consolidation/EBO...so what happens now...

[co-chair]

Lets all just work together and see what lies ahead time will tell have a great day everyone

 

[Dragon]

Island1 Fox and Dustroads, outstanding converstion, now this is why I come to Brown Cafe!!

Co-Chair - great post.

 

[Anonymous 10]

IslandFox, first, let me note that with regard to indirecting a rural delivery to a commercial address should have no impact on the shipper. And, rest assured, I do know the difference between a shipper and a consignee. If the shipper sent the package to a residential address that the consignee provided, and if the consignee is pleased that we indirected their package, I'm not sure how the shipper would be impacted. We indirect a lot of packages for lots of different reasons. In rural areas it happens every single day we operate.

As for your prediction that the number of cars that ups puts on the street every day will shrink from 65,000 to 25,000, it is pretty unrealistic. If that were to happen, it would be, volume wise, similar to the day after christmas every day.

As for your belief that this is the ultimate goal of the downsizing that started with 1800 management jobs being eliminated, I have never heard anyone from management, or anyone, at all, say that this is a goal of our new corporate strategy. To suggest that we want to reduce our volume by more than half, just keeping the very profitable packages, isn't much of a growth strategy.

Finally, addressing your belief that it is the high cost of union workers that have put us in a competitive disadvantage, I think that the opposite is true. You could never, ever, get a non-union Fedex driver to deliver 25 stops an hour. UPS gains ITS competitive advantage and financial advantage by economies of scale. If we can put 500 pieces on a package car, and get our driver to deliver 25 stops an hour, our profit margin is high. Our volume gives us an advantage that far outweighs any advantage that FedEx has with cheap labor. On my area, FedEx uses three package cars, an express, a ground and a home delivery car on a rural area where I take care of everything for ups in one car, and deliver more packages that all three of those drivers combined. Who has the competitive advantage now. To throw away the advantage of economies of scale would be foolish.

1+

 

[Anonymous 10]

IslandFox, first, let me note that with regard to indirecting a rural delivery to a commercial address should have no impact on the shipper. And, rest assured, I do know the difference between a shipper and a consignee. If the shipper sent the package to a residential address that the consignee provided, and if the consignee is pleased that we indirected their package, I'm not sure how the shipper would be impacted. We indirect a lot of packages for lots of different reasons. In rural areas it happens every single day we operate.

As for your prediction that the number of cars that ups puts on the street every day will shrink from 65,000 to 25,000, it is pretty unrealistic. If that were to happen, it would be, volume wise, similar to the day after christmas every day.

As for your belief that this is the ultimate goal of the downsizing that started with 1800 management jobs being eliminated, I have never heard anyone from management, or anyone, at all, say that this is a goal of our new corporate strategy. To suggest that we want to reduce our volume by more than half, just keeping the very profitable packages, isn't much of a growth strategy.

Finally, addressing your belief that it is the high cost of union workers that have put us in a competitive disadvantage, I think that the opposite is true. You could never, ever, get a non-union Fedex driver to deliver 25 stops an hour. UPS gains ITS competitive advantage and financial advantage by economies of scale. If we can put 500 pieces on a package car, and get our driver to deliver 25 stops an hour, our profit margin is high. Our volume gives us an advantage that far outweighs any advantage that FedEx has with cheap labor. On my area, FedEx uses three package cars, an express, a ground and a home delivery car on a rural area where I take care of everything for ups in one car, and deliver more packages that all three of those drivers combined. Who has the competitive advantage now. To throw away the advantage of economies of scale would be foolish.

Why don't you old timers go settle it in a game of roshambo!

Thank God we still have these old timers to show the way.

 

[lastoasis]

Thank God we still have these old timers to show the way.

friend'n right.........the "old timers" built this beast

 

[island1fox]

In response to some of the recent posts here --Dusty and I thank you. I will immediately correct that statement by telling you I do not speak for Dusty --He speaks for himself and I listen to what he says --yes read and listen. We agee on some points and respecfully but strongly disagee on many others.
I understand that Dusty is still in the trenchs at UPS and I am officially "out of the war" --enjoying retirement.
I would never think of giving Cheryl problems with UPS ----so I want this to be perfectly clear --I do not speak for the company nor the union. I am what you would call a civilian !!
My recent posts have been very harsh --almost worse case scenario--some have accused me of being chicken little-with the sky is falling.
I can only tell you that I post with an honest heart and wish the best for all UPSers.
I know how major this District consolidation is --and will elaborate on future posts.
With that being said --before I am ruthlessly attacked as a company talking head --let me repeat --I am RETIRED--I openly will admit that I still own UPS shares although over the past five years I have wisely diversified my financial portfolio. I post here because UPS will always be part of my life until I take my last breath--it is in my blood and I enjoy the people. I still have many ,many friends at UPS and strongly want it to succeed.
From my perspective --outside UPS --I also hope that some Present management people will listen to some ideas as well as our influential drivers and shop stewards.
Some can keep talking about the past -but that is all it is --the past--I believe we have to live in and deal with todays world ---that is the present and near future --that is reality.
Sorry for the long post --Just really wanted to say --Thank you for some positive comments !!!!!

 

[island1fox]

Islandfox,
You do make some great points and you might be right. But its also possible that we could have a huge economic recovery here in the states and worldwide. Just like the 90s and just like the housing boom. The potential for International shipping is still huge if this happens. An economic recovery will happen its just how faraway and how big will it be? Things can change fast in this world as we have all seen in the past 15 years. Yes UPS like all other companies will be streamlined but companies will at sometime start hiring workers again and making product and we will see growth in the volume at UPS. With online sales growth each year I just dont see massive layoffs on the frontlines. UPS is by far better positioned than any other delivery company in 2010. The Post Office is going to fail and Fed Ex ground is not going to have a couple hundred thousand drivers that work for contractors pretending to be contractors. That model will not work if it gets UPS big. Not in CA. and not in NY. or PA. so I feel pretty good about UPS and its chances to survive this recession.

Purple,
I know I do not have to tell you --but we have banged heads before and definitely do not agree on much. I have critized many of your posts as "dopey' This is only my opinion --does not mean much --but this is one of the best posts you have sent in my direction.
First of all I truly hope and pray {prayer --hope I did not offend anyone}that the economy will make a very quick and huge upswing --but as you know from current events --where we disagee strongly --I do not want to bring politics to this part of the cafe--suffice it to say --I strongly believe with the present business climate --things will get much worse before recovery --again only my humble opinion.
Also even with a massive recovery --the simple math equasion problem will only be slowed down --not solved. CPP vs RPP
I believe I know what some of the solutions could be ---not talking "givebacks --but a change that both the company and the Union could impliment together ---key word -together --In the present labor -mgmt climate{hot}--I do not see it ---with some "Global Relations Cooling Off"
--the solutions do exist --Hate to say "sides " --but both sides would have to give !!!!

P.S.
1. The Government backed Post Office will never fail --bailouts
2. If the economy continues to slide-depression --fedx contractors or whatever --people will work for almost nothing and do anything to survive -sad but true

 

[UPSviking]

I for one do not believe that UPS will not let any shippers go because we don't make "enough money" on them, as any UPS sales person will tell you, they already have to make a predefined cost per piece minimum on their contracts.

I also truly believe that UPS will fight for the volume, more volume means more efficient operation, remember that it is ALWAYS much cheaper to put 1,000 packages in the system than taking 1,000 out.

As long as the planes are flying and the feeders are running the object is to fill them rather than emptying them.

There is also the issue of cash flow, think about how much money is in the UPS system at any given time, it is HUGE amounts, and the interest alone on all that money is mind boggling. Many companies that are not making any profit, survive on their cash flow, allot of them even takeover profitable competitors simply by using some of the money that is temporarily in their possession.

All I mean to say is that it is highly unlikely that UPS will pursue any other strategy than growth.

 

[island1fox]

I for one do not believe that UPS will not let any shippers go because we don't make "enough money" on them, as any UPS sales person will tell you, they already have to make a predefined cost per piece minimum on their contracts.

I also truly believe that UPS will fight for the volume, more volume means more efficient operation, remember that it is ALWAYS much cheaper to put 1,000 packages in the system than taking 1,000 out.

As long as the planes are flying and the feeders are running the object is to fill them rather than emptying them.

There is also the issue of cash flow, think about how much money is in the UPS system at any given time, it is HUGE amounts, and the interest alone on all that money is mind boggling. Many companies that are not making any profit, survive on their cash flow, allot of them even takeover profitable competitors simply by using some of the money that is temporarily in their possession.

All I mean to say is that it is highly unlikely that UPS will pursue any other strategy than growth.

Viking,
Just some food for thought.
UPS salespeople work on "commission"
Have you heard the term "contract compliance"--UPS does a very bad job with this .
I will try to keep it as simple as possible:
A fairly large customer that ships heavily to say zones 2,4,6. and 8.The customer tell the UPS sales person -give me a huge discount on zone 2 and 4 --will pay higher on 6 and eight. If the customer gives UPS all the packages this could average the rev per pc and could work.
BUT --After the 97 stike most customers keep an account with UPS and fedx.
They would call the fedx salesperson and demand a high discount on zones 6 and 8--will promise to pay higher rate on zones 2 and 4.
The ups driver gets zone 2 and 4 packages --The fed x driver gets zones 6 and eight.
The customer gets highly discounted shipping from two companies.

Main problem again: Density or not --if your total cost per piece is getting close to --gaining on --or surpasses your total revenue per piece--you are finished. This is a complex problem broken down to a simple cost equasion.
If you put a thousand dollars worth of volume in the system and it costs you two thousand dollars to totally process the volume --you lose !!
Cash flow or no --simple math is TOTAL CPP vs TOTAL RPP.
Viking --with all due respect --a growth strategy does not include reducing your vice President level by two thirds Looks like they are persuing a much different strategy!!!
Many people --who do not understand a District mgrs Job --say dead wood --Far from true ----Those 46 District managers are never "off the clock" --I would say the average District mgr put in a good 12 to 14 hours per day.
Here is an good analogy for you.
Lets say a driver today is doing a total of 150 stops( I obviously know this varies route to route) Because of cost cutting we eliminate two thirds of the drivers but keep the same total stops----This driver would now have 450 stops. Impossible task !!!
UPS has been reducing districts over the years --the same way some routes were eliminated and dispatch was increased.
This present reduction of 46 to 20 is MASSIVE --MASSIVE.If the average DM was working 12 to 14 hours with 46 districts ---with 20 ??????
Yet most here seem to feel that everything else will remain the same ????
Sure the 26 Vice Predidents/District managers were all dead wood and were only decoration or figureheads ----Look in the mirror --the person you see in there will tell you the truth !!!!

 

[spif91]

Thank God we still have these old timers to show the way.

+2.....don't know what this company would be like without us....LOL

 

[UPSviking]

"UPS salespeople work on "commission"
Have you heard the term "contract compliance"--UPS does a very bad job with this"

Where I come from our BD can under no circumstance make an contract that we don't make any money on, like everything at UPS they too have to get their superiors to sign off on all their work, I agree that we are not making as much as we used to, but in my region we still make money on all of our accounts.

"A fairly large customer that ships heavily to say zones 2,4,6. and 8.The customer tell the UPS sales person -give me a huge discount on zone 2 and 4 --will pay higher on 6 and eight. If the customer gives UPS all the packages this could average the rev per pc and could work.
BUT --After the 97 stike most customers keep an account with UPS and fedx.
They would call the fedx salesperson and demand a high discount on zones 6 and 8--will promise to pay higher rate on zones 2 and 4.
The ups driver gets zone 2 and 4 packages --The fed x driver gets zones 6 and eight.
The customer gets highly discounted shipping from two companies."

Again, all of my regions contracts are based on volume guarantied from the customer, so you example above does not apply.

We have an lot of customers that ship with both TNT,DHL and UPS and they are priced accordingly, we may on occasion bid for all of their business, but they still pay higher rates than if they where UPS exclusive.

"Main problem again: Density or not --if your total cost per piece is getting close to --gaining on --or surpasses your total revenue per piece--you are finished. This is a complex problem broken down to a simple cost equasion.
If you put a thousand dollars worth of volume in the system and it costs you two thousand dollars to totally process the volume --you lose !!
Cash flow or no --simple math is TOTAL CPP vs TOTAL RPP."

I will try to make it simple:

Say that we tomorrow get rid of 30-40% of the customers that we are not making "enough" on as you put it, will you not agree that the B767 still has to land at the airport, and will you not agree that the feeder still has to leave the hub?.

An example:

Yesterday I delivered 2 packages to an customer, one Amazon and one Air letter from his uncle in Brazil, tomorrow after we got rid of the heavily discounted client Amazon I will only deliver the Air letter from his uncle, We will make the 25$ of the letter but will be missing the 30 cents from the Amazon, does that not increase the cost per piece?

I may be missing your point, but UPS introduced consolidated delivery for a reason, to save money spent per piece delivered.

Sorry for the long reply everybody.....

 

[island1fox]

"UPS salespeople work on "commission"
Have you heard the term "contract compliance"--UPS does a very bad job with this"

Where I come from our BD can under no circumstance make an contract that we don't make any money on, like everything at UPS they too have to get their superiors to sign off on all their work, I agree that we are not making as much as we used to, but in my region we still make money on all of our accounts.

"A fairly large customer that ships heavily to say zones 2,4,6. and 8.The customer tell the UPS sales person -give me a huge discount on zone 2 and 4 --will pay higher on 6 and eight. If the customer gives UPS all the packages this could average the rev per pc and could work.
BUT --After the 97 stike most customers keep an account with UPS and fedx.
They would call the fedx salesperson and demand a high discount on zones 6 and 8--will promise to pay higher rate on zones 2 and 4.
The ups driver gets zone 2 and 4 packages --The fed x driver gets zones 6 and eight.
The customer gets highly discounted shipping from two companies."

Again, all of my regions contracts are based on volume guarantied from the customer, so you example above does not apply.

We have an lot of customers that ship with both TNT,DHL and UPS and they are priced accordingly, we may on occasion bid for all of their business, but they still pay higher rates than if they where UPS exclusive.

"Main problem again: Density or not --if your total cost per piece is getting close to --gaining on --or surpasses your total revenue per piece--you are finished. This is a complex problem broken down to a simple cost equasion.
If you put a thousand dollars worth of volume in the system and it costs you two thousand dollars to totally process the volume --you lose !!
Cash flow or no --simple math is TOTAL CPP vs TOTAL RPP."

I will try to make it simple:

Say that we tomorrow get rid of 30-40% of the customers that we are not making "enough" on as you put it, will you not agree that the B767 still has to land at the airport, and will you not agree that the feeder still has to leave the hub?.

An example:

Yesterday I delivered 2 packages to an customer, one Amazon and one Air letter from his uncle in Brazil, tomorrow after we got rid of the heavily discounted client Amazon I will only deliver the Air letter from his uncle, We will make the 25$ of the letter but will be missing the 30 cents from the Amazon, does that not increase the cost per piece?

I may be missing your point, but UPS introduced consolidated delivery for a reason, to save money spent per piece delivered.

Sorry for the long reply everybody.....

Viking,
I could give you a long answer--but I have something to do ---Ups can easily control taking retail residential customers --that produce "windshield routes"
High mileage high overtime routes --by concentrating on the "new" consolidated delivery system ---seek business to business -heavy -multiple parcel high revenue per pc volume .
Ups over the years has been adding additional feeder runs ,additional planes etc---No longer makes sense ---cut routes,planes ,cars etc to the bone in non profit areas----Remember there will be 20 PROFIT CENTERS formed --believe what you want --everyone has a right to his or her own opinion.
As one of the earlier posters stated --lets all work together and see what happens.
If any one really believes that such a major management restructuring --will cause no other ripples or WAVES--I think they are mistaken --does not mean I am right --Just looking at the facts and the events as they unfold.

 

[Dustyroads]

I think if UPS volume dropped any substantial amount, it could significantly affect public perception, followed very quickly by tumbling stock prices. I've noticed that no management person on the board has indicated that UPS's new long term goal is less packages, less employees, less routes. We already tack a surcharge on residential packages that is sometimes as much as 30% over the charge for the same package going to a business. I guess if we charged $100 surcharge on every residential package, our business in that area might evaporate. It certainly would make for a good christmas season. If we didn't have residential deliveries, our fourth quarter profit statements would look pretty bad. I haven't heard any BD people telling JC Penneys and Amazon to stick their business where the sun don't shine.

 

[IWorkAsDirected]

Interesting idea. I remember when we were paid extra for turning in address corrections for a while.

It could work if there was a way for the customer to agree to the indirects. I would hate to have customers feel that we were short changing them on service or inconveniencing them at work.

I agree with the last sentence. I can see this becoming a tangled mess by opening that can of worms.

 

[IWorkAsDirected]

+2.....don't know what this company would be like without us....LOL

Hey spif, I knew a spiffydog feeder driver, that isn't you is it?

 

[Dustyroads]

I agree with the last sentence. I can see this becoming a tangled mess by opening that can of worms.

It's just a wild guess, but I'm bettin' you have never delivered in the country.

 

[Speed Demon]

I think if UPS volume dropped any substantial amount, it could significantly affect public perception, followed very quickly by tumbling stock prices. I've noticed that no management person on the board has indicated that UPS's new long term goal is less packages, less employees, less routes. We already tack a surcharge on residential packages that is sometimes as much as 30% over the charge for the same package going to a business. I guess if we charged $100 surcharge on every residential package, our business in that area might evaporate. It certainly would make for a good christmas season. If we didn't have residential deliveries, our fourth quarter profit statements would look pretty bad. I haven't heard any BD people telling JC Penneys and Amazon to stick their business where the sun don't shine.

I work on the front lines within the districts but am tied to ATL. I have heard the talk from DM's and DOS' about UPS turning away business and focusing only on higher profit packages moving forward. That initially led me to believe our goal was volume redution and profit enhancement.

However, I was on a call recently with my boss, who's based in 55, and he assured our group that while it is the intention of UPS to focus on higher profitability, the company is also focused on growth.

That's just what I've been told. I don't know which is true, but we're sure to have a clear idea of how the rubber meets the road once April 5th is in our rear view mirror.

 

[Midwest96]

We are losing volume everyday, that's equate to job loss. One of the big account that UPS lost to FedEx is Walmart/Sams Club. Management jobs are being slashed right now, without volume and revenue it will come down to us hourly, drivers and all.

 

[CharleyHustle]

We are losing volume everyday, that's equate to job loss. One of the big account that UPS lost to FedEx is Walmart/Sams Club. Management jobs are being slashed right now, without volume and revenue it will come down to us hourly, drivers and all.

It seems to me that UPS is pulling out of the pricing wars and the slashing of price points just to keep FedEx out. Like the two gas stations across the street, they cut the price untill neither is making money. WalMart is the first example. Lets see if they can make money on the most cut throat outfit going.

UPS is probably counting on FedEx following suit. They have a history of raising their rates after we do. The risk is that higher shipping rates helps FedEx more than UPS.

 

[brownmonster]

It seems to me that UPS is pulling out of the pricing wars and the slashing of price points just to keep FedEx out. Like the two gas stations across the street, they cut the price untill neither is making money. WalMart is the first example. Lets see if they can make money on the most cut throat outfit going.

UPS is probably counting on FedEx following suit. They have a history of raising their rates after we do. The risk is that higher shipping rates helps FedEx more than UPS.

The theory is we could then beat them on service. Hopefully we will be allowed to provide it some day.