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LAXintl
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FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 4:57 pm

After nearly a full year of global air freight weakness, FedEx bites the bullet and will trim capacity


Blamed weaker than expected express demand on trade friction and other macroeconomic influences FedEx announced plans to park or retire the equivalent of up to thirty-five MD-10-10F, A310-300F and MD11F aircraft by the end of its next fiscal year. FedEx previously planned on retiring its 18-unit MD-10-10F fleet by the end of its 2021 fiscal year.

During a call with investors to discuss FedEx’s 1QFY20 results, Fred Smith, chairman and founder, said the remainder of FedEx’s A310-300Fs would “likely” be retired by year end, “eliminating the fleet type.” In addition to the retirements, Smith also said the company was parking the equivalent of seven MD-11Fs this fiscal year, of which the company currently operates 57. In the event that a recession hits, further fleet cuts are possible.


FedEx to park or retire 35 freighters on express headwinds
https://cargofacts.com/allposts/logisti ... azon-ties/

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airfrnt
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 4:58 pm

By headwinds, i assume the loss of the Amazon contract being the biggest factor in this.
 
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UPlog
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 5:09 pm

I doubt Amazon matters much in the big scheme. Its more about macro indicators. The entire global freight market is in negative territory this year.

Image
 
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flyPIT
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 5:27 pm

LAXintl wrote:
In addition to the retirements, Smith also said the company was parking the equivalent of seven MD-11Fs this fiscal year, of which the company currently operates 57. In the event that a recession hits, further fleet cuts are possible.[/i]

So what exactly does parking "the equivalent" mean? I take that to mean that none of the MD-11s will actually be taken out of service, but rather they will all see additional down time, an opportunity to get caught up on inspections, paint jobs, etc.

In the mean time FX continues to add new B767s and B777s.


UPlog wrote:
I doubt Amazon matters much in the big scheme. Its more about macro indicators. The entire global freight market is in negative territory this year.

8% of FedEx's domestic volume was Amazon.
Last edited by flyPIT on Wed Sep 18, 2019 5:34 pm, edited 1 time in total.
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 5:31 pm

UPlog wrote:
I doubt Amazon matters much in the big scheme. Its more about macro indicators. The entire global freight market is in negative territory this year.

Image


Local giant here in NWA, JB Hunt said they did not see much of an increase in pre booked frieght in their intermodal ops. So, yeah, less crap is being bought.
 
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 5:34 pm

flyPIT wrote:
LAXintl wrote:
In addition to the retirements, Smith also said the company was parking the equivalent of seven MD-11Fs this fiscal year, of which the company currently operates 57. In the event that a recession hits, further fleet cuts are possible.[/i]

So what exactly does parking "the equivalent" mean? I take that to mean that none of the MD-11s will actually be taken out of service, but rather they will all see additional down time, an opportunity to get caught up on inspections, paint jobs, etc.

In the mean time. FX continues to add new B767s and B777s.


Likely changes in routing/flight times, more MX touch time, etc. Also could be one of those things where the routings are changed to offer less capacity in shorter markets and the fleet re-deployed elsewhere.
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 5:42 pm

flyPIT wrote:
So what exactly does parking "the equivalent" mean? I take that to mean that none of the MD-11s will actually be taken out of service, but rather they will all see additional down time, an opportunity to get caught up on inspections, paint jobs, etc.


That sounds about right - pulling the frames from active service for other tasks to reduce the MD-11's available freight tonne kilometers.


flyPIT wrote:
In the mean time. FX continues to add new B767s and B777s.


Capacity rationalization - the 777 and 767 are pretty much the most-efficient models that track to FedEx's wide body routes and capacity. So long term, those are the two wide body models they want to standardize on. And since Boeing wants orders for both models to keep their lines humming, they're willing to make deals and FedEx has the capital to purchase.
 
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 5:46 pm

LAXintl wrote:
Fred Smith, chairman and founder, said the remainder of FedEx’s A310-300Fs would “likely” be retired by year end, “eliminating the fleet type.”


Don't they only have 4 of them in service anymore anyway? And of those they're a mix of GE and Pratt birds.
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FLALEFTY
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 6:26 pm

Given the the loss of Amazon business and the US tariff wars with China (and soon, the EU), it is not a surprise that FedEx is adjusting their fleet. They had pegged the retirements of their last 3 active A310's by the end of this year and the remaining 29 of the MD-10 fleet by the end of 2021. They have also been in the process of drawing down their fleets of A306RF's and MD11F's at a slow, steady rate. Looks like they will move those retirements up a bit sooner?

I imagine we will have UPS Airlines speeding up fleet retirements coming soon, too?
 
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 7:11 pm

FLALEFTY wrote:
I imagine we will have UPS Airlines speeding up fleet retirements coming soon, too?


Its possible, but from what I've heard UPS needs to grow their fleet to be in compliance with their union agreement. I forget the exact details, but they will/have taken delivery of 767Fs from CAM.
 
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 7:16 pm

FLALEFTY wrote:
Given the the loss of Amazon business and the US tariff wars with China (and soon, the EU), it is not a surprise that FedEx is adjusting their fleet. They had pegged the retirements of their last 3 active A310's by the end of this year and the remaining 29 of the MD-10 fleet by the end of 2021. They have also been in the process of drawing down their fleets of A306RF's and MD11F's at a slow, steady rate. Looks like they will move those retirements up a bit sooner?

I imagine we will have UPS Airlines speeding up fleet retirements coming soon, too?


With this announcement the pilot hiring window for UPS will likely be closed for the near future. Age 65 rules will provide for the reduction in force that the company will apply to the fleet reduction.

Frontier 14
 
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 7:19 pm

Where do they fly their remaining A310s?
 
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 7:20 pm

airfrnt wrote:
By headwinds, i assume the loss of the Amazon contract being the biggest factor in this.


They voluntarily chose not to renew their contract with Amazon, likely because they weren't making any profit off of it.

This seems like a smart move on FedEx's part. If we hit this recession that everyone is predicting, reducing capacity beforehand will be seen as a good move.
 
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 7:20 pm

FLALEFTY wrote:
Given the the loss of Amazon business and the US tariff wars with China (and soon, the EU), it is not a surprise that FedEx is adjusting their fleet. They had pegged the retirements of their last 3 active A310's by the end of this year and the remaining 29 of the MD-10 fleet by the end of 2021. They have also been in the process of drawing down their fleets of A306RF's and MD11F's at a slow, steady rate. Looks like they will move those retirements up a bit sooner?

I imagine we will have UPS Airlines speeding up fleet retirements coming soon, too?


No they will not. They are chronically SHORT of lift.
 
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 7:21 pm

At face value, it appears the trade wars are starting to take toll.

If we use the January 2018 as the official start date of the trade war, it goes down hill quickly from there.
 
CoThG
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 7:24 pm

Frontier14 wrote:
FLALEFTY wrote:
Given the the loss of Amazon business and the US tariff wars with China (and soon, the EU), it is not a surprise that FedEx is adjusting their fleet. They had pegged the retirements of their last 3 active A310's by the end of this year and the remaining 29 of the MD-10 fleet by the end of 2021. They have also been in the process of drawing down their fleets of A306RF's and MD11F's at a slow, steady rate. Looks like they will move those retirements up a bit sooner?

I imagine we will have UPS Airlines speeding up fleet retirements coming soon, too?


With this announcement the pilot hiring window for UPS will likely be closed for the near future. Age 65 rules will provide for the reduction in force that the company will apply to the fleet reduction.

Frontier 14


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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 7:30 pm

Parking (and not necessarily scrapping) 35 MD-10-10F, A310-300F or MD11F aircraft should be seen as pretty darn sensible, no?

They're still taking 76F in significant numbers, and will still be running 50 MD11F which is a lot more than anyone else.
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 9:07 pm

Love catching the MD10s still. This is the flexibility FX has as demand fluctuates, park those paid off planes.
 
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 9:12 pm

PhilMcCrackin wrote:
airfrnt wrote:
By headwinds, i assume the loss of the Amazon contract being the biggest factor in this.


They voluntarily chose not to renew their contract with Amazon, likely because they weren't making any profit off of it.


For whatever reason, they hadn't been carrying much for Amazon even before canceling the contract -- Amazon was less than 1.3% of their revenue in 2018. They are carrying ~65% of Walmart's packages, which is probably related to both the low percentage and the contract cancellation.
 
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Re: FedEx to park 35 planes on weaker demand

Wed Sep 18, 2019 11:54 pm

dtremit wrote:
For whatever reason, they hadn't been carrying much for Amazon even before canceling the contract -- Amazon was less than 1.3% of their revenue in 2018. They are carrying ~65% of Walmart's packages, which is probably related to both the low percentage and the contract cancellation.

flyPIT wrote:
8% of FedEx's domestic volume was Amazon.

"An estimated 80% of FedEx’s business with Amazon is tied to Express, totaling some $716 million, according to UBS. The firm estimates 7.7% of FedEx Express packages in the U.S. come from Amazon and 5.4% of FedEx Express' domestic revenue comes from business with Amazon."
https://www.commercialappeal.com/story/money/industries/logistics/2019/06/12/fedex-ups-amazon-shipping-contract/1421374001/

Dropping Amazon is a huge decrease in domestic volume for FX.
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 12:03 am

"We believe Amazon was one of FedEx’s least profitable customers on a margin basis, representing less than 1.3% of FedEx’s $69.7 billion of FY 19 revenue, the majority of it for FedEx Express rather than FedEx Ground," Jonathan Root, Moody’s senior vice president and lead FedEx analyst, said in a statement emailed to Supply Chain Dive.

and

Amazon represented 1.3% of FedEx's total revenue. Morgan Stanley suggested the break will have a "relatively limited" near-term financial impact on FedEx. Amazon's size and pricing power mean FedEx could likely have been getting "below-company average margins" from its contact with the e-retailer.

https://www.supplychaindive.com/news/fe ... PS/560648/
 
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 12:18 am

Not sure what your point is... 8% domestic volume loss is 8% domestic volume loss. I'm not debating if FX made the right choice or not wrt to Amazon. But that kind of volume loss explains the decrease in a commensurate amount of capacity.

I really don't think this assumed global slowing in air freight is the bigger factor for FX, considering UPS, DHL, Amazon, SF Express, etc. can't get enough capacity
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 12:29 am

Point is that removal of Amazon a low yield customer is hardly a bump in the road, instead, the real speed bump is global macro issues and resultant market softness.
 
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 12:41 am

Spacepope wrote:
Don't they only have 4 of them in service anymore anyway? And of those they're a mix of GE and Pratt birds.


Per todays call they said they had 10 A310s

UPlog wrote:
Point is that removal of Amazon a low yield customer is hardly a bump in the road, instead, the real speed bump is global macro issues and resultant market softness.

:checkmark:

On todays earning call the company specifically called out global trade slowness and drops in manufacturing in Europe, Asia and U.S. which has slowed shipping demand along with forecast GDP growth in year ahead. For the first time since 2009 trade volumes declined.

For Amazon specifically, they said they would see a quarterly hit, but have other business in the pipeline to replace the Amazon traffic which can be served at significant less cost versus Amazon which had "unique requirements."
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flyPIT
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 12:46 am

UPlog wrote:
Point is that removal of Amazon a low yield customer is hardly a bump in the road, instead, the real speed bump is global macro issues and resultant market softness.

No.. the point is the removal of Amazon has a far larger impact on required aircraft capacity than it does on revenue (which no one is debating btw).
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 12:56 am

Most of my Amazon stuff came by FedEx Ground.
 
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 1:06 am

[list=][/list]Amazing that just today some economists stated the Local Memphis economy is the best it's been in 4 decades and Memphis has landed the offshoot of United Health Care to be HQ'd downtown. Fed EX us parking inefficient birds when not needed, imagine that. Talk is UPS is looking at a big expansion at MEM, and speaking of Amazon, another massive warehouse is planned, this time next to Nike's massive DC in North Memphis.

https://www.commercialappeal.com/story/ ... 151306001/
 
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 1:11 am

mikejepp wrote:
Where do they fly their remaining A310s?

Some routings per FlightAware:

https://flightaware.com/live/flight/N808FD
https://flightaware.com/live/flight/N809FD
https://flightaware.com/live/flight/N811FD

These are the only three active A310s in FedEx's fleet according to Planespotters.net
 
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 1:39 am

Runway28L wrote:
mikejepp wrote:
Where do they fly their remaining A310s?

Some routings per FlightAware:

https://flightaware.com/live/flight/N808FD
https://flightaware.com/live/flight/N809FD
https://flightaware.com/live/flight/N811FD

These are the only three active A310s in FedEx's fleet according to Planespotters.net

They must be still carrying 7 parked ones on the books.
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 1:47 am

The A310's are too few to really maintain as a sub-fleet at economical levels.
The MD-10/11's are fuel hogs and likely mx hogs vs. the 767's which are close to the same capacity and more fuel efficient.
With the 777's vs. the MD's there could be more taken with less frequency, with considerable savings.
Some 'creative accounting', accelerating depreciation, the reality of the China trade debacle and a likely recession in the next year add to the soundness of their decision.
 
ThePointblank
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 3:12 am

Gee, this probably explains why Fedex is jacking up their rates on average of 5-6% starting January 2020...
 
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 3:43 am

One-ish percent of their total global revenue. Now they admit that is also eight percent of their total domestic traffic volume on Express. From one customer. That was still a lot. When I said it blew a hole in their revenue and volume, to the point that they were discounting the slowest air price to match the ground price for big shippers, that could mean only one thing: that they were trying to cannibalize the Ground to fill the big hole in Air so the decision didn't look as bad. People mocked me. (Surprise. It's A.net. I'm used to it.) So today they admit 8 percent of Air. It is what it is.
 
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 4:12 am

Why long term doom and gloom if buying all the new 767/777.
A lot of 777 stop in anchorage from Asia often. Anchorage used to be most all MD 11.

Recently fedex is expanding anchorage hub. North America gateway to Asia for FedEx.

“On Monday, the airport (ANC) announced FedEx wants to lease a little more than 1 million square feet to the south of its current warehouse.That's where the delivery company wants to build a 98,000-square-foot operations center. The building would house administrative offices and allow for more parking of its jets and FedEx trucks.”

https://www.ktva.com/story/40908339/fed ... nal-aiport
 
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 10:15 am

Only 3 A310F operational right now. The rest are in the desert.
wjcandee wrote:
One-ish percent of their total global revenue. Now they admit that is also eight percent of their total domestic traffic volume on Express. From one customer. That was still a lot. When I said it blew a hole in their revenue and volume, to the point that they were discounting the slowest air price to match the ground price for big shippers, that could mean only one thing: that they were trying to cannibalize the Ground to fill the big hole in Air so the decision didn't look as bad. People mocked me. (Surprise. It's A.net. I'm used to it.) So today they admit 8 percent of Air. It is what it is.

This is also measured by package count including express documents and since thousands of those can fit in one container, extrapolating this as a frontline employee I can tell you that realistically you can double that number in terms of box packages. 8 percent of overall packages, certainly over 15% of non-document, box packages.

Too many people in here are reading way too much into the corporate wordiness, which doesn't usually reflect real life. Nor does revenue have ANY bearing on volume. I deal with this subject matter directly on a daily basis and wjcandee can verify that I've been on top of this for quite some time.
 
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 10:42 am

I watched an interview with the FedEx boss a few years back. He was asked about Amazon and their freighter expansion.

He didn't seem worried at all. It seemed extremely naive at the time.

Now Amazon is 1.3% of FedEx revenue? And all low-yield. This could have been different.
 
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 11:23 am

Revelation wrote:
Parking (and not necessarily scrapping) 35 MD-10-10F, A310-300F or MD11F aircraft should be seen as pretty darn sensible, no?


And world wide aviation safety will improve by 273% as a result of this parking.
 
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 12:27 pm

So now this makes more sense. Parking 18 MD-10-10 (and thereby eliminating that engine type, where FX was the only user of the original CF-6-6), parking the 3 oddball A310 and basically saying 7 in the desert are never coming back (mostly an accounting thing) and then giving 7 MD-11s a vacation.

The old -10s are being directly replaced by the 763s with 50% fewer engines. Number of frames will dip slightly in the short term though the fleet count is in a peak with all the 763 and 772 deliveries.

On the whole, it looks like rationalization of the fleet and retirement of the least efficient cargo haulers. I'm not seeing the big deal besides the headline grabbing overall number, especially when at least 20% of the announced cuts are already parked at VCV.
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Re: FedEx to park 35 planes on weaker demand

Thu Sep 19, 2019 2:20 pm

Spacepope wrote:
So now this makes more sense. Parking 18 MD-10-10 (and thereby eliminating that engine type, where FX was the only user of the original CF-6-6), parking the 3 oddball A310 and basically saying 7 in the desert are never coming back (mostly an accounting thing) and then giving 7 MD-11s a vacation.

The old -10s are being directly replaced by the 763s with 50% fewer engines. Number of frames will dip slightly in the short term though the fleet count is in a peak with all the 763 and 772 deliveries.

On the whole, it looks like rationalization of the fleet and retirement of the least efficient cargo haulers. I'm not seeing the big deal besides the headline grabbing overall number, especially when at least 20% of the announced cuts are already parked at VCV.


Couldn't agree more. Not "fake news" but an article and information that aren't as "flashy" when you really break down what is occurring. Fleet rationalization, older jets being retired and really a 1 for 1 replacement ongoing with newer jets (767/777).

Not a bad deal to park the older/oddball fleets and standardize on 767 and 777 operations! From a viewer perspective though, it is always nice to see the MD-10s or "dinosaurs" from a bygone era still operating.
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Re: FedEx to park 35 planes on weaker demand

Fri Sep 20, 2019 12:32 am

I read something somewhere about the TNT acquisition not going well?
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Re: FedEx to park 35 planes on weaker demand

Fri Sep 20, 2019 1:41 am

Spacepope wrote:
So now this makes more sense. Parking 18 MD-10-10 (and thereby eliminating that engine type, where FX was the only user of the original CF-6-6), parking the 3 oddball A310 and basically saying 7 in the desert are never coming back (mostly an accounting thing) and then giving 7 MD-11s a vacation.

The old -10s are being directly replaced by the 763s with 50% fewer engines. Number of frames will dip slightly in the short term though the fleet count is in a peak with all the 763 and 772 deliveries.

On the whole, it looks like rationalization of the fleet and retirement of the least efficient cargo haulers. I'm not seeing the big deal besides the headline grabbing overall number, especially when at least 20% of the announced cuts are already parked at VCV.

Yes, this is depreciating inefficient assets. I didn't realize that FedEx was the last CF-6-6 operator, there are difficult to find parts! If 20% of this fleet was already parked, we see rationalization:
1. A high volume, low yield client is disposed of. Bad optics, but Amazon is brutal with costs. That sounds like cost/revenue rationalization.
2. Oil has crept up ,(I ignore the recent blip). That hurts the economics of used aircraft.


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jagraham
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Re: FedEx to park 35 planes on weaker demand

Fri Sep 20, 2019 1:54 am

flyPIT wrote:
dtremit wrote:
For whatever reason, they hadn't been carrying much for Amazon even before canceling the contract -- Amazon was less than 1.3% of their revenue in 2018. They are carrying ~65% of Walmart's packages, which is probably related to both the low percentage and the contract cancellation.

flyPIT wrote:
8% of FedEx's domestic volume was Amazon.

"An estimated 80% of FedEx’s business with Amazon is tied to Express, totaling some $716 million, according to UBS. The firm estimates 7.7% of FedEx Express packages in the U.S. come from Amazon and 5.4% of FedEx Express' domestic revenue comes from business with Amazon."
https://www.commercialappeal.com/story/money/industries/logistics/2019/06/12/fedex-ups-amazon-shipping-contract/1421374001/

Dropping Amazon is a huge decrease in domestic volume for FX.



But, if Amazon accounted for about 7.7% of package volume, and only 5.4% of package revenue, that says that Amazon pricing is more than 15% less than average. And FX has a lot of corporate accounts with volume discounted shipping.
 
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Re: FedEx to park 35 planes on weaker demand

Fri Sep 20, 2019 2:21 am

airfrnt wrote:
By headwinds, i assume the loss of the Amazon contract being the biggest factor in this.

My thought, as well.
 
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Re: FedEx to park 35 planes on weaker demand

Fri Sep 20, 2019 2:33 am

HPRamper wrote:
Only 3 A310F operational right now. The rest are in the desert.
wjcandee wrote:
One-ish percent of their total global revenue. Now they admit that is also eight percent of their total domestic traffic volume on Express. From one customer. That was still a lot. When I said it blew a hole in their revenue and volume, to the point that they were discounting the slowest air price to match the ground price for big shippers, that could mean only one thing: that they were trying to cannibalize the Ground to fill the big hole in Air so the decision didn't look as bad. People mocked me. (Surprise. It's A.net. I'm used to it.) So today they admit 8 percent of Air. It is what it is.

This is also measured by package count including express documents and since thousands of those can fit in one container, extrapolating this as a frontline employee I can tell you that realistically you can double that number in terms of box packages. 8 percent of overall packages, certainly over 15% of non-document, box packages.

Too many people in here are reading way too much into the corporate wordiness, which doesn't usually reflect real life. Nor does revenue have ANY bearing on volume. I deal with this subject matter directly on a daily basis and wjcandee can verify that I've been on top of this for quite some time.

I imagine this means substantial savings during peak, as well.
No ad hoc adds, etc, while using the available volume for higher margin traffic.
Ad hocks in the US have become very expensive due to the pilot situation.
 
strfyr51
Posts: 3935
Joined: Tue Apr 10, 2012 5:04 pm

Re: FedEx to park 35 planes on weaker demand

Fri Sep 20, 2019 3:15 am

Revelation wrote:
Parking (and not necessarily scrapping) 35 MD-10-10F, A310-300F or MD11F aircraft should be seen as pretty darn sensible, no?

They're still taking 76F in significant numbers, and will still be running 50 MD11F which is a lot more than anyone else.

They're parking the oldest or less fuel efficient airplanes Since with the refinery fires in Saudi Arabia there might well be an Oil shortage in the world for a while. And? It Will affect fuel Prices!
 
HPRamper
Posts: 4952
Joined: Sat May 14, 2005 4:22 am

Re: FedEx to park 35 planes on weaker demand

Fri Sep 20, 2019 9:04 am

FlyingElvii wrote:
HPRamper wrote:
Only 3 A310F operational right now. The rest are in the desert.
wjcandee wrote:
One-ish percent of their total global revenue. Now they admit that is also eight percent of their total domestic traffic volume on Express. From one customer. That was still a lot. When I said it blew a hole in their revenue and volume, to the point that they were discounting the slowest air price to match the ground price for big shippers, that could mean only one thing: that they were trying to cannibalize the Ground to fill the big hole in Air so the decision didn't look as bad. People mocked me. (Surprise. It's A.net. I'm used to it.) So today they admit 8 percent of Air. It is what it is.

This is also measured by package count including express documents and since thousands of those can fit in one container, extrapolating this as a frontline employee I can tell you that realistically you can double that number in terms of box packages. 8 percent of overall packages, certainly over 15% of non-document, box packages.

Too many people in here are reading way too much into the corporate wordiness, which doesn't usually reflect real life. Nor does revenue have ANY bearing on volume. I deal with this subject matter directly on a daily basis and wjcandee can verify that I've been on top of this for quite some time.

I imagine this means substantial savings during peak, as well.
No ad hoc adds, etc, while using the available volume for higher margin traffic.
Ad hocks in the US have become very expensive due to the pilot situation.

FX is still currently slated to utilize the usual Atlas 747 lift for peak. Whether this will change things, I don't know yet.
mikejepp wrote:
Where do they fly their remaining A310s?

BUF, SAT, LRD, YEG are the only outstations left who see it, and the MEM and AFW hubs. Currently the only routes in the system are AFW-SAT-LRD-SAT-AFW and then MEM-YEG and MEM-BUF out-and-backs.
 
blacksoviet
Posts: 1240
Joined: Thu Apr 21, 2016 10:50 am

Re: FedEx to park 35 planes on weaker demand

Sat Sep 21, 2019 1:12 am

Revelation wrote:
Parking (and not necessarily scrapping) 35 MD-10-10F, A310-300F or MD11F aircraft should be seen as pretty darn sensible, no?

They're still taking 76F in significant numbers, and will still be running 50 MD11F which is a lot more than anyone else.

Why does FedEx prefer the MD-10-30 over the MD-10-10? Is the MD-10-30 cheaper to maintain?
 
UPS Pilot
Posts: 878
Joined: Tue May 18, 1999 1:17 pm

Re: FedEx to park 35 planes on weaker demand

Sat Sep 21, 2019 1:36 am

UPS will have a 747 domicile in SDF. MD11 Domicile going away in ANC. More MD flying domestic and more 747 domestic. The MD11 rumored to be gone in 5 years. Hearing a new aircraft order announcement to replace MD11 lift. It will probably be more 74/76’s

Fed Ex has a multi year contract with Atlas for peak lift so I don’t see that changing this year.

FDX will be just fine. I think they have felt the tarriffs with China more than UPS has. The TNT deal turned into a disaster for them as well. My guess is we will see a shift in FDX business model. They have been expanding ground hubs very quick the last few years. FDX, I expect to truck more like UPS does.

http://www.investors.ups.com/static-fil ... 8af1e0cd51
 
jetblueguy22
Posts: 3238
Joined: Thu Nov 29, 2007 12:26 am

Re: FedEx to park 35 planes on weaker demand

Sat Sep 21, 2019 3:12 am

UPS Pilot wrote:
UPS will have a 747 domicile in SDF. MD11 Domicile going away in ANC. More MD flying domestic and more 747 domestic. The MD11 rumored to be gone in 5 years. Hearing a new aircraft order announcement to replace MD11 lift. It will probably be more 74/76’s

Fed Ex has a multi year contract with Atlas for peak lift so I don’t see that changing this year.

FDX will be just fine. I think they have felt the tarriffs with China more than UPS has. The TNT deal turned into a disaster for them as well. My guess is we will see a shift in FDX business model. They have been expanding ground hubs very quick the last few years. FDX, I expect to truck more like UPS does.

http://www.investors.ups.com/static-fil ... 8af1e0cd51

Well that explains network planning moving more MD flying domestic, we're going to start seeing it soon.

It's pretty amazing to see how the market is changing, even within the same segment. 5X's planes have been packed to the gills. My gateway is seeing more planes than we ever have, and peak is looking no different. I couldn't imagine what it would be like if Amazon didn't deliver as much of their own stuff as they do.

Having the ability to move so much over the ground is a key benefit that UPS has over FX. They will be fine, but finding a way to integrate their network better will be key to their long term success. It's always amazed me that they run them essentially as standalone businesses. I guess the cost advantage of the ground model is really that significant. Meanwhile we put as much air into the ground network as possible.
Look at sweatpants guy. This is a 90 million dollar aircraft, not a Tallahassee strip club
 
HPRamper
Posts: 4952
Joined: Sat May 14, 2005 4:22 am

Re: FedEx to park 35 planes on weaker demand

Sat Sep 21, 2019 3:05 pm

blacksoviet wrote:
Revelation wrote:
Parking (and not necessarily scrapping) 35 MD-10-10F, A310-300F or MD11F aircraft should be seen as pretty darn sensible, no?

They're still taking 76F in significant numbers, and will still be running 50 MD11F which is a lot more than anyone else.

Why does FedEx prefer the MD-10-30 over the MD-10-10? Is the MD-10-30 cheaper to maintain?

FedEx operates both. The difference operationally is that the 10-10 is much less capable in terms of payload.
 
musman9853
Posts: 831
Joined: Mon May 14, 2018 12:30 pm

Re: FedEx to park 35 planes on weaker demand

Sat Sep 21, 2019 3:16 pm

strfyr51 wrote:
Revelation wrote:
Parking (and not necessarily scrapping) 35 MD-10-10F, A310-300F or MD11F aircraft should be seen as pretty darn sensible, no?

They're still taking 76F in significant numbers, and will still be running 50 MD11F which is a lot more than anyone else.

They're parking the oldest or less fuel efficient airplanes Since with the refinery fires in Saudi Arabia there might well be an Oil shortage in the world for a while. And? It Will affect fuel Prices!


refinery fires are a polite way to put it lol. but it likely wont' have as big of an impact as previously feared, the Kingdom is gonna tap into its strategic reserve to make up the shortfall
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