Contract talks

[Catatonic]

You need to know the reason he sold his stock.........if it's to just buy stuff, like a new car ....too impulsive.
If it was because his financial advisor told him to diversify....then that's different.
Sometimes people don't realize the tax implications of selling stock....it can be brutal.

It was for diversification and to pay off hypos used to purchase stock.
Turned out to be a great move for him ... a lot of people sitting on hypos got their stock sold out underneath them by the banks in 2008 and 2009.

 

[Re-Raise]

No doubt.

My source is an old-timer like me at the same level with access to the numbers and analysis.
He sold over 90% of his stock too by the way.
That says more than his words.

Based on the recent run up in the price, it would appear more people are buying than selling at this point.

Hoaxster you do realize that you added this information about the lack of profit on ground packages in the middle of a discussion about possible wage increases in the next contract?

I don't think I made much of a leap to infer from your statement about the uprofitability of delivering ground packages that you were implying that driver wages were a factor.

If you were just pointing it out to convince us to sell our stock, then I misunderstood your original intentions.

 

[Catatonic]

Based on the recent run up in the price, it would appear more people are buying than selling at this point.

Hoaxster you do realize that you added this information about the lack of profit on ground packages in the middle of a discussion about possible wage increases in the next contract?

I don't think I made much of a leap to infer from your statement about the uprofitability of delivering ground packages that you were implying that driver wages were a factor.

If you were just pointing it out to convince us to sell our stock, then I misunderstood your original intentions.

The people that are buying UPS Stock are doing so probably because UPS continues to increase the dividend (yield ratio).
The $.03 additional increase in the quarterly dividend will give UPS a 3% yield if the price is $80/ share, which you responded to as if in some way it was related to driver wages (beats me).

If UPS Stock does not represent more than 5% of your investment portfolio, then I would suggest it as a buy. There are another 20 or so stocks that would suggest just as readily or even more though.

---------------
My responses was one of several posts in regards to an assertion by Southwestern that UPS is headed towards bankruptcy (see post 232). In post 232, I say to SW, "... Ground will continue to shrink as you suggest. UPS Drivers may decrease in number but UPS going bankrupt is not inevitable or even something I foresee."
To further back up that line of thought, in post 244, I say, "The profit on ground packages is approaching "zero" ... once you consider the infrastructure investments and maintenance to support Ground."
I should point out that I was "loosely" joining in on your and bubblehead's attacks on what southwestern was posting.

The fact, which I just now realized, that the driver wages discussion was mixed in during this same period was not recognized by me. However, your lumping me in in with southwestern and posting that I said things that I never said or even believe in was poor deduction and irresponsible posting on your part ... which I called you out on.

---------------
NOW IF I MAY RESPOND TO THE UPS DRIVER WAGES DISCUSSION:

As for the wages that a UPS driver makes, I believe they earn every penny of it (been there and done it). Unfortunately, FedEx drivers do not get paid what they are worth.
And as far as education level, I personally feel that all that education level does is get your foot in the door and after that, it means nothing. If a person with a high school degree is compensated more than person with a PhD because he/she makes a company more money than a person with a PhD then that is the way it should be. I have several people that report to me of which one has a Master's degree ... that person is very ineffective and makes less than everyone else and will continue to do so as long as I have a say in the matter.

 

[Re-Raise]

I deliver to a book bindery every morning from another package car prior to returning to the building and beginning my bid route. I don't mind because it gives me a great time allowance because of the double trip and extra packages. I am in good enough shape that the number packages isn't a problem.

I deliver between 150 and 250 pieces there as they stack them on pallets at their dock. The Fed Ex ground guy shows up there the same time every day. He delivers between 10 and 20 pieces.

He pulls up to the dock next to mine and it takes him about 10 minutes and it takes me about 30 minutes. You keep throwing out this comparison of wages between the Fed Ex contractors and a UPS driver.

We are paid more because we are more productive. If I were paid by the piece as the contractors at Fed Ex are for the packages I deliver in a day my wages would still be higher than his.

 

[Catatonic]

I deliver to a book bindery every morning from another package car prior to returning to the building and beginning my bid route. I don't mind because it gives me a great time allowance because of the double trip and extra packages. I am in good enough shape that the number packages isn't a problem.

I deliver between 150 and 250 pieces there as they stack them on pallets at their dock. The Fed Ex ground guy shows up there the same time every day. He delivers between 10 and 20 pieces.

He pulls up to the dock next to mine and it takes him about 10 minutes and it takes me about 30 minutes. You keep throwing out this comparison of wages between the Fed Ex contractors and a UPS driver.

We are paid more because we are more productive. If I were paid by the piece as the contractors at Fed Ex are for the packages I deliver in a day my wages would still be higher than his.

That is because the difference in total compensation is the single biggest issue facing the "UPS Ground" business model.

UPS Driver versus FedEX Ground driver
Your particular route is not representative of all UPS Driver routes.
There are UPS drivers that do less manual work than the typical FedEx Ground contractor.
Residential routes and rural routes at UPS would make less than an Urban and Super-Urban UPS Driver using your logic.
To an impartial observer, the job description is essentially the same.

With that said, the UPS Driver has to work smarter and much harder on the whole than a FedEx Ground driver.
The UPS Driver is held to much higher standard - absolutely no doubt about that.

 

[Re-Raise]

Do you have any information on the profit margin per piece at UPS compared to the profit margin per piece at Fed Ex?

I am not asking to be defensive , I am really curious.

 

[Catatonic]

If you read my postings, you'll notice that I stated a) FedEx Ground enjoys a heavy (labor) cost advantage over UPS and (b) FedEx Ground's volume is growing at a torrid pace. Which of those statements aren't true? I never suggested that FedEx is a better workplace, or FedEx drivers are more happy with their jobs -- because it doesn't matter. If UPS is unable to keep its costs under control, and FedEx remains non-union, the cost advantage will grow so large it will ultimately force UPS into bankruptcy. It's inevitable.

And your compensation justification would hold merit only if people weren't willing to endure a decade of working part-time to drive. In theory, compensation is suppose to be dictated by the market. The only reason UPS employees are paid so well is because we are covered by a CBA.

I don't see that happening - Logistics and International are the growing parts of UPS. For many years, UPS information based services and products has differentiated us from the competition ... there are many companies that can pickup and deliver loose small packages
Non-Ground products are very profitable.
UPS Freight is questionable.
Ground will continue to shrink as you suggest.

UPS Drivers may decrease in number but UPS going bankrupt is not inevitable or even something I foresee.

Interesting follow up on this aspect of the UPS business model:

UPS Shareholders Should Applaud The Acquisition Of TNT

UPS Shareholders Should Applaud The Acquisition Of TNT - Seeking Alpha

UPS shareholders should applaud the deal if it is able to buy TNT at 9 euros. The valuation is about 0.7 times annual revenues vs. a multiple of 1.4 times for UPS. Furthermore, annual synergies in the range of $400 million per year could be expected.

From a strategic point of view, UPS has a one-time chance to expand its European market share from 7.7% to 17.3%, making it a close competitor of German DHL which has a market share of 17.6%

It would create a duopoly in Europe, as Fedex has a mere 3.3% market share in Europe.
​

 

[moreluck]

I like the improvement in your avatar.....it doesn't look like you are wearing a veil now.....thought maybe it was a religion thing there for awhile!!

 

[Treegrower]

The last time I heard that we had zero profit on ground was in the mid to late 90's. We had many meetings PCM's) about it and the district and region would bring in their big dogs from time to time to hand around the turn in areas and preach to us about how we lost money on every ground package and that we really needed to focus on our core business area which was business to business delivery. They would tell us over and over how our wage and benefit level mades residential delivery a loser and how we could no longer profitably do it. And they never failed to trot out the old Railway Express story about how REA had their most profitable year ever the year before it all collapsed and they went out of business.They told us they we going to get out of the residential market. Shortly afterwards there was a huge price increase in residential rates and they implemented 'Rual Remote." You remember that dog? Well after about a year or so of that abject failure they scraped that plan and cried about all the lost residential volume and put it on us drivers to get it all back. UPS went hard after JC Penney and Sears and all the other home shoppers and (back then) catalog shoppers. I guess the long and short of it is that I have been hearing about zero profit on ground for a solid 15 years or more now.

 

[Re-Raise]

The last time I heard that we had zero profit on ground was in the mid to late 90's. We had many meetings PCM's) about it and the district and region would bring in their big dogs from time to time to hand around the turn in areas and preach to us about how we lost money on every ground package and that we really needed to focus on our core business area which was business to business delivery. They would tell us over and over how our wage and benefit level mades residential delivery a loser and how we could no longer profitably do it. And they never failed to trot out the old Railway Express story about how REA had their most profitable year ever the year before it all collapsed and they went out of business.They told us they we going to get out of the residential market. Shortly afterwards there was a huge price increase in residential rates and they implemented 'Rual Remote." You remember that dog? Well after about a year or so of that abject failure they scraped that plan and cried about all the lost residential volume and put it on us drivers to get it all back. UPS went hard after JC Penney and Sears and all the other home shoppers and (back then) catalog shoppers. I guess the long and short of it is that I have been hearing about zero profit on ground for a solid 15 years or more now.

I agree completely. I have seen this song and dance too many times over the years to start giving it credence now.

Maybe we should begin refusing new accounts that ship ground packages?

 

[Catatonic]

Maybe we should begin refusing new accounts that ship ground packages?

I believe that does happen on occasion.
It is impossible for UPS to match FedEx Ground (without taking a loss) if FedEx really wants the account.

 

[barnyard]

I believe that does happen on occasion.
It is impossible for UPS to match FedEx Ground (without taking a loss) if FedEx really wants the account.

I have heard that from our sales guys.