feel going under 1 contractor will solve the problem for single route owners. Feel very sorry for them, but they specifically told you merging would not guarantee the same incentive as it did back then under the new metric system of being paid.

A new perspective on the matter and much appreciated. I don't even want to think about what this is going to be like for contractors in depressed rural areas like the one I operated in which consisted of 34 zip codes stretched across 4 large rural counties and included more than 3000 miles of RD mail carrier miles on unpaved township turkey trails so narrow and in such poor condition that 15-20 MPH was the best you could do without tearing the suspension out from under you because that was all they were designed for. Merging 4-5 single routes under 1 C-Corp with separate profit centers could work if all routes have the same overall profitability all members agree to take the same modest salary draw and each profit center is required to maintain minimum capital reserves. Few people would be willing to abide by the discipline required to make it a success. The clearly better way and I'm seeing more of this is 4or 5 single route contractors packaging together their routes and sell them for more than what they are worth to somebody from the investor class who only sees if from the here and now and not what's coming later.

 

[Gone fishin]

If you think for one second of one minute that express would go to a contractor model. You know nothing about the business.

 

[bbsam]

If you think for one second of one minute that express would go to a contractor model. You know nothing about the business.

Why do you think that?

They used to say because of "control". But if you saw the amount of control they can "legally"(?) exercise over contractors, you might well reconsider.

 

[Gone fishin]

Because we struggle with 28 $ an hour employees. What happens when dra builds 3 extra p 1 rts. Because you have 5-6 days to deliver ground and you have hrs to deliver express.

 

[bacha29]

If you think for one second of one minute that express would go to a contractor model. You know nothing about the business.

Judging by your comments it would appear that you are an employee who has nothing more at stake than his lunch money not a contractor. If so you know nothing about the challenges one of them faces. As a contractor you have thousands of dollars in the game much of it borrowed, money who's fate is decided entirely by the decisions someone else makes and are under constant pressure to provide even greater value for the company with much of that additional value insufficiently compensated or not compensated at all. If for no other reason and their are plenty of others contractors must remain vigilant and keenly observant regarding changes and differing operating terms that could be looming on the horizon. While the chances are remote they also have to be mindful of the huge potential impact that a global military or banking crisis might have on an industry as vital as the shipping business including the need to petition for emergency regulatory relief in response to that crisis.

 

[Gone fishin]

Your way over thinking this. Every company goes thru challenges and change. They don't tear down their original model of what made them successful

 

[Gone fishin]

You think ups is going to bust their union and pay some guys 14$ because of the e-commerce drain. Think of the money they'd save

 

[bbsam]

Because we struggle with 28 $ an hour employees. What happens when dra builds 3 extra p 1 rts. Because you have 5-6 days to deliver ground and you have hrs to deliver express.

Incorrect. If it gets to the building, it is expected to be delivered that day.

 

[bacha29]

Your way over thinking this. Every company goes thru challenges and change. They don't tear down their original model of what made them successful

Pressure to improve margins or action designed to preserve margins in a challenging market is almost always the driver. In a market whose performance is completely tied to a stable and growing economy the lack of which can open up a multitude of possibilities.

 

[bacha29]

Incorrect. If it gets to the building, it is expected to be delivered that day.

Indeed. Shows you how much "gone fishin" knows about Ground. Clearly he doesn't know that contractor revenue streams are performance driven.

 

[Gone fishin]

Incorrect. If it gets to the building, it is expected to be delivered that day.

5-6 days total. How's that

 

[Gone fishin]

Pressure to improve margins or action designed to preserve margins in a challenging market is almost always the driver. In a market whose performance is completely tied to a stable and growing economy the lack of which can open up a multitude of possibilities.

So what's ups going to do with shrinking margin. Just curious of your answer

 

[BootsOnTarmac]

Many times planes will wait for USPS, our biggest customer. Ground will fill trucks and get going. In many markets Ground will deliver in one day, especially in the Midwest. Kudos to Ground. Many times I have ordered by ground out of Cincinnati at 5p and received package by 10a in Chicago.

 

[Gone fishin]

Many times planes will wait for USPS, our biggest customer. Ground will fill trucks and get going. In many markets Ground will deliver in one day, especially in the Midwest. Kudos to Ground. Many times I have ordered by ground out of Cincinnati at 5p and received package by 10a in Chicago.

Nothing against ground. Just saying express is a whole different animal.

 

[bacha29]

Many times planes will wait for USPS, our biggest customer. Ground will fill trucks and get going. In many markets Ground will deliver in one day, especially in the Midwest. Kudos to Ground. Many times I have ordered by ground out of Cincinnati at 5p and received package by 10a in Chicago.

Ground"s improving transit times make it an attractive alternative to going express when to comes to items that people don't want to have to wait a month of Sundays to get it but at the same don't need it badly enough to be willing to pay a king's ransom just to have there by morning.

 

[dmac1]

Nothing against ground. Just saying express is a whole different animal.

Divert everything but the time of day sensitive packages directly from the airport to the ground terminal instead of the express terminal, and it will almost assuredly be delivered that day, at a cheaper cost. Customers won't care.

 

[MAKAVELI]

Divert everything but the time of day sensitive packages directly from the airport to the ground terminal instead of the express terminal, and it will almost assuredly be delivered that day, at a cheaper cost. Customers won't care.

That's friend* brilliant I wish I would have thought of that.