they let out a huge stink bomb today..stock down almost 10%..analysts are crying in their beer..They blew it.they shouldve been more aggressive with the new reductions and I wouldnt be surprised if heads will roll ..look for express saver to go away soon if that is the plan..they cant let the investors down two qtrs in a row.way to go fred ..
apathy in meeting
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thedownhillEXPRESS
Well-Known Member
Yep, an increase in revenue of 4% to 11 billion for the quarter just isn't enough for the vampires.
Yes, if they are looking for something permanent, then FedEx isn't worth it. DRA will allow for high turnover while keeping productivity reasonable. People will take the job because it works for what they need right now, not for a permanent position, unless they are fine with low pay and minimal hours.
Maui
Well-Known Member
Amazon already has same day in many of the areas they have DCs. You have to be a prime member and it's $8.99 for delivery same day by like 2100. You have to order pretty early like 0900-1100 depending on the area. Amazon uses their own delivery trucks. FedEx has none of that market and would not get any with the current business model.
No one is saying Express is going away, just that there will be less volume for Express so eventually they'll be paying people free money if they keep the guarantee. I'm not saying Express Saver is going away either, just saying that shippers will be made aware of the cost savings of Ground and more freight will go Ground, often at the expense of Express. As for the cost of hiring and training, look at the difference in pay between a newhire and topped out couriers. They'll make back the cost in a year or so. If you are counting on things remaining the same you may be very disappointed. They aren't going to almost double profits by 2016 without major structural changes. And be skeptical of anything said by management. They need you to remain in place until they don't need you. Tell me why I was told over 14 years ago that I'd top out in 7 to 8 years, which didn't happen, and according to some coworkers with low seniority they were told the same? They'll say anything to keep you at it.
MAKAVELI
Well-Known Member
No, a high turn over is not what they want. They would have nothing to gain by having a revolving door for its employees.They would have high costs in hiring and training, loss in revenue due to lower service levels and possible loss of business. It does not look good to customers and investors to have no longevity and loyalty in its workforce.
The shocking news I read in the report was the average revenue per package is just $1.77 for smart post. I know I can't get rates anywhere in that vicinity, which means to average out someone has to be paying a lot less that $1.77. Why would Fedex even want it? I'm not sure I can take that number seriously.
OK, you tell me how they are going to increase profits to $3.8 Billion by 2016? Digital Roads, assuming they can get it right, will minimize service level issues. As long as people stick around for at least a couple of years they'll easily make back the hiring and training costs with lower pay. As for loyalty, people see 4X10 cover drivers and swings in place of their regular courier all the time, not to mention many couriers switch rts every so often. I don't think FedEx is concerned that companies won't have a pet courier anymore. It's not about having career couriers anymore, it's about producing the most profits.
MAKAVELI
Well-Known Member
A lot of these large accounts have to have trust in the service they are paying for. That's why Apple has put the heat on FedEx. I'm not talking about swings and 4x10. That's an expectation that the customer is not going to see the same courier 24/7. But the change in philosophy on having a revolving door and not effecting business in a negative way is just ignorant. DRA is not the magic pill that's going to solve every problem and eliminate the need for hard working dedicated employees. The express system is and always will be dependant on its employees to make it work. That is until they come up with a robot that can replace us. Just Google high turnover and see what comes up if you don't believe me.
I'm just trying to get across what it appears they are doing. I don't think they put anything above making a buck. Just look at the simplification of the job. We used to have to do quite a bit with internationals, for example. About all I do anymore is scan a barcode, look up the country code on power pad, look up city code or plug in zip code, and state whether I pulled commercial invoice or not. Rarely see an international on old airbill anymore. There's very little we do now that can't be learned quickly by a newhire. Simplification is key in finding couriers capable of doing job. And all couriers were newhires at one point. There isn't a magic courier gene that only some have. Willingness to work, ability to do some physical work, have a clean drug screen, able to read and write qualifies most.
Search FedEx on Google News and read Forbes article. Appears we're about to suffer for the downturn.
MrFedEx
Engorged Member
Good. This company needs to reap what it sows for a change. Pretty soon, Wall Street is going to get wise to what's going on at Express and realize that Uncle Fred sold them a Yugo. Not only will they not be able to save the $1.7B, revenues are going into the toilet as well. This is what you get when you replace quality employees with inferior substitutes and then piss-off those who are still there. The stock will sink to it's proper level, and investors will look at FedEx "promises" with a much more critical eye. In other words, the sheet is starting to hit the fan.
Couldn't happen to a nicer bunch.
What I meant, unfortunately, is we employees are about to suffer.
Ricochet1a
Well-Known Member
And you believed him? District and Senior Managers have been told to flat out LIE, if they are asked a question about impending operational changes which may, "Create undue alarm and distress among wage employees". The plan exists, it is just waiting for Express to put it in the line up of operational changes.
Now I know he was lying to you. Express Saver CANNOT compete with Ground product. The only reason Express still has it is that shippers on the two coasts want the option of 3rd day delivery that Ground cannot possibly meet. That is the only reason it still exists. Express doesn't want to 'surrender' those customers to UPS by terminating Express Saver, but it also doesn't want to carry that volume given the revenue that 3rd day generates.
Here's a 'clip' from Dow Jones Newswire about the news today (BC doesn't want full article inclusions)
FedEx, which pioneered overnight air delivery in the early 1970s, acknowledged it has been carrying too many low-margin, deferred packages on its expensive-to-operate priority air network. It said Wednesday (that's today, March 20, 2013) that it plans to ground some of its express flights and shift more nonpriority volume to lower-cost parts of its delivery network, such as FedEx Trade Networks, its unit that arranges third-party transportation for shippers, including using oceangoing freighters.
They didn't mention Ground here (because FedEx doesn't want to let the cat completely out of the bag), but the decision has been made - shift more nonpriority volume to lower-cost parts of its delivery network....
The writing has been on the wall for a long time now. The Express Couriers need to snap out of their seemingly never ending state of denial and face what Express is being molded into.
I think it was closer to 7% drop, closing at just under $100/share.
Oh how wrong you are.
It costs Express about $4000 to currently recruit, perform background checks and train a new Courier. It takes about 3 months for that Courier to get to a point where their productivity is acceptable, if not comparable to 'fully seasoned' Couriers. If Express had to undergo a 'rush' recruitment of Couriers to replace striking Couriers, the cost would increase dramatically.
If that new Courier is making $5/hr less than the Courier they replaced, how long does it take for Express to hit the "break even point'? Let's assume that they are part-time to boot (fewer hours worked, so longer to hit that break even point).
It would take 800 hours to recoup the expense of recruitment, background checks and training. For the 3 months it takes this Courier to come up to an acceptable level of productivity (I'm going to throw out 75% of 'goal' as being acceptable - getting to the 100% point will take another couple of months - I'm being REAL generous in allowing this Courier to come up to speed SLOWLY), the 'loss' to Express in terms of productivity would be equivalent of about 5 hours a week for that 12 week period of time.
HOWEVER...
Since this Courier is being paid $5/hr LESS than the Courier they replaced, the actual 'cost' to Express for this lost productivity, is ZERO. If one hires a replacement that is only 75% as productive as their predecessor, BUT they are also paid only 75% as much - there is NO LOSS to the company 'working' the lower cost worker. But then when this 'replacement' Courier does get their productivity up to that of a 'seasoned Courier', the savings to Express in terms of labor costs are pure profit margin.
Look at what a low progression Courier now makes compare to a topped out Courier - and they are both held to the same standard of productivity. Express is making serious 'bank' on that low progression Courier.
So.... this leaves the only cost to recover as being the initial training expense - which is recouped with 800 hours of work - or about 10 months time for a part-time employee (it is half that time for a full-time employee).
Express just LOVES high turnover for Couriers. Internally, Express management has stated that they see the future of the Courier job position as "Something that someone holds for about 5 years then either progresses in the company or leaves".
High costs in hiring and training - DISPROVED
Loss in revenue.... I think you have an inflated sense of just how important you are as an individual to your employer.
Customer and Investors caring about 'longevity and loyalty"..... Investors DON'T CARE about wage employee loyalty - all they care about is PROFIT. If employees aren't 'loyal', the issue falls on company management to get productivity out of them regardless of what the employee may be thinking in their head.
The old days of Federal Express are long past. The old timers here know what that company was like and lament its passing. You are now working as part of FedEx Corporation - where the corporation is going to cash in on the brand of 'FedEx' and reel in the profits while the wage employees in particular take it in the shorts.
MrFedEx
Engorged Member
No matter what, we suffer.
MAKAVELI
Well-Known Member
And what you just described is harder find than you think.
If they are looking for people willing to work less hours, do you think a military retiree looking to supplement his pension, or a college kid working around his classes, do you think they aren't capable enough? Do you think perfectly capable people laid off in this economy and are super eager to impress an employer aren't able to learn what you do? In effect you are saying FedEx is really on your side and wants you to have a long, prosperous career. I say that because you seem to be in denial, and I'm not trying to be rude. What appears to be looming on the horizon is the reality that we will have to accept what they are offering, a very different reality from now, or leave. If you can get the union in great, but don't kid yourself that you have years to get it done.
DontThrowPackages
Well-Known Member
Agree. They don't really want to hear whats "REALLY" on your mind. They walk in expecting softball questions to which they respond with vanilla answers. Its 30 minutes out of your life, nothing more. I can't think of any one issue, brought up in the past meetings, that was followed through with.