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Topic: FedEx Announces $1.7bil Restructuring
Username: LAXintl
Posted 2012-10-10 12:50:36 and read 14330 times.

Details about the much anticipated restructuring are being revealed at the annual investors and lenders meeting.

Fedex has revealed it intends to reduce cost and boost profits by $1.7Bil within 3-years.

In the face of slowed global demand that has seen customers shift to cheaper options, FedEx plans shake up of its Express division and Services division.

Biggest changes:
o $700mil savings - Dispose of 5,000 trucks and reconfigure the companies delivery networks
o $400mil savings - Consolidating back office operations, and reduce number of facilities
o $300mil savings - Ground or replace older less efficient aircraft - net flying reduced by 3%

Company anticipates it will need shed its workforce by "several thousand", primarily with a buyout program.

Keen focus will be on the bottom line to improve yields, build profitable market share, and leverage its network and various product offerings in face of anemic global demand forecast to deliver the best value proposition for customers.

Some other changes announced are that CEO of FedEx Ground will retire.


Story:
http://www.sfgate.com/business/bloom...-Profit-Growth-Plan-in-3935780.php

Investor details:
https://edge.media-server.com/m/s/w8f957yq/p/ypfzvrd3/lan/en

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Topic: RE: FedEx Announces $1.7bil Restructuring
Username: gsoflyer
Posted 2012-10-10 13:02:03 and read 14252 times.

Wow, so how will this affect a hub like GSO where the hub opening has been severely delayed.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: AeroWesty
Posted 2012-10-10 13:13:15 and read 14164 times.

From the linked article:

"The size of the target reflects FedEx’s view that the move of some customers to ground, freight and even ocean shipping is permanent and not a temporary change linked to a slowing economy."

I'm more optimistic than this. Businesses have very short memories, and as soon as there's a competitive advantage to ship by air instead of ground, freight or ocean, they'll ship by air. Ground isn't even that cheap. A 14-lb. box someone sent me from Wisconsin last week cost them $65 to ship FedEx Ground to Oregon. We were both thinking it couldn't possibly cost more than 25 bucks when we first talked about the shipment.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: LAXintl
Posted 2012-10-10 13:30:15 and read 14056 times.

You have to remember that air has gotten ever more expensive over the years primary due to fuel, while ships have remained pretty steady thanks to growing efficiency in size and speed.

In the international arena a whole new generation of vessels are entering the market.

Supersize container ships (known as “Post-Panamax” and “Super-Post-Panamax”) are hitting the market that are not only larger, but faster also. Not only do have per tonne operating cost as much a 45% lower, they are able to shave a day or two off the week-long Trans-Pacific crossing.
Add in the benefits of the Panama Canal widening finished by 2015, these super ships will be able to deliver directly to East Coast US quicker then ever before.

So unless if an item is super time critical to move by air, ships are definitely becoming ever more competitive for international freight.

Domestically air is competing to a greater degree with trains and trucks again. Air cost have rise faster then ground cost.
Even UPS now moves growing volume of its own domestic stuff on rail as the cost is very compelling versus air.

So I think there truly could be a paradigm shift by growing number of clients willing to forgo air in favor of other forms of delivery.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: AeroWesty
Posted 2012-10-10 13:43:57 and read 13956 times.

Quoting LAXintl (Reply 3):
So I think there truly could be a paradigm shift by growing number of clients willing to forgo air in favor of other forms of delivery.

I thought about that while writing my post, then remembered FedEx's commercial where their nonstop out of China vs. UPS' one-stop, created higher value to their shipping base.

We've all heard of paradigm shifts in the past in regards to transportation. The first fuel crisis in the 1970s brought out predictions that we'd never see large passenger vehicles again, until SUVs hit the market in the '90s with better fuel economy than their predecessors, and were a sudden hit.

Will advances in aircraft and engine technologies allow the same, to make air shipments competitive to ground and ocean when it means the difference of making a sale or not? I guess time will tell.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: Stitch
Posted 2012-10-10 13:46:19 and read 13928 times.

Quoting LAXintl (Thread starter):
$300mil savings - Ground or replace older less efficient aircraft - net flying reduced by 3%

The 727-200F fleet is scheduled to be gone by 2015, so I am guessing accelerated retirements of the MD-10-30 as the 767-300F arrives?

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: LAXintl
Posted 2012-10-10 14:02:43 and read 13819 times.

Well back in June they already announced 50 aircraft retirements.
Fedex To Retire 50-aircraft; Establish Japan Hub (by LAXintl Jun 4 2012 in Civil Aviation)

I'm sure more details will come out in the coming weeks what today's announcement means fleet wise.

I know one of the investor slides from today said air focus was on "premium service traffic", so there seems to be a concerted move to shift lower value traffic away from its air network towards ground.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: Giancavia
Posted 2012-10-10 14:39:57 and read 13623 times.

Will Monarch still be doing the maintenance on FEDex planes. I enjoy watching them in Luton, Since they test them and lift up early its quite the site to see.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: imiakhtar
Posted 2012-10-10 15:04:06 and read 13495 times.

Quoting LAXintl (Reply 6):
I'm sure more details will come out in the coming weeks what today's announcement means fleet wise.
http://api.ning.com/files/bn*4uy1zFq...iqK2Ek4w/FedExsixyearfleetplan.jpg

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: blueflyer
Posted 2012-10-10 15:38:16 and read 13314 times.

Quoting LAXintl (Thread starter):
Dispose of 5,000 trucks and reconfigure the companies delivery networks

Is that code for they're going to, finally, integrate express and ground operations?

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: KC135TopBoom
Posted 2012-10-10 15:41:36 and read 13306 times.

Quoting imiakhtar (Reply 8):
imiakhtar

I think they meant the B-767-300F, not the listed -200F. It is interesting to see the A-306F and MD-11F fleet begins retirement in 2018. Total capacity also decreases by more than 12%.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: ual747-600
Posted 2012-10-10 15:46:33 and read 13271 times.

In looking at the chart, why wouldn't they keep the newer MD-11F's and get rid of the older, and I would think, less efficient MD-10's? Parts for the ones they keep?

UAL747-600

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: HPRamper
Posted 2012-10-10 17:03:24 and read 12988 times.

Quoting gsoflyer (Reply 1):
Wow, so how will this affect a hub like GSO where the hub opening has been severely delayed.

Well, physically the "hub" at GSO will still be there, waiting for the volume to come back. It may never, we don't know.

Quoting Stitch (Reply 5):
The 727-200F fleet is scheduled to be gone by 2015, so I am guessing accelerated retirements of the MD-10-30 as the 767-300F arrives?

The 727s will be gone before 2015. Mark my words. And the company does not seem to be retiring the -30s any faster than the -10s, although the A310 is leaving the fleet as fast as the 767s come online.

Quoting LAXintl (Reply 6):
Well back in June they already announced 50 aircraft retirements.

Mostly aircraft that were already parked - it was just making things official.

Quoting blueflyer (Reply 9):
Is that code for they're going to, finally, integrate express and ground operations?

No. There is no way to do that without 1. mass layoffs and 2. mass chaos. Fedex is quickly retiring older, diesel-guzzling larger vans - the boxy ones we are all used to seeing - and acquiring more fuel-efficient Sprinter vans to replace them. Routes are also being optimized - there is a lot of inefficiency in the system because routes are still being run the way they were ten years ago.

Quoting ual747-600 (Reply 11):
In looking at the chart, why wouldn't they keep the newer MD-11F's and get rid of the older, and I would think, less efficient MD-10's? Parts for the ones they keep?

The chart shows a hurried retirement of the MD10s. MD11s will probably end up being retired because internationally they are being replaced by the 777s, and domestically the capacity simply isn't needed. FX has no problem with an upgauge in volume if there is also a fuel savings (see the 757 replacing the 727) but in this case there is not.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: aa61hvy
Posted 2012-10-10 17:50:22 and read 12802 times.

Quoting blueflyer (Reply 9):
Is that code for they're going to, finally, integrate express and ground operations?

That won't happen any time soon, thank God.

Ground drivers are contractors/small business owners. Express are salaried/hourly.

If you merge the two together a la UPS you will lose so much accountability and service while increasing damages per 1,000 boxes. FedEx will not merge GND and EXP as long as the current executive team is in place.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: nyc2theworld
Posted 2012-10-10 17:54:02 and read 12792 times.

Quoting aa61hvy (Reply 13):
That won't happen any time soon, thank God.

Ground drivers are contractors/small business owners. Express are salaried/hourly.

If you merge the two together a la UPS you will lose so much accountability and service while increasing damages per 1,000 boxes. FedEx will not merge GND and EXP as long as the current executive team is in place.

Also as soon as they merge GND and EXP no one will be covered by the Railroad Labor Act like EXP is. This is why UPS was pushing to get FedEx reclassified because EXP is technically an airline that has ground ops, vs a delivery service with planes.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: aa61hvy
Posted 2012-10-10 18:02:15 and read 12721 times.

Quoting nyc2theworld (Reply 14):
Also as soon as they merge GND and EXP no one will be covered by the Railroad Labor Act like EXP is

Helluva point that I forgot.

On top of it, Ground drivers want to keep what they have. I worked super closely with around 7 ground drivers in my past life, and they loved being contractors. They only dealt with the route owner, rarely with FX management.
Plus some of them make good $ (more than EXP drivers) because most GND drivers are paid per on time box (pick up and deliveries). So it's a huge incentive for them to work hard and get things delivered.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: CompensateMe
Posted 2012-10-10 18:39:57 and read 12571 times.

Quoting LAXintl (Reply 3):
Domestically air is competing to a greater degree with trains and trucks again. Air cost have rise faster then ground cost.
Even UPS now moves growing volume of its own domestic stuff on rail as the cost is very compelling versus air.

So I think there truly could be a paradigm shift by growing number of clients willing to forgo air in favor of other forms of delivery.

UPS has long integrated its air operations into its ground operations. For example, an overnight package from S.F. to L.A. is hauled by truck, as is a third-day package from Chicago to L.A. UPS keeps packages on the ground as long as possible to still meet its guarantee. Meanwhile, a third-day (“saver”) FedEx package from Chicago to Indy is flown overnight; if volume’s light, you’ll get it the next day, otherwise it’ll stay in the warehouse.

FedEx Air operation uses highly-compensated FedEx Air drivers whereas the Ground (former RPS) operation uses a contractor model. Concerns that an integrated company may not be covered by the RLA have delayed FedEx from integration. When it became clear that true Ground employees (part-timers that load trucks) were increasingly in favor of unionization, FedEx gave them medical benefits to compete with UPS. It's a very big concern. The Ground operation has big margins for the company, unlike the air.

UPS shifted somewhat away from the rail model in the late 1990s/early 2000s as it and FedEx Ground competed on speed (sleeper teams move faster than trains). With increased fuel costs, UPS is adding a bunch of 53' trailers that can be double-stacked on rails. It's placed pressure on FedEx, which has -- finally -- responded with some rails of its own (although I've never actually seen them in action).

Quoting aa61hvy (Reply 15):
On top of it, Ground drivers want to keep what they have. I worked super closely with around 7 ground drivers in my past life, and they loved being contractors. They only dealt with the route owner, rarely with FX management.
Plus some of them make good $ (more than EXP drivers) because most GND drivers are paid per on time box (pick up and deliveries). So it's a huge incentive for them to work hard and get things delivered.


Uh, no.

Contractors (or "Independent Service Providers" as FedEx calls them) own multiple routes and are responsible for hiring drivers to run them. Most FedEx Ground drivers earn about $600 per week, regardless of how many hours they work, with limited benefits (no medical, no retirement... usually just some vacation & holiday pay, with holiday bonuses to make-up for long seasonal work weeks) -- there's tremendous turnover. In comparison, the average UPS driver earns twice that, plus receives medical & retirement benefits. As for the ISP... many do very well, but plenty have gone bankrupt (remember, the ISP pays for the truck, maintenance, gas, uniforms, is responsible for covering the routes should employees no-show, etc.) Most have been happier since FedEx modified the model several years ago, though.

[Edited 2012-10-10 18:48:03]

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: HPRamper
Posted 2012-10-11 04:48:54 and read 8839 times.

Quoting CompensateMe (Reply 16):
Meanwhile, a third-day (“saver”) FedEx package from Chicago to Indy is flown overnight; if volume’s light, you’ll get it the next day, otherwise it’ll stay in the warehouse.

A route like this is now trucked. Even overnight packages on such a short stage length are trucked to save money these days. Just one example, overnight packages to the East Coast that are shipped from MSP on Friday night are put on a truck to EWR so as to arrive before the Sunday night sort. It was long ago realized that driving on the ground is much more cost-effective.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: neveragain
Posted 2012-10-11 05:16:32 and read 8634 times.

Quoting gsoflyer (Reply 1):
Wow, so how will this affect a hub like GSO where the hub opening has been severely delayed.

I'd say doesn't look promising with that fleet plan.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: HPRamper
Posted 2012-10-11 06:39:17 and read 7957 times.

Quoting neveragain (Reply 18):
I'd say doesn't look promising with that fleet plan.

I tend to agree - unless the domestic economy explodes at some point. Turns out the construction of GSO was badly timed. Still nothing close to the disaster that would have been FX taking delivery of the A380 before that order was cancelled.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: LAXintl
Posted 2012-10-11 07:49:48 and read 7343 times.

President of the Express division was on CNBC last night.

He made a few points -

o There has been a real shift in demand globally. Not just drop in trade volumes, but interest by customers seeking cheaper options. Boats and ground transport are seeing this growth.
o This is mostly OK for FedEx. Its more affordable ground division is ready, and happens to be a more profitable segment anyhow for the company.
o Ground based delivery is reliable and timed by the day. Headed towards being timed to the minute as air is.
o Long term sees FedEx growing freight forwarding especially overseas to partner with business clients and provide them a complete transportation solution beyond just air. Could see FedEx booking sea freight for its customers. Already have a division (FedEx Trade Networks) that works with third-party shippers on behalf of clients.
o Don't expect much growth in 2013. Maybe 2014 sees improvement. But if things were to pick up fast can always hold onto aircraft and trucks longer.
o Restructuring is also good opportunity to improve technology and review overall operations. Can do more with less.
o Expects virtually all employee reductions to be by attrition or voluntary buyouts.

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Topic: RE: FedEx Announces $1.7bil Restructuring
Username: gsoflyer
Posted 2012-10-11 08:19:45 and read 7089 times.

To be honest, I don't understand why FedEx maintains a feeder presence at RDU, CLT, AVL, ROA and why they don't focus them all in GSO and ramp the operation up to a feeder for the region type of thing at minimum.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: JohnJ
Posted 2012-10-11 16:27:18 and read 5162 times.

There was an interview with Fred in today's Commercial Appeal:

http://www.commercialappeal.com/news...fred-smith-backs-efforts-to-boost/

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: HPRamper
Posted 2012-10-11 17:38:23 and read 5056 times.

Quoting LAXintl (Reply 20):
Long term sees FedEx growing freight forwarding especially overseas to partner with business clients and provide them a complete transportation solution beyond just air. Could see FedEx booking sea freight for its customers. Already have a division (FedEx Trade Networks) that works with third-party shippers on behalf of clients.

Trade Networks already books sea freight with third parties. Not sure why he mentioned this as a "possibility."

Quoting gsoflyer (Reply 21):
To be honest, I don't understand why FedEx maintains a feeder presence at RDU, CLT, AVL, ROA and why they don't focus them all in GSO and ramp the operation up to a feeder for the region type of thing at minimum.

That was sort of the idea originally, but now MEM is operating at much less than capacity so there is no reason to spin off freight to a secondary hub. In any case the area you refer to, basically the Piedmont, while populous is just not big enough to warrant or support flights to even major markets across the country or internationally nor is there enough freight traveling within the region to justify even a small hub.

GSO originally was supposed to be the hub for the entirety of area from about Washington DC, south to Florida and west to around the western border of Alabama. Fedex wants its regional hubs to be the main transit for overnight packages within their respective regions while MEM and to a lesser extent IND handle the transit of inter-regional freight as well as 2- and 3-day cargo. For instance if someone ships overnight from Seattle to Los Angeles, this package never touches MEM but transits OAK instead. You suggest what would amount almost to a North Carolina hub and there is just not enough express traffic to do that when even states like Texas and California do not sustain hubs on their own merits.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: LAXintl
Posted 2012-10-11 18:33:21 and read 4967 times.

I believe the way I took his comment was that FedEx under its own umbrella could utilize sea freight as an option for its clients directly, and not simply act as a logistics broker.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: HPRamper
Posted 2012-10-11 21:11:48 and read 4967 times.

Quoting LAXintl (Reply 24):
I believe the way I took his comment was that FedEx under its own umbrella could utilize sea freight as an option for its clients directly, and not simply act as a logistics broker.

That would entail either buying ships or wet-leasing would it not?

In any case...that would seem to go against the whole tenet of Fedex. Shipping something via ocean freight is anything but "Express."

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: gsoflyer
Posted 2012-10-12 05:18:53 and read 4807 times.

Quoting HPRamper (Reply 23):
That was sort of the idea originally, but now MEM is operating at much less than capacity so there is no reason to spin off freight to a secondary hub. In any case the area you refer to, basically the Piedmont, while populous is just not big enough to warrant or support flights to even major markets across the country or internationally nor is there enough freight traveling within the region to justify even a small hub.

GSO originally was supposed to be the hub for the entirety of area from about Washington DC, south to Florida and west to around the western border of Alabama. Fedex wants its regional hubs to be the main transit for overnight packages within their respective regions while MEM and to a lesser extent IND handle the transit of inter-regional freight as well as 2- and 3-day cargo. For instance if someone ships overnight from Seattle to Los Angeles, this package never touches MEM but transits OAK instead. You suggest what would amount almost to a North Carolina hub and there is just not enough express traffic to do that when even states like Texas and California do not sustain hubs on their own merits.

Well, I mean right now. GSO has flights to MEM, IND, EWR, ORF, BQN and Mountain Air Cargo to EWN and ILM.

So, with RDU having daily flights to MEO (or is it MQI), OAJ and FAY, ROA having flights to LYH, CLT having flights to AVL. That is more what I'm saying. Why not ramp down the excessive service at the other nearby airports. Why have a small sorting from RDU to make runs to the coast when GSO is already doing this. So, instead of the localized sorting runs, close down CLT, RDU, ROA sorting and push it all through GSO and consolidate Mountain Air Cargo in GSO.

Roughly what I'm saying. They have the facility already. Why are they:
1) Renting extra space at the other airports to sort and deliver to other cities from those airports
2) when they could utilize the facility they already own to make the runs instead of employing more in the regional airports.

In other words. Let ROA, RDU, CLT etc be a destination not a micro-hub to another destination.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: LAXintl
Posted 2012-10-12 07:15:22 and read 4759 times.

Quoting HPRamper (Reply 25):
That would entail either buying ships or wet-leasing would it not?

In any case...that would seem to go against the whole tenet of Fedex. Shipping something via ocean freight is anything but "Express."

Simply make a block-space agreement with one or more of the big container shipping companies such as Evergreen, NYK, APL, COSCO, etc..

FedEx could offer one-week door-to-door service to the West Coast from across the Pacific for example. I'm sure such end to end product offering would be attractive to all types of businesses.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: aa61hvy
Posted 2012-10-12 15:48:43 and read 4483 times.

Quoting CompensateMe (Reply 16):
(no medical, no retirement... usually just some vacation & holiday pay, with holiday bonuses to make-up for long seasonal work weeks)

That is purely based on who (route owner) they report to. The drivers I used to work with had benefits.

Quoting CompensateMe (Reply 16):
FedEx, which has -- finally -- responded with some rails of its own (although I've never actually seen them in action).

Source for that? Do you know what service? As of 8 months ago it was not GND/EXP/LTL. I worked for FX for quite a few years until Feb 2012 and I am unaware of this. As are my old colleagues who still work for FX

Quoting LAXintl (Reply 20):
Could see FedEx booking sea freight for its customers. Already have a division (FedEx Trade Networks) that works with third-party shippers on behalf of clients.

FTN is a broker for customs and a freight forwarder for ocean and air.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: HPRamper
Posted 2012-10-12 21:34:29 and read 4230 times.

Quoting gsoflyer (Reply 26):
So, with RDU having daily flights to MEO (or is it MQI), OAJ and FAY, ROA having flights to LYH, CLT having flights to AVL. That is more what I'm saying. Why not ramp down the excessive service at the other nearby airports. Why have a small sorting from RDU to make runs to the coast when GSO is already doing this. So, instead of the localized sorting runs, close down CLT, RDU, ROA sorting and push it all through GSO and consolidate Mountain Air Cargo in GSO.

Roughly what I'm saying. They have the facility already. Why are they:
1) Renting extra space at the other airports to sort and deliver to other cities from those airports

Those usually are not full sort ops. They are often shared flights with maybe a transload. For instance BIL will show as having connecting flights to MEM, DEN, GTF and SGF but nobody but MEM sorts anything. Generally feeder ops already fit within given ramp space so rent isn't much of an issue. And consolidating feeder ops might add jobs at GSO but other places will lose jobs. The facility is already a sunk cost so that should not factor in this.

Quoting aa61hvy (Reply 28):
Source for that? Do you know what service? As of 8 months ago it was not GND/EXP/LTL. I worked for FX for quite a few years until Feb 2012 and I am unaware of this. As are my old colleagues who still work for FX

Shipping FX trailers via rail like UPS does. I've seen it too.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: Darksnowynight
Posted 2012-10-12 21:55:28 and read 4198 times.

Quoting HPRamper (Reply 12):
Fedex is quickly retiring older, diesel-guzzling larger vans - the boxy ones we are all used to seeing - and acquiring more fuel-efficient Sprinter vans to replace them.

How are those working out for deliveries? We have a bunch ourselves for ramp work & local parts x-fer. Personally, I think they're great. Your guys liking them?

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: F9animal
Posted 2012-10-13 01:11:54 and read 4079 times.

I have heard some negative talk about this restructure. But, we should be thankful that the company is being proactive! Some companies wait till the last minute to restructure, and end up doing it through bankruptcy. For FX to step up to the plate, and identify areas where improvements can be made to operations and the bottom line are impressive moves IMO. What I like about it is, this company looks 20 years ahead. Where most companies look a year ahead. Smart management, and a bright future for FX. Sad to see the 727s leaving!  

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: HPRamper
Posted 2012-10-13 09:32:52 and read 3851 times.

Quoting Darksnowynight (Reply 30):
How are those working out for deliveries? We have a bunch ourselves for ramp work & local parts x-fer. Personally, I think they're great. Your guys liking them?

They can basically fit just as much freight as the old ones - Express does not normally bulk out its trucks like Ground and UPS do - and while a gust of wind on the freeway can throw them all over the road, they generally perform pretty well.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: gsoflyer
Posted 2012-10-13 18:52:53 and read 3586 times.

Quoting HPRamper (Reply 29):
Those usually are not full sort ops. They are often shared flights with maybe a transload. For instance BIL will show as having connecting flights to MEM, DEN, GTF and SGF but nobody but MEM sorts anything. Generally feeder ops already fit within given ramp space so rent isn't much of an issue. And consolidating feeder ops might add jobs at GSO but other places will lose jobs. The facility is already a sunk cost so that should not factor in this.

That's what I'm saying, consolidating feeder ops into centralized locations seems like it would cut costs. For instance, why fly into RDU with a loaded MD-11 when you could use a smaller plane, and use the space fly it into GSO and use the same feeder ops from GSO to do multi-stop into places like MYR, FAY, ROA, KIN, AVL, Lynchburg, Manteo that are getting feeder ops into them from various other places. It seems you you could easily not only consolidate feeder ops, reduce flights by doing multi-stop feeder from a centralized feeder location.

Sure, it cuts jobs from one location, but places like RDU and CLT already have higher pay for the same employment compared to GSO, which is one reason they sunk the sorting op into GSO.

I mean, right now, they have feeder ops scattered all over NC, SC and VA.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: JohnJ
Posted 2012-10-13 19:18:00 and read 3549 times.

With regard to the rail question, a Google search on "fedex piggyback trailer" yields a fair number of YouTube videos depicting trains carrying FedEx trailers.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: KC135TopBoom
Posted 2012-10-14 05:08:50 and read 3306 times.

Quoting HPRamper (Reply 29):
Shipping FX trailers via rail like UPS does. I've seen it too.

Shipping by rail is one of the cheapest way to move freight there is. I believe it is the second method of shipping only to shipping by barge.

Quoting F9animal (Reply 31):
I have heard some negative talk about this restructure. But, we should be thankful that the company is being proactive! Some companies wait till the last minute to restructure, and end up doing it through bankruptcy.

Correct. FedEx is a smart company, and will do what they think they need to do to stay profitable.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: Trucker
Posted 2012-10-14 13:31:17 and read 3088 times.

Quoting AeroWesty (Reply 2):
A 14-lb. box someone sent me from Wisconsin last week cost them $65 to ship FedEx Ground to Oregon.

That's surprising. When you order something online the shipping doesn't cost anywhere near that much.

Quoting HPRamper (Reply 12):
Fedex is quickly retiring older, diesel-guzzling larger vans - the boxy ones we are all used to seeing - and acquiring more fuel-efficient Sprinter vans to replace them.
Quoting CompensateMe (Reply 16):
the ISP pays for the truck, maintenance, gas

How does that work exactly? Does the ISP buy the new van from FX? What if they want to continue to operate the older vans because if they're paid for it might be cheaper despite the higher cost for fuel and maintenence. What if the IPO has routes out in Montana where the delivery vehicle used is a Ford Transit? Is the IPO forced to buy vans from FX even if they'd rather get them elsewhere?

Quoting KC135TopBoom (Reply 35):
Shipping by rail is one of the cheapest way to move freight there is

Only if the trip is long enough. First, railroads have a nasty tendency to damage trailers and freight. Next, it takes forever to drop off and pick up trailers at railyards. Then the trailer has to be picked up by the yard jockey, loaded on the train by the crane operator etc, etc. The trailer has to be going far enough otherwise the labor costs to get it on and off the train are greater than the fuel saved.

[Edited 2012-10-14 13:39:29]

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: HPRamper
Posted 2012-10-14 15:19:08 and read 2987 times.

Quoting Trucker (Reply 36):
That's surprising. When you order something online the shipping doesn't cost anywhere near that much.

Private shippers generally pay full price. Businesses that are passing on the cost to the consumer almost always have a contract with Fedex in which cheaper shipping rates are traded for guaranteed business.

Quoting Trucker (Reply 36):
How does that work exactly? Does the ISP buy the new van from FX? What if they want to continue to operate the older vans because if they're paid for it might be cheaper despite the higher cost for fuel and maintenence. What if the IPO has routes out in Montana where the delivery vehicle used is a Ford Transit? Is the IPO forced to buy vans from FX even if they'd rather get them elsewhere?

Only Express is replacing vehicles because Express is the division in which the margins are paper thin and that fuel efficiency really matters. Ground usually uses secondhand vehicles, even ones that have been retired by Express in some cases. Ground contractors are free to look for whatever suitable vehicle is available, I've known some who found a van halfway across the country on Craigslist and bought it, driving it back home.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: HPRamper
Posted 2012-10-14 18:51:31 and read 2853 times.

I also heard earlier today from a person with access to information that FX is now down to around 28 active 727s, and sometime around the beginning of the year a chunk of about ten more will be retired in close succession.

Topic: RE: FedEx Announces $1.7bil Restructuring
Username: CompensateMe
Posted 2012-10-15 18:01:16 and read 2421 times.

Quoting HPRamper (Reply 17):
A route like this is now trucked. Even overnight packages on such a short stage length are trucked to save money these days. Just one example, overnight packages to the East Coast that are shipped from MSP on Friday night are put on a truck to EWR so as to arrive before the Sunday night sort. It was long ago realized that driving on the ground is much more cost-effective.

No doubt FedEx Air utilizes the ground as much as possible, but only a small percentage of its volume is carried in this manner as it lacks the infostructure to deploy it full-scale. FedEx is attempting to integrate its air into its ground operations but there's still plenty of logistics/hurdles. Remember that FedEx has replaced the old RPS footprint with mammoth, state-of-the art Ground buildings over the past 10+ years, but many of these buildings cover huge geographic footprints and meeting air time commitments just wouldn't be feasible. Thus, even if you started trucking 100% of the overnight volume from Chicago to Minneapolis, you're still going to face the challenges of on-time delivery (either from the center, or re-sorting to existing air terminals).

Quoting aa61hvy (Reply 28):
That is purely based on who (route owner) they report to. The drivers I used to work with had benefits.

Nearly all Ground/HD employees are pure subcontractors. Very, very, very few have any type of medical benefits. The most lucrative ISP are the ones operating with antiqued RPS contracts (that provide things such as heavily subsided fuel); a good portion of ISP have gone bankrupt. FedEx would prefer to run the company as if they're employees (instead of contractors)... I know somebody who owned 8 routes, and when the economy tanked FedEx would break-up most of them and divert volume elsewhere (meanwhile that person would be responsible for the cost of the truck, insurance, etc.) There's ongoing litigation against FedEx among many ISP and several states (including some Red), which claim that the contractor model is a red herring and Ground employees should be classified as FedEx employees. The changes to the ISP model are suppose to fix this. TBC...

Quoting aa61hvy (Reply 28):
Source for that? Do you know what service? As of 8 months ago it was not GND/EXP/LTL. I worked for FX for quite a few years until Feb 2012 and I am unaware of this. As are my old colleagues who still work for FX

I've seen the rails on the road, but I've never seen them on rails. The level of service is unmarked, but a Google search yields that they're init ally Freight but will move into Ground in the future. Will be interesting, since Ground Feeder routes are also ISP.

Quoting Trucker (Reply 36):
How does that work exactly? Does the ISP buy the new van from FX? What if they want to continue to operate the older vans because if they're paid for it might be cheaper despite the higher cost for fuel and maintenence. What if the IPO has routes out in Montana where the delivery vehicle used is a Ford Transit? Is the IPO forced to buy vans from FX even if they'd rather get them elsewhere?

They can buy the delivery vans from any source, but they have to meet FedEx specifications and standards. Many ISPs sued over high standards, which allegedly have been loosened. The person I referenced earlier attempted to replace his fleet of trucks with ex-DLH that were available for cheap, but was denied by FedEx. Most of the Ground equipment is modern -- automatic, power steering, air conditioning, lift gates, etc. UPS, in comparison, has a large number of trucks built in the 1980s that lack power steering; most lack automatics and AC. Of course, the cost to the employee is $0.


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