How about some rampant speculation?

[newgirl]

The customers are the ones driving the freight to Ground. Memphis doesn't have to come up with any merging plans, cross-over equipment, etc. They see the price of ground vs. express and they pick ground, unless it absolutely, positively needs to be there overnight by 1030 or 1500--or it's international. Hang out at your front counter or at a Fedex Office or a pack and ship place and listen to the customers. They pick price, not color of the uniform.

Ground has gotten pretty good-comparable to UPS, don't know-but in my experience on my route I know that I get the same stuff everyday, same shippers. These shippers are still choosing us-probably out of laziness or "it's just the way it's always been done." That will change, as it already has with a few national volume shipper accounts. Don't expect Memphis to stop it, either.

[whenIgetthere]

As a former shipping manager, if I shipped something thinking it was being carried by Express, then it was delivered by ground, I would expect a heck of a lot bigger discount on that package! With most ground employees making much less than most Express, grounds prices would have to drop substantially on XS/2D packages to justify the cost of XS/2D. It's up to us to make customers aware of this in the event of the big shift. I have one large customer who recieves about 40 Express a day, and about 10 ground. They hate ground and would switch to UPS in a heartbeat should that happen.

[Mr. 7]

As a former shipping manager, if I shipped something thinking it was being carried by Express, then it was delivered by ground, I would expect a heck of a lot bigger discount on that package!

That's a really good point.
How is FDX gonna explain that.

[Ricochet1a]

As a former shipping manager, if I shipped something thinking it was being carried by Express, then it was delivered by ground, I would expect a heck of a lot bigger discount on that package! With most ground employees making much less than most Express, grounds prices would have to drop substantially on XS/2D packages to justify the cost of XS/2D. It's up to us to make customers aware of this in the event of the big shift. I have one large customer who recieves about 40 Express a day, and about 10 ground. They hate ground and would switch to UPS in a heartbeat should that happen.

Do you think customers really care if the individual delivering a package is driving a truck that states in little letters under the huge FedEx.... Express? Come on....

What difference does it make to a customer whoever steps out of a truck that says FedEx on the side of it to deliver their package, as long as it gets delivered by the time that was specified when it was shipped? I'll address the exception below...

Who delivers the package makes no difference in the price charged. When customers pay for Express, they are paying to have it at its location by a time certain not by a Courier/driver specific. How it gets there is irrelevant. When they pay for Ground, they pay to get it there, but whether it is a day before or a day after the expected delivery date isn't important.

The only real issue for customers is the issue of tag alongs. Customers that receive regular priority overnight volume are used to getting their non-overnight volume delivered as part of that one early AM stop - thus tag alongs. If FedEx decides to eventually "outsource" the delivery of non-overnight volume, then customers will be receiving two separate deliveries each day (assuming they have a mixture of overnight and non-overnight incoming volume each day). This will tick off a lot of customers (who are used to receiving non-overnight volume in the early AM along with their few pieces of priority volume).

I think this, more than anything, is what is holding up FedEx from pulling the trigger - high volume customers are used to getting EVERYTHING delivered in the early AM. When I was doing it, I pissed off quite a few customers who were used to jacking me around with waiting to sign for shipments. I then only offered up the overnight volume for them to sign for in the AM, and stated that I'll be back in the afternoon to get off the non-overnight volume for them to sign for - since I didn't have the time to wait around for them to make up their minds when they are going to sign and let me get out of there. It pissed them off, but they got the message - and I was able to make my P1 committment and not cool my heels for 10 minutes waiting for a damn signature at 10AM.

The fear for FedEx becomes one of having irate shipping managers calling FedEx asking, "Where are my shipments, they were usually delivered in the morning with the rest of my "Express" incoming volume?". That is what might be a tad difficult to explain to people who have been used to getting their 2nd day volume delivered at 10AM instead of delivered separately at 2PM. It can be done (it was done in my case to prove a point), but FedEx doesn't like getting high revenue customers upset.

However, all of this must be taken into context when the business plan first came to prominence - 2009.

When it looked like FedEx was going to lose its RLA status in 2009, FedEx went into major panic mode. They were literally panicing in Memphis over the prospect of losing the RLA status, and having one-third of the stations having certification votes and subsequently certifying union representation. This is when FedEx went into major cost cutting mode for those that can remember back 2.5 years ago. Even with having gutted the defined benefit pension plan a year earlier, FedEx would've been placed into a serious cash flow crunch if they had to agree to sign labor contracts at a significant number of stations or be forced into the position of having regional lockouts and trying to lure the Ground "contractors" to cross picket lines to move Express volume.

This is when the business plan came to prominence - shift the delivery of non-overnight volume directly to Ground. If Express could do this, then implementing lockouts at the stations that were attempting to collectively bargain would've been much easier. You don't have drivers cross a picket line, you don't bring the volume - at least the non-overnight volume - across a picket line to begin with (you take it directly to a ground terminal for delivery). From a purely business perspective, it was brilliant.

If FedEx would've lost its RLA status in 2009, FedEx would've pulled the trigger and immediately eliminated (or at least tried) the majority of full-time Courier positions and gone to a part-time Courier force whose only deliveriers would've been overnight volume (easily accomplished by a part-time force). It would've gotten ugly, Couriers at a significant number of stations having voted to certify union representation under NLRA rules (local level certification), and FedEx dealing with the negative PR of striking Couriers and RTDs while trying to reassure their customers, "All is well".

Fast forward to February 2012. There is still cost advantages to shifting the delivery of non-overnight volume over to Ground, but the threat of unionization within Express is now completely eliminated. I haven't pulled up the legislation to read myself, but the indications are that the change in the requirements to hold a certification election from 35% of craft to 50% of craft having signed rep cards has eliminated ANY possibility of even a vote being held. You'd need to have a majority of Couriers right now - nationwide - ready to strike no matter what, to even begin to have a chance for a certification election. On a nationwide basis, most Couriers complain like heck about their compensation, but they aren't willing to do anything about it - they complain, they dream, they even make occasional threats, but they won't sign union representation cards - they chow down on that turd sandwich with a look of disgust, but they still chow down.

FedEx may indeed decide to shift the delivery over to Ground - but now, the real impetus to do so has been eliminated. Fred is secure in the fact that not only does he still have RLA classification, but now it will take 50% of craft to sign rep cards to even have an election - not the previous 35%.

When the economy does improve, FedEx will indeed have to sweeten the compensation for Ground drivers to keep turn over there within managable levels (and service issues related to high turnover minimized). This will start to narrow the gap between Express and Ground compensation (in the end, you all will most likely be compensated rather closely, with Express wage stagnation an established fact and Ground gradually raising their compensation levels to keep turnover down).

So if you are worried about losing your full time job as a Courier at Express, actually those fears now (given the recent legislative victories by Express) are misplaced. You are a wage slave - and will always be so (for those with less than 12 years in). The Walmart-ization of America continues. Your only real solution is to get out of Express.

[whatnthe]

Wow, very nice post. I would appreciate your take on the quartile compensation plan. I'm an 8 year stuck in the first quartile. Top of range seems like a pipe dream now more than ever.


My bad, I found the other thread where this has been discussed.

[newgirl]

So, any rumors yet?

[59 Dano]

When it looked like FedEx was going to lose its RLA status in 2009, FedEx went into major panic mode. They were literally panicing in Memphis over the prospect of losing the RLA status, and having one-third of the stations having certification votes and subsequently certifying union representation. This is when FedEx went into major cost cutting mode for those that can remember back 2.5 years ago. Even with having gutted the defined benefit pension plan a year earlier, FedEx would've been placed into a serious cash flow crunch if they had to agree to sign labor contracts at a significant number of stations or be forced into the position of having regional lockouts and trying to lure the Ground "contractors" to cross picket lines to move Express volume.

Then again, perhaps the major cost cutting had something to do with the fact that they were only generating a net profit of 2.1% for '09, when they'd had 5.5% and 9.3% for '08 and '07, respectively. 2009 was brutal to the company and there was serious concern about whether or not it would turn a profit for the year. I don't doubt that the RLA was a consideration but let's get real, they went into major cost cutting mode because they were taking an absolute beating.

FedEx may indeed decide to shift the delivery over to Ground - but now, the real impetus to do so has been eliminated. Fred is secure in the fact that not only does he still have RLA classification, but now it will take 50% of craft to sign rep cards to even have an election - not the previous 35%.

Someone please explain the logic in arguing for almost 4 years that 'Fred' is going to switch it over for the sake of satisfying his own extreme avarice when the guy isn't going to push it when he can do so easily and with near impunity. He has no union to deal with and it's virtually impossible to for the Express couriers to get one voted in. If switching the aforementioned freight to Ground makes so much financial sense, then it would make perfect sense to do it now.

[59 Dano]

So, any rumors yet?

No, but here's the new theory: 'Fred' is so greedy that he won't take the easy money. Figure *that one out.

[vantexan]

So, any rumors yet?

I just don't see this happening all at once due to the sudden massive loss of freight which would most likely lead to layoffs. Valentine's was a good illustration of what most likely will happen. We worked the Monday before like it was Peak but the volume wasn't there. Ground had it. And most likely our sales people convinced the flower shippers that Ground could do it and they'd save money too. I'd look for Express shippers continuing to switch while Express consolidates routes and loses employees through attrition. I've heard numerous times in the last year from our director, our senior, our ops mgrs, and on Frontline that Express is going to shrink as customers switch to low cost alternatives. They've consolidated stations, and replaced 700's with Sprinters. And are consolidating loops. The guy pulled off my loop is doing the rt of the courier going into management. No JCATS posting to replace him. We're getting it done with overtime, but that might not last with less freight eventually. I think it's happening before our eyes while we're looking for a dramatic switchover. The company has to be cautious, they've got stockholders to please. But everything they're doing says they're switching to a model where Express isn't the dominant division.

[MrFedEx]

No, but here's the new theory: 'Fred' is so greedy that he won't take the easy money. Figure *that one out.

Fred knows that there would be a massive Express response to a switchover of services to Ground. The RLA is still Fred's ace in the hole because keeping us in that jail is his best insurance against a unionized Express division, but the potential liberalization of voting requirements for the RLA might have Smith thinking twice. I don't think it will be easy money for him because Ground is going to have issues with service commitments and on-calls. As of now, just getting it there on the designated day is Ground "service". Express is different in that regard.

I think his real fear is a legal one, because using Ground employees to deliver packages that go through the Express linehaul system might jeopardize the Ground scam. My bet is that the Legal Department has advised him to wait until he's paid-off enough politicians to make Ground's legality iron-clad, and even that might be problematic because the legal system is tougher for a scoundrel like Smith to purchase than the legislative system.

Run upstairs, climb under his desk, and ask MT3 if I'm right and then report back to us, OK?