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Usps $1 Bil Contract W/ FedEx Expiring Soon  
User currently offlineacidradio From United States of America, joined Mar 2001, 1875 posts, RR: 10
Posted (2 years 5 months 6 days 18 hours ago) and read 10570 times:
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The US Postal Service recently announced (actually it was more discovered through regulatory filings) that its $1 billion contract for air cargo service will be up for grabs. It is theorized that the large contract, set to expire in Sep 2013, could also be bid on by UPS. FedEx provides air freight movement for USPS First Class, Priority and Express Mail products. Somebody correct me if I'm wrong but I remember FedEx saying that this contract necessitated the use of at least 20 aircraft systemwide!

In unrelated news but with interesting timing FedEx will start removing drop boxes placed at post offices throughout the nation. The USPS either leased space or permitted FedEx to place dropboxes for its services at about 5000 post offices around the US. Apparently the contract expired in June.

http://finance.yahoo.com/news/fedex-...ks-losing-1-billion-191406155.html

FedEx risks losing $1 billion-plus Post Office contract to UPS
Reuters – 26 minutes ago


By Lynn Adler

(Reuters) - Package-delivery company FedEx Corp (FDX) risks losing its business with the U.S. Postal Service, worth more than $1 billion a year, when the beleaguered postal service puts the contract up for bid next year.

The postal service alerted FedEx that it will seek bids for the contract after it expires in September 2013, FedEx said in a regulatory filing late on Monday.

That clears the way for larger competitor United Parcel Service (UPS) to grab the business - domestic air transportation for first-class, priority and express mail - that FedEx has had since 2000.


I wonder if the USPS will do anything down the road to reduce costs and/or usage of these contracts. A while back an audit was performed and it was determined that the USPS was "overusing" its FedEx capacity, especially for classes of mail that didn't require the speed of (and the cost of) the FedEx service. More about this audit can be found in this article: http://www.commercialappeal.com/news...-spent-too-much-on-fedex/?print=1. Granted this is not FedEx's fault necessarily but I wonder if it could play into how the contract is done on the next round.

[Edited 2012-07-18 09:21:00]


Ich haben zwei Platzspielen und ein Microphone
42 replies: All unread, showing first 25:
 
User currently offlinerwy04lga From United States of America, joined Jul 2005, 3176 posts, RR: 8
Reply 1, posted (2 years 5 months 6 days 18 hours ago) and read 10542 times:

C'mon Delta, make a bid!


Just accept that some days, you're the pigeon, and other days the statue
User currently offlinesrbmod From , joined Dec 1969, posts, RR:
Reply 2, posted (2 years 5 months 6 days 18 hours ago) and read 10402 times:

Quoting rwy04lga (Reply 1):

C'mon Delta, make a bid!

It's not going to happen, as they don't have the infrastructure for such an operation. They don't have enough late evening and overnight flights to be able to handle all of the packages, plus those would have to go immediately from planeside to the USPS facility at an airport and that would require hiring more employees to work overnight shifts. Let's not forget that this sort of contract is better suited to airlines with dedicated cargo a/c as they can handle the volume much better.

I remember when Emery Worldwide had this contract and at certain times of the day they had priority at the drop-off belts at ATL and everyone else who may have been unloading had to stop unloading and take their carts with them. There would be a number of large containers that would come off of the Emery flights and it would take them anywhere from 90 minutes to 2 hours+ to unload all of them.

UPS bidding for it is not surprising, but I wouldn't be surprised if someone tries to piece together something with several smaller cargo airlines to go after the contract.

[Edited 2012-07-17 13:56:10]

User currently offlinerwy04lga From United States of America, joined Jul 2005, 3176 posts, RR: 8
Reply 3, posted (2 years 5 months 6 days 17 hours ago) and read 10339 times:

Quoting srbmod (Reply 2):
I remember when Emery Worldwide had this contract and at certain times of the day they had priority at the drop-off belts at ATL and everyone else who may have been unloading had to stop unloading and take their carts with them.

Mail moves the country and the USPS moves the mail.



Just accept that some days, you're the pigeon, and other days the statue
User currently offlineHPRamper From United States of America, joined May 2005, 4144 posts, RR: 8
Reply 4, posted (2 years 5 months 6 days 17 hours ago) and read 10260 times:

It's about time FX pulled the dropboxes out of the Post Office locations, it was always a dumb idea and they have some of the lowest profits of the entire dropbox network. Each market only has X number of dropboxes and they need to be placed in the best spots with the most traffic.

As for the billion dollar contract, it will be interesting to see what happens. Without postal volume, FX would turn into a one-shift-daily operation instead of the current day and night-turns. That said, it's fairly common knowledge in the industry that the USPS loves FX, and FX loves their money but hates their shoddy equipment and two-bit contractors we are forced to work with daily. USPS rarely works directly with FX, there is a middle-man contractor who does handling for the post office at just about every Fedex ramp.


User currently offlinerotating14 From United States of America, joined Jan 2012, 729 posts, RR: 0
Reply 5, posted (2 years 5 months 6 days 17 hours ago) and read 10139 times:

If FX is buying 767's and 777's, would they already have some insight of what's ahead?? Papa Smith wouldn't let the contract slip away to UPS or somebody else so easily. I remember that around the time of 9-11, they were desperate for the USPS contract because they didn't get it it would have changed the way FX did its operations, . With volume down, and the USPS proposing cuts it's anybody's guess where the wind will blow but I see it as FX's contract to lose.

User currently offlinemayor From United States of America, joined Mar 2008, 10655 posts, RR: 14
Reply 6, posted (2 years 5 months 6 days 17 hours ago) and read 10112 times:

Quoting srbmod (Reply 2):

It's not going to happen, as they don't have the infrastructure for such an operation.

Remember that FedEx started doing this after 9/11 when the airlines severely cut back on the mail they carried and the contract was awarded to FedEx. The USPS has the infrastructure as long as the airlines can get the mail to them in a timely manner.


BTW, as far as late night and overnight flights are concerned, what do you think happens when FedEx can't move a particular package when they want to? They take it to an airline, to be shipped on that airline's small package service. Happens quite frequently, actually.



"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
User currently offlineHPRamper From United States of America, joined May 2005, 4144 posts, RR: 8
Reply 7, posted (2 years 5 months 6 days 17 hours ago) and read 10067 times:

Quoting mayor (Reply 6):
Remember that FedEx started doing this after 9/11 when the airlines severely cut back on the mail they carried and the contract was awarded to FedEx. The USPS has the infrastructure as long as the airlines can get the mail to them in a timely manner.

USPS can, but the passenger airlines cannot absorb the kind of capacity needed.


User currently offlineslcdeltarumd11 From United States of America, joined Jan 2004, 3638 posts, RR: 0
Reply 8, posted (2 years 5 months 6 days 14 hours ago) and read 9806 times:

Quoting rwy04lga (Reply 1):
C'mon Delta, make a bid!

I cant see Delta being able to absorb this? Even if delta stopped accepting checked bags i doubt they could absorb this whole contract


User currently offlineFI642 From Monaco, joined Mar 2005, 1079 posts, RR: 2
Reply 9, posted (2 years 5 months 6 days 13 hours ago) and read 9522 times:

No scheduled carrier could carry that volume. Either FX or UPS will win the contract.


737MAX, Cool Planes for the Worlds Coolest Airline.
User currently offlinegreenwichsud From United States of America, joined May 2008, 62 posts, RR: 0
Reply 10, posted (2 years 5 months 6 days 12 hours ago) and read 9451 times:

Quoting FI642 (Reply 9):
No scheduled carrier could carry that volume. Either FX or UPS will win the contract.

While admittedly not knowing the full extent of the logistics involved, does it have to be a single scheduled carrier?


User currently offlinemayor From United States of America, joined Mar 2008, 10655 posts, RR: 14
Reply 11, posted (2 years 5 months 6 days 12 hours ago) and read 9408 times:

Quoting FI642 (Reply 9):
No scheduled carrier could carry that volume.

Who do you think hauled it before FedEx got the contract?



"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
User currently offlineFX1816 From United States of America, joined Mar 2004, 1400 posts, RR: 3
Reply 12, posted (2 years 5 months 6 days 12 hours ago) and read 9332 times:

Quoting mayor (Reply 11):
Quoting FI642 (Reply 9):No scheduled carrier could carry that volume.
Who do you think hauled it before FedEx got the contract?

Emery Worldwide but the airlines did carry their fair share too.

FX1816


User currently offlinejporterfi From United States of America, joined Feb 2012, 447 posts, RR: 0
Reply 13, posted (2 years 5 months 6 days 12 hours ago) and read 9297 times:

Could we see the contract split between a large cargo carrier such as FX or 5X and a smaller carrier (specifically A8- Ameriflight)? I think A8's smaller aircraft could be beneficial for smaller markets, and A8 seems to have a very geographically spread-out route network.

User currently offlineSeabiscuit From United States of America, joined Jan 2007, 40 posts, RR: 0
Reply 14, posted (2 years 5 months 6 days 11 hours ago) and read 9230 times:

i think that USPS will be putting a lot pressure on the carriers to significantly reduce costs or at least the majors interested in the bidding.


Seabiscuit
User currently offlineGEG2RAP From United States of America, joined Sep 2003, 853 posts, RR: 0
Reply 15, posted (2 years 5 months 6 days 11 hours ago) and read 9219 times:

Quoting mayor (Reply 11):

Who do you think hauled it before FedEx got the contract?

It was really spread out, Southwest used to haul it's share too.
Really hurt the airlines when 9-11 happened then losing this revenue too.


User currently offlinemayor From United States of America, joined Mar 2008, 10655 posts, RR: 14
Reply 16, posted (2 years 5 months 6 days 10 hours ago) and read 9110 times:

Quoting GEG2RAP (Reply 15):
Really hurt the airlines when 9-11 happened then losing this revenue too.

I think we were very lucky that the legacies managed to convince the feds to let us keep hauling air freight. It was a close run thing, because the feds were using there usual all or nothing approach and they almost shut our (DL) cargo down. In SLC, NW quit hauling cargo altogether and closed their freight office.



"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
User currently offlineFI642 From Monaco, joined Mar 2005, 1079 posts, RR: 2
Reply 17, posted (2 years 5 months 5 days 23 hours ago) and read 7906 times:

Quoting FX1816 (Reply 12):

Quoting mayor (Reply 11):
Quoting FI642 (Reply 9):No scheduled carrier could carry that volume.
Who do you think hauled it before FedEx got the contract?

Emery Worldwide but the airlines did carry their fair share too.

FX1816

USPS always had additional lift beside what scheduled carriers could handle. For a while they even had a fleet of leased 727's painted in the current USPS logo.



737MAX, Cool Planes for the Worlds Coolest Airline.
User currently offlineFX1816 From United States of America, joined Mar 2004, 1400 posts, RR: 3
Reply 18, posted (2 years 5 months 5 days 23 hours ago) and read 7873 times:

Quoting FI642 (Reply 17):
USPS always had additional lift beside what scheduled carriers could handle. For a while they even had a fleet of leased 727's painted in the current USPS logo.

Yes and those 727's were from Emery/Ryan International.

FX1816


User currently offlinebigbird From United States of America, joined Aug 2004, 190 posts, RR: 0
Reply 19, posted (2 years 5 months 5 days 23 hours ago) and read 7765 times:
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Back in the 1970s and 1980s when I worked the ramp at DL when passenger loads were heavy we used to 'no ride" mail regularlly. During the the the Christmas rush it was worse. There were times when we would have 200 to 300 conveyances ie. containers and carts full of backlog mail that could not be handled. Sometimes even more. It got so bad that they wound up having to send it out by truck. With the passenger loads even heavier today there is no way that DL could even handle their share if the contract was split between the carriers like it was then. Give it to FX or UPS.


bigbird from georgia
User currently offlinemayor From United States of America, joined Mar 2008, 10655 posts, RR: 14
Reply 20, posted (2 years 5 months 5 days 23 hours ago) and read 7695 times:

Quoting bigbird (Reply 19):
Give it to FX or UPS.

Oh, I've got no problem with that. More room for air freight then. You make more, per pound, on air freight than you ever would on mail.



"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
User currently offlinethreeifbyair From United States of America, joined Aug 2007, 709 posts, RR: 1
Reply 21, posted (2 years 5 months 5 days 22 hours ago) and read 7434 times:

Do passenger aircraft carry any USPS packages, or just letters? I thought USPS boxes above a certain size were restricted on passenger aircraft.

Quoting acidradio (Thread starter):
wonder if the USPS will do anything down the road to reduce costs and/or usage of these contracts. A while back an audit was performed and it was determined that the USPS was "overusing" its FedEx capacity, especially for classes of mail that didn't require the speed of (and the cost of) the FedEx service.

Indeed - I once recieved a Media Mail package that traveled IAH-SEA in two days. Prettty cool for me.

Quoting HPRamper (Reply 4):
It's about time FX pulled the dropboxes out of the Post Office locations, it was always a dumb idea and they have some of the lowest profits of the entire dropbox network. Each market only has X number of dropboxes and they need to be placed in the best spots with the most traffic.

I never understood the Post Office FX boxes either. For retail customers USPS Express Mail letters are considerably cheaper than even Standard Overnight letters (although Express Mail only has a 1-day delivery guarantee in certain corridors). Both letters are probably fllying in different cans on the same FX flight.


User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17824 posts, RR: 46
Reply 22, posted (2 years 5 months 5 days 22 hours ago) and read 7324 times:

Quoting mayor (Reply 6):
Remember that FedEx started doing this after 9/11 when the airlines severely cut back on the mail they carried and the contract was awarded to FedEx. The USPS has the infrastructure as long as the airlines can get the mail to them in a timely manner.

I've always heard it's a time consuming, laborious operation for next to no profit. I think most carriers have done away with it b/c it's not worth their time.



E pur si muove -Galileo
User currently offlineNWAESC From United States of America, joined Aug 2007, 3408 posts, RR: 9
Reply 23, posted (2 years 5 months 5 days 22 hours ago) and read 7291 times:

Quoting rwy04lga (Reply 1):
C'mon Delta, make a bid!

As someone that was originally hired to "throw mail," it'd be nice, but outside of maybe a small expansion of what we handle now, I don't see it happening- at least not like it used to be, anyway.

Quoting mayor (Reply 6):
They take it to an airline, to be shipped on that airline's small package service. Happens quite frequently, actually.

  

Quoting slcdeltarumd11 (Reply 8):
I cant see Delta being able to absorb this? Even if delta stopped accepting checked bags i doubt they could absorb this whole contract

No, but that's not how it used to be either... Most everyone carried at least some...

Quoting mayor (Reply 16):
In SLC, NW quit hauling cargo altogether and closed their freight office.

That was one of a handful that all closed at once. I want to say 8 or 9 of 'em? SLC, MSN, FSD are 3 that come to mind... Not sure what the other ones were (SNA?)... After that, they only accepted VIPS (our equivalent of Dash)...



"Nothing ever happens here, " I said. "I just wait."
User currently offlineKLASM83 From United States of America, joined Aug 2005, 633 posts, RR: 0
Reply 24, posted (2 years 5 months 5 days 21 hours ago) and read 7002 times:

I can see this as an opportunity for the Post Office to shed some of that excess contracting they do. Having it go from the Post Office to say, Matthson Flight Forwarders or Integrated Airline Services, to FedEx, back to IAS or some other company than to a contracted trucking company that takes it to the Post Office may be a bit much.

As one of the many middlemen, I can see the opportunity for it to be cut, but honestly, you get a pretty penny for throwing mail from a ULD into one of them there postal carts (a BMC or an APC), and I'd hate for that to dry up.



Don't you want to hang out and waste your life with us?
25 boeing773ER : I personally believe FX should retain the contract, their service is consistent (my mother works for the government and receives packages daily from h
26 HPRamper : They most likely were both on the same flight. It gets worse. FX Express has drop boxes at Fedex Office locations too. Since all the Fedex companies
27 KC10Guy : Keep in mind that Regional Jets are more popular now in the domestic market versus years ago when heavier and less frequent jets (DC-10, L1011, 747, e
28 mayor : Depending on where you are, cargo moves 24/7
29 tb727 : I wish it would go back to the way it used to be with a lot of smaller cargo carriers flying the mail to spread the flying around a little but I don'
30 B6A322 : Maybe someone here knows the answer to this, but doesn't UPS already carry some mail on behalf of the USPS? The service is called UPS Mail Innovations
31 threeifbyair : That is ridiculous, but it might explain why the completely bored Fedex Office people were so happy to see me when I would drop off packages for work
32 aztrainer : That is a good question as I have received items from Amazon when tracking it it has said that it was a USPS, but when it arrived it was by UPS or Fe
33 135mech : I agree, I paid about $50 to overnight some documents from GFK to Burlington, Vt and holy crap, it got there before 10:00 a.m. by using FX. No offens
34 rwy04lga : Part of my 1/400 collection
35 par13del : Well UPS has government oversight / control, once this contract is put out to bid it is anyones guess who will be the final winner, all FX can do is
36 HPRamper : Yes they do, FX has a similar program called Smartpost. From what I hear they are quite profitable. It's not the same as regular mail though, it's a
37 mayor : Basically, FedEx is providing the air transportation, just as the airlines used to do.
38 HPRamper : That's it. There is some bulk handling of express and first class mail but the vast majority of what FX carries is priority mail which is generally n
39 mayor : If that's the case, it seems like FX (being the handler and loader of the a/c) is to blame and not the USPS. In SLC, the ramp would load the express/
40 HPRamper : FX doesn't control what goes into the containers at the USPS contractor facilities. Don't get me wrong, plenty of first class mail does travel with t
41 mayor : No, but I think they were under the mistaken assumption that first class mail rode ahead of air freight, also.
42 Post contains images KLASM83 : Yeah, I thought it would be an $8 or $9 an hour job, and now with the raise it's $15.29/ hour. Not many hours, granted, but it's still kind of trippy
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