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Lead On... to the death of Expres...
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<blockquote data-quote="Ricochet1a" data-source="post: 989336" data-attributes="member: 22880"><p>To continue with the analysis started above...</p><p></p><p>A drop of 7% (to maybe 10% in the coming years) of volume moving through the line haul system of Express, ISN'T reason enough to radically alter the carrying capacity of the network. Usually, businesses would GRADUALLY reduce the capacity of their network (accelerating retirement of equipment), to prevent incurring large costs in new equipment purchases at once (for such a small loss of volume). The savings in fuel and operating costs have to be weighed against the very real costs of purchasing new equipment. </p><p></p><p>What is going on here (the reason for "rightsizing" the line haul network), is that Express is going to <u>eliminate Express Saver volume from its product offering entirely</u>. I don't have a hard number on what percentage of the average daily volume Express Saver constitutes (I'm using 10% of current volume as a working figure - if anyone has a "harder number", go ahead an put it up, I'll use data from any source....)</p><p></p><p>I've used 250,000 to 280,000 pieces a day as a figure for Express Saver moving through Express (about 10%). When combined with the already seen 7% reduction in overall volume (about 200,000 pieces/day), a total reduction of at least 450,000 pieces a day is going to be experienced by Express. This amounts to a MINIMUM of a 16% reduction in pieces - possibly up to 20%. In addition, it must be pointed out that the <u>average</u> Express Saver piece is HEAVIER and LARGER than the <u>average</u> of all the pieces currently moving through the Express network. This means when it comes to NET and DIM weight moving through the Express network, there will be about a 25% reduction in carrying load (what affects the aircraft the most). </p><p></p><p>THIS is the reason for the accelerated push for changing the composition and capability of the line haul network of Express - they know that the new normal (combined with getting the very low revenue ES product out of the system), will result in a reduction of needed capability of approximately 25% - compared to pre-Great Recession levels. A reduction of this magnitude demands an accelerated retirement of higher cost equipment and purchase of new fuel efficient equipment which better matches the anticipated loads in the coming decade. It's a no-brainer. </p><p></p><p>With regard to the latest push for sales leads...</p><p></p><p>I think it is obvious from looking at the very simple analysis above, that there ISN'T going to be anything the Couriers can do to grab more business for Express. Customers have and are making a deliberate decision to shift the movement of their non-urgent volume, to a lower cost alternative. It is easy to see that this started in late 2008-early 2009 (I was still working for Express at this time, and I witnessed first hand the collapse in outgoing volumes) and there is absolutely NOTHING that anyone can do about it (except maybe get the cost of jet fuel back down to below $1/gallon). FedEx Corporate management OBVIOUSLY knows this is the issue (it is what they get paid to do).</p><p></p><p></p><p>So the question is begged, "Why in the hell are Express Couriers being told to beat the bushes for sales leads?"</p><p></p><p>Answer: To drum up business for FedEx Ground. </p><p></p><p>There is NOTHING FedEx can do about the declining volumes moving through Express (they are eliminating ES and altering the composition of the aircraft inventory to improve margins...), so it is better put there is NOTHING that is REALISTICALLY possible for the Couriers to do, to bring back pre-2009 volumes. The customers who shifted the movement of their volume off of Express, still OBVIOUSLY have Express account numbers - they just aren't using them as much. It isn't like these customers have mysteriously forgotten how to use Powership or their pre-printed manual airbills for shipping, they have CHOSEN to use lower cost alternatives, to boost their own bottom line. </p><p></p><p>So why the push for leads....</p><p></p><p>What many of these customers did, was to shift the movement of that volume that "disappeared" from the Express network, to UPS Ground - in an effort to save themselves some money. FedEx wants to get that volume back, NOT into the Express network (they know that won't happen), but into the GROUND network. Since customers have already made the decision regarding what is time critical and what is not, FedEx wants to get that volume shifted over to the Ground network. </p><p></p><p>Since FedEx sales can offer substantial discounts on the movement of volume through Ground (compared to UPS product), what FedEx Corporate management is really looking for (from the Express Couriers) are shippers who are using UPS Ground option for their shipping needs (former customers of Express who are now using UPS Ground). They want Express Couriers to "find this potential volume", report it to sales, then have sales give their pitch. They know that the businesses which are using UPS Ground aren't going to suddenly start using the vastly more expensive service option that Express offers - won't happen. BUT, sales might just be able to convince these businesses to use FedEx Ground INSTEAD of the UPS Ground option.</p><p></p><p>This is why Express Couriers are being held at figurative gunpoint, to get sales leads. That loss of 200,000 pieces per day from the Express network (pre-2009 levels) is right now being moved by UPS (DHL is no longer in the domestic US market). FedEx wants those 200,000 pieces back, but they know it won't be back into Express - so might as well have it in Ground. Thus the Express Courier is being "Shanghai-ed" to generate leads for FedEx sales, to grab volume for FedEx Ground.</p></blockquote><p></p>
[QUOTE="Ricochet1a, post: 989336, member: 22880"] To continue with the analysis started above... A drop of 7% (to maybe 10% in the coming years) of volume moving through the line haul system of Express, ISN'T reason enough to radically alter the carrying capacity of the network. Usually, businesses would GRADUALLY reduce the capacity of their network (accelerating retirement of equipment), to prevent incurring large costs in new equipment purchases at once (for such a small loss of volume). The savings in fuel and operating costs have to be weighed against the very real costs of purchasing new equipment. What is going on here (the reason for "rightsizing" the line haul network), is that Express is going to [U]eliminate Express Saver volume from its product offering entirely[/U]. I don't have a hard number on what percentage of the average daily volume Express Saver constitutes (I'm using 10% of current volume as a working figure - if anyone has a "harder number", go ahead an put it up, I'll use data from any source....) I've used 250,000 to 280,000 pieces a day as a figure for Express Saver moving through Express (about 10%). When combined with the already seen 7% reduction in overall volume (about 200,000 pieces/day), a total reduction of at least 450,000 pieces a day is going to be experienced by Express. This amounts to a MINIMUM of a 16% reduction in pieces - possibly up to 20%. In addition, it must be pointed out that the [U]average[/U] Express Saver piece is HEAVIER and LARGER than the [U]average[/U] of all the pieces currently moving through the Express network. This means when it comes to NET and DIM weight moving through the Express network, there will be about a 25% reduction in carrying load (what affects the aircraft the most). THIS is the reason for the accelerated push for changing the composition and capability of the line haul network of Express - they know that the new normal (combined with getting the very low revenue ES product out of the system), will result in a reduction of needed capability of approximately 25% - compared to pre-Great Recession levels. A reduction of this magnitude demands an accelerated retirement of higher cost equipment and purchase of new fuel efficient equipment which better matches the anticipated loads in the coming decade. It's a no-brainer. With regard to the latest push for sales leads... I think it is obvious from looking at the very simple analysis above, that there ISN'T going to be anything the Couriers can do to grab more business for Express. Customers have and are making a deliberate decision to shift the movement of their non-urgent volume, to a lower cost alternative. It is easy to see that this started in late 2008-early 2009 (I was still working for Express at this time, and I witnessed first hand the collapse in outgoing volumes) and there is absolutely NOTHING that anyone can do about it (except maybe get the cost of jet fuel back down to below $1/gallon). FedEx Corporate management OBVIOUSLY knows this is the issue (it is what they get paid to do). So the question is begged, "Why in the hell are Express Couriers being told to beat the bushes for sales leads?" Answer: To drum up business for FedEx Ground. There is NOTHING FedEx can do about the declining volumes moving through Express (they are eliminating ES and altering the composition of the aircraft inventory to improve margins...), so it is better put there is NOTHING that is REALISTICALLY possible for the Couriers to do, to bring back pre-2009 volumes. The customers who shifted the movement of their volume off of Express, still OBVIOUSLY have Express account numbers - they just aren't using them as much. It isn't like these customers have mysteriously forgotten how to use Powership or their pre-printed manual airbills for shipping, they have CHOSEN to use lower cost alternatives, to boost their own bottom line. So why the push for leads.... What many of these customers did, was to shift the movement of that volume that "disappeared" from the Express network, to UPS Ground - in an effort to save themselves some money. FedEx wants to get that volume back, NOT into the Express network (they know that won't happen), but into the GROUND network. Since customers have already made the decision regarding what is time critical and what is not, FedEx wants to get that volume shifted over to the Ground network. Since FedEx sales can offer substantial discounts on the movement of volume through Ground (compared to UPS product), what FedEx Corporate management is really looking for (from the Express Couriers) are shippers who are using UPS Ground option for their shipping needs (former customers of Express who are now using UPS Ground). They want Express Couriers to "find this potential volume", report it to sales, then have sales give their pitch. They know that the businesses which are using UPS Ground aren't going to suddenly start using the vastly more expensive service option that Express offers - won't happen. BUT, sales might just be able to convince these businesses to use FedEx Ground INSTEAD of the UPS Ground option. This is why Express Couriers are being held at figurative gunpoint, to get sales leads. That loss of 200,000 pieces per day from the Express network (pre-2009 levels) is right now being moved by UPS (DHL is no longer in the domestic US market). FedEx wants those 200,000 pieces back, but they know it won't be back into Express - so might as well have it in Ground. Thus the Express Courier is being "Shanghai-ed" to generate leads for FedEx sales, to grab volume for FedEx Ground. [/QUOTE]
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