Sokes
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Is the FedEx Express business model outdated?

Mon Mar 16, 2020 3:07 am

In another topic "Airbus considers A330neo production rate cut"
viewtopic.php?p=22089885#p22089885
we have a discussion about an airbus marketing chart concerning competitors for a B797.

post 120:
lightsaber wrote:
Why is the chart missing 738 and A320? 70% of my flights out to six hours are those sizes.
Lightsaber


That made me wonder: Is the Fed Ex Express business model outdated?
Last edited by Sokes on Mon Mar 16, 2020 3:16 am, edited 1 time in total.
Why can't the world be a little bit more autistic?
 
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Starlionblue
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Re: Is the FedEx Express business model outdated?

Mon Mar 16, 2020 3:15 am

I would say just the opposite. Companies like Amazon keep pushing for faster delivery. Because apparently they can sell that to customers.
"There are no stupid questions, but there are a lot of inquisitive idiots." - John Ringo
 
Sokes
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Re: Is the FedEx Express business model outdated?

Mon Mar 16, 2020 3:18 am

Starlionblue wrote:
I would say just the opposite. Companies like Amazon keep pushing for faster delivery. Because apparently they can sell that to customers.


I edited the last sentence from "Is overnight delivery outdated" to "is Fed Ex Express business model" outdated.
Sorry. You are right of course. Overnight is not outdated.
Why can't the world be a little bit more autistic?
 
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Starlionblue
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Re: Is the FedEx Express business model outdated?

Mon Mar 16, 2020 3:22 am

Sokes wrote:
Starlionblue wrote:
I would say just the opposite. Companies like Amazon keep pushing for faster delivery. Because apparently they can sell that to customers.


I edited the last sentence from "Is overnight delivery outdated" to "is Fed Ex Express business model" outdated.
Sorry. You are right of course. Overnight is not outdated.


Well, I think FedEx supports the growth of fast, itemised freight. So IMHO as someone who is not much of an expert it seems they are in the right place.
"There are no stupid questions, but there are a lot of inquisitive idiots." - John Ringo
 
jetblueguy22
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Re: Is the FedEx Express business model outdated?

Mon Mar 16, 2020 5:28 am

I wouldn’t say FX’s model is outdated, it’s more in need of modernization.

Before I start my schpeel, I’m going to throw it out there I am biased. I work for brown, but I’d like to think I can at least look at it objectively.

FX needs to leverage their ground system to become more efficient. Just taking a market I know well BOS-NYC, their cost is substantially more than 5X. If you were to send a Next Day Air from Boston to Manhattan on UPS it would move on a trailer from Boston, go through a ground hub in CT, and be delivered in NYC.

A FX Priority Overnight (same service level as Next Day Air) gets loaded onto an airplane and flown to EWR where it is sorted and put out for delivery.

Now on the surface that seems pretty much the same, but the cost to move it on an airplane is 10x higher than a ground lane.

It’s the same with 2 Day, brown can cover a massive area over the ground network while FX flies more.

I understand how FedEx is set up as a company, but it’s always amazed me how they’ve been able to run ground and express as standalone businesses. Especially for commercial they’re sending two trucks to the same location, it just doesn’t make sense.

FedEx in the long run will be fine, but they certainly have some challenges in the short term beyond just the economy.
Look at sweatpants guy. This is a 90 million dollar aircraft, not a Tallahassee strip club
 
johns624
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Re: Is the FedEx Express business model outdated?

Mon Mar 16, 2020 12:44 pm

jetblueguy22 wrote:

I understand how FedEx is set up as a company, but it’s always amazed me how they’ve been able to run ground and express as standalone businesses. Especially for commercial they’re sending two trucks to the same location, it just doesn’t make sense.
For those who don't know, Fedex Ground started out as Roadway Package System (RPS), a subsidiary of Roadway Express (now YRC). They'd have to do an entire restructuring to combine Ground and Express since Express employees are direct while all of Ground are contractors. I think something may be in the works since they are painting all the trucks the same. Ground used to be Green/Purple but they are changing to Orange/Purple, just like express. Just like UPS bucked the trend to bust unions when they bought Overnite, a nonunion trucking company that became UPS Freight. They actually unionized it to make it compatible with the rest of their operations.
 
jetblueguy22
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Re: Is the FedEx Express business model outdated?

Mon Mar 16, 2020 4:17 pm

johns624 wrote:
jetblueguy22 wrote:

I understand how FedEx is set up as a company, but it’s always amazed me how they’ve been able to run ground and express as standalone businesses. Especially for commercial they’re sending two trucks to the same location, it just doesn’t make sense.
For those who don't know, Fedex Ground started out as Roadway Package System (RPS), a subsidiary of Roadway Express (now YRC). They'd have to do an entire restructuring to combine Ground and Express since Express employees are direct while all of Ground are contractors. I think something may be in the works since they are painting all the trucks the same. Ground used to be Green/Purple but they are changing to Orange/Purple, just like express. Just like UPS bucked the trend to bust unions when they bought Overnite, a nonunion trucking company that became UPS Freight. They actually unionized it to make it compatible with the rest of their operations.

Which is funny because there isn’t much overlap between freight and small package. I think it was more a function of keeping the peace with the substantially larger small package employees.

FedEx needs to combine their model somehow to make it all work well. They have the lower wage cost across the board (pilots may be the exception) when compared to 5X. One would think they could control the market with low cost shipping, but instead it’s a fairly even split
Look at sweatpants guy. This is a 90 million dollar aircraft, not a Tallahassee strip club
 
Okie
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Re: Is the FedEx Express business model outdated?

Mon Mar 16, 2020 6:47 pm

jetblueguy22 wrote:
FedEx needs to combine their model somehow to make it all work well. They have the lower wage cost across the board (pilots may be the exception) when compared to 5X. One would think they could control the market with low cost shipping, but instead it’s a fairly even split


The split being relatively equal is largely due to the pricing points given to their customers.
A company I used to work for switched to Fedex 2nd day for out going but had to maintain a certain volume to keep prices cheaper than Brown on 5 day.

My company now does not have enough outgoing package <50lb to justify a contract.

Interesting since I travel quite a bit that I see thousands of Fedex tractor trailers moving down the highways. Google says Fedex has 84,700 tractor/trailer as of 2019.
I figured a lot but not that many.

Okie
 
strfyr51
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Re: Is the FedEx Express business model outdated?

Tue Mar 17, 2020 4:26 am

Sokes wrote:
Starlionblue wrote:
I would say just the opposite. Companies like Amazon keep pushing for faster delivery. Because apparently they can sell that to customers.


I edited the last sentence from "Is overnight delivery outdated" to "is Fed Ex Express business model" outdated.
Sorry.x is regulated as an airlineernight is not outdated.


FEDEX is the only model of it's kind in the USA. UPS is a Trucking company that bought airplanes, So they're regulated that way. [b]Primarily AS a trucking company,
FEDEX was a freight airline that certified as an airline with Ground delivery trucks. There is a significant difference, So much so that UPS went to the DOT to have FDX recertified the way they're certified. But Amazon will be certified the way UPS is certified as well. At any point in Time? FEDEX? Could buy and fly a passenger fleet for charter or in scheduled service. They have the operating manuals to do it as they did with "Metro" when they dabbled in Sports team charters and Disney charters.
All the flight attendants had day jobs as FEDEX employees on leaves of absence to Metro. Sweet Deal.
 
Sokes
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Re: Is the FedEx Express business model outdated?

Tue Mar 17, 2020 8:00 am

I didn't knew all these differences between FedEx and competitors. Interesting.
But I didn't have trucks in mind when I posted the topic. I had in mind that planes get more and more payload for a given distance.
What were the planes available when FedEx started it's business? Why does the A330 sell so well in Asia? Why does A321 Neo sell so much better than A321?
In other words: Will evolution in plane design challenge FedEx's business model sooner or later?
Why can't the world be a little bit more autistic?
 
strfyr51
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Re: Is the FedEx Express business model outdated?

Tue Mar 17, 2020 3:14 pm

jetblueguy22 wrote:
I wouldn’t say FX’s model is outdated, it’s more in need of modernization.

Before I start my schpeel, I’m going to throw it out there I am biased. I work for brown, but I’d like to think I can at least look at it objectively.

FX needs to leverage their ground system to become more efficient. Just taking a market I know well BOS-NYC, their cost is substantially more than 5X. If you were to send a Next Day Air from Boston to Manhattan on UPS it would move on a trailer from Boston, go through a ground hub in CT, and be delivered in NYC.

A FX Priority Overnight (same service level as Next Day Air) gets loaded onto an airplane and flown to EWR where it is sorted and put out for delivery.

Now on the surface that seems pretty much the same, but the cost to move it on an airplane is 10x higher than a ground lane.

It’s the same with 2 Day, brown can cover a massive area over the ground network while FX flies more.

I understand how FedEx is set up as a company, but it’s always amazed me how they’ve been able to run ground and express as standalone businesses. Especially for commercial they’re sending two trucks to the same location, it just doesn’t make sense.

FedEx in the long run will be fine, but they certainly have some challenges in the short term beyond just the economy.

FDX's model is fly first ground later, UPS's model is Ground First Fly later. Amazon's model seems to be like the UPS model
 
Sokes
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Re: Is the FedEx Express business model outdated?

Thu Mar 19, 2020 2:51 am

China also is of a size that doesn't allow for overnight transport by truck. How do they handle air freight?
Why can't the world be a little bit more autistic?
 
Sokes
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Re: Is the FedEx Express business model outdated?

Thu Mar 19, 2020 2:52 am

China also is of a size that doesn't allow for overnight transport by truck. How do they handle air freight?
Why can't the world be a little bit more autistic?
 
Sokes
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Re: Is the FedEx Express business model outdated?

Thu Mar 19, 2020 2:53 am

China also is of a size that doesn't allow for overnight transport by truck. How do they handle air freight?
Why can't the world be a little bit more autistic?
 
Sokes
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Re: Is the FedEx Express business model outdated?

Fri Mar 27, 2020 5:49 pm

I think I found the mistake in my idea.
Example A321:
Total usable volume 206 cubic meter. of which lower deck 10 LD3-45 = 37 cubic meter or 18% of total usable volume.
https://www.elbeflugzeugwerke.com/filea ... _pager.pdf
https://en.wikipedia.org/wiki/Unit_load_device

The lower deck is interrupted by wing and it's also less long than main deck. The lower deck can't carry lots of cargo.
One could think if it may be worth to design a plane with more cargo capacity. I could think about another deck with 1,8 m height and 6 abreast on the upper deck.
But then the advantage of the overnight operation in separate planes is just too great.

I still wonder why A330s sell so well in China. Is it because of cargo or is one A330 cheaper to operate than two A321?

Of topic:
Why did FedEx Express order B767F instead of A330F? Do their B767 usually fly well below MTOW, but with more freight than a narrowbody can handle?
Why can't the world be a little bit more autistic?
 
jetblueguy22
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Re: Is the FedEx Express business model outdated?

Sat Mar 28, 2020 3:32 am

Sokes wrote:

Of topic:
Why did FedEx Express order B767F instead of A330F? Do their B767 usually fly well below MTOW, but with more freight than a narrowbody can handle?

Wingspan is the issue with the A330. You can't look at the integrators really like you look at any other airline. Almost their entire fleet is on the ground is on the ground during the sort. Yes there is a stagger to arrivals and departures, but there will be a point in the night where every airplane you intend to fly out at the end of the sort are on the ground. This means maximizing your space is key.

Look at it like a math equation. Let's say you have 100 A330s on the ground at that midpoint of your sort, which is the max you can fit. If you made those 767s you can fit 126 in the same area (Really it's less than that due to wingtip clearance requirements, but it was more to prove a point). The A330's wingspan is that much greater.

It's an even bigger problem at the destination. There are a lot of places that are set up for a 767 sized wingspan. In those places you may have 3 767s on the ground, but you could only have 2 A330s. And the A330 only carries about 1000 cubic feet more, so you're not making up the difference. Any gateway that has enough to send an A330 to will have multiple flights on the ground at once, so it's critical everything fits.

As for the widebody vs narrowbody debate. For domestic it is going to come down to cube size, very rarely weight. Air packages are usually lighter. Not many people are ordering refrigerators next day. There are plenty of occasions where a 757 weight wise could probably carry what is on the 767, but because we're talking about light boxes that take up a lot of space, the cube makes the 767 necessary.
Look at sweatpants guy. This is a 90 million dollar aircraft, not a Tallahassee strip club
 
strfyr51
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Re: Is the FedEx Express business model outdated?

Sat Mar 28, 2020 3:46 am

Sokes wrote:
Starlionblue wrote:
I would say just the opposite. Companies like Amazon keep pushing for faster delivery. Because apparently they can sell that to customers.


I edited the last sentence from "Is overnight delivery outdated" to "is Fed Ex Express business model" outdated.
Sorry. You are right of course. Overnight is not outdated.

FEDEX could easily and probably cheaply downgrade their express delivery to 2nd day air like UPS. Which is exactly what UPS would like them to do. FEDEX is an Airline that has Boxes as passengers. And they operate on an Airline Style. With everything But a passenger service component, Because their passengers are Boxes,and their mantra is the NEXT DAY! Unless it's FEDEX Ground.
I think this thread is by a UPS employee as UPS has been Lobbying for FEDEX to be recertified to their business model as a trucking company primarily. FEDEX started with airplanes and they need to progress in that model as well as passenger flight as well.
 
Sokes
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Re: Is the FedEx Express business model outdated?

Sat Mar 28, 2020 5:32 am

jetblueguy22 wrote:
... there will be a point in the night where every airplane you intend to fly out at the end of the sort are on the ground. This means maximizing your space is key.
...

That explains it.

strfyr51 wrote:
I think this thread is by a UPS employee as UPS has been Lobbying for FEDEX to be recertified to their business model as a trucking company primarily. FEDEX started with airplanes and they need to progress in that model as well as passenger flight as well.

How much time per month do you think the average politician spends on a.net?
Why can't the world be a little bit more autistic?
 
jetblueguy22
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Re: Is the FedEx Express business model outdated?

Sun Mar 29, 2020 10:49 pm

strfyr51 wrote:
Sokes wrote:
Starlionblue wrote:
I would say just the opposite. Companies like Amazon keep pushing for faster delivery. Because apparently they can sell that to customers.


I edited the last sentence from "Is overnight delivery outdated" to "is Fed Ex Express business model" outdated.
Sorry. You are right of course. Overnight is not outdated.

FEDEX could easily and probably cheaply downgrade their express delivery to 2nd day air like UPS. Which is exactly what UPS would like them to do. FEDEX is an Airline that has Boxes as passengers. And they operate on an Airline Style. With everything But a passenger service component, Because their passengers are Boxes,and their mantra is the NEXT DAY! Unless it's FEDEX Ground.
I think this thread is by a UPS employee as UPS has been Lobbying for FEDEX to be recertified to their business model as a trucking company primarily. FEDEX started with airplanes and they need to progress in that model as well as passenger flight as well.

What a load of nonsense this post is. UPS doesn't downgrade anything to 2 Day unless there is a significant reason. If it's Next Day it gets delivered next day.

Take your conspiracies somewhere else.
Look at sweatpants guy. This is a 90 million dollar aircraft, not a Tallahassee strip club
 
Sokes
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Re: Is the FedEx Express business model outdated?

Sat Apr 04, 2020 4:58 pm

jetblueguy22 wrote:
Sokes wrote:
Of topic:
Why did FedEx Express order B767F instead of A330F? Do their B767 usually fly well below MTOW, but with more freight than a narrowbody can handle?

Wingspan is the issue with the A330. ... there will be a point in the night where every airplane you intend to fly out at the end of the sort are on the ground.

Suppose Airbus would put a 52 m wing on the A330, could it do the job?
I speak of an added bonus to a MOM version of the A330, maybe -200 length.
Why can't the world be a little bit more autistic?
 
jetblueguy22
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Re: Is the FedEx Express business model outdated?

Tue Apr 07, 2020 4:05 am

Sokes wrote:
jetblueguy22 wrote:
Sokes wrote:
Of topic:
Why did FedEx Express order B767F instead of A330F? Do their B767 usually fly well below MTOW, but with more freight than a narrowbody can handle?

Wingspan is the issue with the A330. ... there will be a point in the night where every airplane you intend to fly out at the end of the sort are on the ground.

Suppose Airbus would put a 52 m wing on the A330, could it do the job?
I speak of an added bonus to a MOM version of the A330, maybe -200 length.

If they can make it economical I don’t see why not. My job involves the internal supply chain, my only concerns are if the plane fits, how long it takes to turn it, and how much it can carry. Although a pilot, I’m not well versed in whether a 52m wing would even be feasible flight wise.
Look at sweatpants guy. This is a 90 million dollar aircraft, not a Tallahassee strip club

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