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What if the Ground ISP Model Fails?
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<blockquote data-quote="59 Dano" data-source="post: 784251" data-attributes="member: 23516"><p>Sure, Ground can buy its own (or rent or lease) planes and Express can reduce hours --legally-- for whatever reason they want. No one who believes that they might do something like that is giving any consideration to the cost effectiveness of doing so. They'll say, "They can use cheaper Ground labor to deliver Express pkgs," but that's about it. Let's look at it.</p><p> </p><p>Two Day and Express Saver packages have accounted for an average of over $2.5 billion/year in revenues the past few years. What does that mean? It covered over 97% of Express' fuel expenses this past FY. The average revenue per 2D/ES pkg is greater than average revenue per PO/SO envelope and generates about a billion dollars *more* revenue a year. Express would be better off if it lost all overnight docs. Those back burner pkgs make a big impact!</p><p> </p><p>Let's assume that they will do it anyway. OK, now Ground gets some planes and can deliver 2D/overnight/whatever anywhere in the lower 48. Soooooooo.... "Fred" just spent a billion bucks buying planes, equipment, hiring ramp/hub employees, paying airport fees, etc. Ground's operating expenses just went through the roof, it's gonna take years to recoup the capital expense of starting it up, and all "Fred" did was create something that he already has to provide the services that he already provides. Imagine the stock price...</p></blockquote><p></p>
[QUOTE="59 Dano, post: 784251, member: 23516"] Sure, Ground can buy its own (or rent or lease) planes and Express can reduce hours --legally-- for whatever reason they want. No one who believes that they might do something like that is giving any consideration to the cost effectiveness of doing so. They'll say, "They can use cheaper Ground labor to deliver Express pkgs," but that's about it. Let's look at it. Two Day and Express Saver packages have accounted for an average of over $2.5 billion/year in revenues the past few years. What does that mean? It covered over 97% of Express' fuel expenses this past FY. The average revenue per 2D/ES pkg is greater than average revenue per PO/SO envelope and generates about a billion dollars *more* revenue a year. Express would be better off if it lost all overnight docs. Those back burner pkgs make a big impact! Let's assume that they will do it anyway. OK, now Ground gets some planes and can deliver 2D/overnight/whatever anywhere in the lower 48. Soooooooo.... "Fred" just spent a billion bucks buying planes, equipment, hiring ramp/hub employees, paying airport fees, etc. Ground's operating expenses just went through the roof, it's gonna take years to recoup the capital expense of starting it up, and all "Fred" did was create something that he already has to provide the services that he already provides. Imagine the stock price... [/QUOTE]
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