Turning point coming

[yadig]

Missed all the talk about the company's record profits in the last FY, did you?

Has grounds profit margin shrunk?

 

[HedleyLamarr]

It’s not a one year snapshot. It’s an event that lasted a year plus and has changed history going forward. Huge difference. Post pandemic reality is the new “overall context”. And maybe you don’t overhaul it but you certainly don’t look at a year of suckage where your biggest competitor absolutely killed it and act like very significant changes need to happen.

For reference, a contractor on Facebook broke down fuel prices and Ground’s fuel supplement between the start of the contract and about a month ago. Fuel expense went up by 65%. FedEx fuel supplement went up by 53%.

One way or another, before this year ends, people will be parking trucks. It will be either under protest or simply unable to financially continue. And it’s not just one or two contractors throughout the country and it’s not just small “mom and pop”shops. It’s the larger investors who decide that continuing down the FedEx owning business isn’t profitable and doesn’t look to be anytime in the near future.

Investors are figuring this out at every level and Pittsburgh/Memphis is completely out of touch with it.

Couldn't help but notice that Dano didn't reply to this. No answer perhaps?

 

[bacha29]

Has grounds profit margin shrunk?

In the short term ? Yes. It spent barge loads of money on the Ground network which now has to be expensed against earnings But, when the reconciliation is finished and if all goes according to plan ground will likely be back in that mid to high teen percentage margins. Again, if it all goes according to the plan.

 

[instiches]

One way or another, before this year ends, people will be parking trucks. It will be either under protest or simply unable to financially continue. And it’s not just one or two contractors throughout the country and it’s not just small “mom and pop”shops. It’s the larger investors who decide that continuing down the FedEx owning business isn’t profitable and doesn’t look to be anytime in the near future.

Investors are figuring this out at every level and Pittsburgh/Memphis is completely out of touch with it.

And contractors are frequently seeing 5-15% cut in per stop revenue on their renegotiations. It's ugly.

 

[bacha29]

And contractors are frequently seeing 5-15% cut in per stop revenue on their renegotiations. It's ugly.

It's the way the system works. The box generates x amount of revenue. Corporate takes it's cut out of it. Executives take their cut out of it in the form of bonuses. By the time it gets down to the contractor there's nothing left. And to top it all off he's expected to find somebody to take responsibility and governance over that route for nothing. A nearly impossible situation has become a completely impossible situation. It's a rigged system whereby a contractor is designed to fail. The only question is how long will it take him to do so? Some last a bit longer than others but in the end it becomes impossible to go on.

 

[Fred's Myth]

It's the way the system works. The box generates x amount of revenue. Corporate takes it's cut out of it. Executives take their cut out of it in the form of bonuses. By the time it gets down to the contractor there's nothing left. And to top it all off he's expected to find somebody to take responsibility and governance over that route for nothing. A nearly impossible situation has become a completely impossible situation. It's a rigged system whereby a contractor is designed to fail. The only question is how long will it take him to do so? Some last a bit longer than others but in the end it becomes impossible to go on.

Awesome! I for one would LOVE to see the Ground Model crash and burn.

Go back to hiring, managing, and most of all PAYING employees!

 

[bacha29]

And contractors are frequently seeing 5-15% cut in per stop revenue on their renegotiations. It's ugly.

There's nothing even remotely close to a full and fair negotiation.

 

[59 Dano]

Has grounds profit margin shrunk?

I think it did YoY for a quarter. What of it?

 

[59 Dano]

Couldn't help but notice that Dano didn't reply to this. No answer perhaps?

I didn't get around to looking it up. Looked it up. Q2 FY22 saw a year-over-year decline in Ground margin. I'm sure that means something to yadig.

 

[59 Dano]

It's a rigged system whereby a contractor is designed to fail.

LOL

 

[59 Dano]

Awesome! I for one would LOVE to see the Ground Model crash and burn.

Go back to hiring, managing, and most of all PAYING employees!

You clowns who support this don't get it. An integration of Ground and Express would be the subbing out of Express employees to contractors, not the turning of Ground drivers into actual FedEx employees.

 

[MAKAVELI]

You clowns who support this don't get it. An integration of Ground and Express would be the subbing out of Express employees to contractors, not the turning of Ground drivers into actual FedEx employees.

Subbing out employees to contractors. Lol
Where do you come up with this Bull ?

 

[59 Dano]

Subbing out employees to contractors. Lol
Where do you come up with this Bull ?

I mean, yeah, in theory they might combine operations to save money and then turn around and choose the most expensive way to staff that combined operation - but it would be stupid.

 

[MAKAVELI]

I mean, yeah, in theory they might combine operations to save money and then turn around and choose the most expensive way to staff that combined operation - but it would be stupid.

Works for UPS and other parts of FedEx Corp. Upper management and Fred are just stuck with the mentality and philosophy that it can't be done with the delivery side. The company needs to adapt or be left behind by UPS and Amazon.

 

[bbsam]

The real kicker is that this mess is all Ground’s own making. They have been obsessed with becoming larger and more efficient. And the plans had a degree of merit but didn’t account for crappy logistics programs, driver turnover, a global pandemic and weather impacts.

And yes, most of that is impossible to predict. The problem is that they refused to adapt to any of those situations. Costs were simply passed along. Honestly, I’d say that had they dealt with those as they came up, we wouldn’t see near the focus on how high gas prices are affecting contractors. Fuel prices are just that proverbial last straw.

So far their only response has been to say that they will get better at doing what hasn’t been working. Contractors have been raising these concerns internally for nearly two years now. They’re in a tight corner and I’m curious to see if they somehow navigate the mess they’ve created.

 

[bbsam]

Works for UPS and other parts of FedEx Corp. Upper management and Fred are just stuck with the mentality and philosophy that it can't be done with the delivery side. The company needs to adapt or be left behind by UPS and Amazon.

And that’s the conundrum. They’re already in a down position against very tough competition. Attempting a monumental restructuring like this could be catastrophic.

 

[MAKAVELI]

And that’s the conundrum. They’re already in a down position against very tough competition. Attempting a monumental restructuring like this could be catastrophic.

I don't think they would try all at once. They've been making small changes over the years to make the appearance of one company to the public. I think if they thought they could turn Express into a contractor model they would have done it already. But combining some Express and Ground into the same buildings is definitely the biggest move they've made yet in either direction.

 

[McFeely]

I mean, yeah, in theory they might combine operations to save money and then turn around and choose the most expensive way to staff that combined operation - but it would be stupid.

I know this thread is mostly about Ground, but one could argue that the company (at least Express) has had a history of doing something "to save money" then completely screw the pooch on execution.

Response comes to mind with extra sorts at ramps and stations, extra RTDs, wave 2 drivers, huge amounts of rental vans, and not enough staffing to support any of that (read: expensive overtime for existing employees). DRA was supposed to save money too to keep every route to an 8-hour day, lulz. One can only imagine what the financial repercussions will be with E-Star's route planning.

 

[Star B]

One can only imagine what the financial repercussions will be with E-Star's route planning.

dont have to imagine, just head over to the UPS side and ask them how Orion's live-day planning works.

 

[Cactus]

I mean, yeah, in theory they might combine operations to save money and then turn around and choose the most expensive way to staff that combined operation - but it would be stupid.

Everything FedEx tries these days IS stupid.