Anyone catch this little tidbit in the earnings release.

Discussion in 'FedEx Discussions' started by Myort, Mar 22, 2012.

  1. Myort

    Myort Member

    "We are pleased with the improved performance at FedEx Ground and FedEx Freight during our third quarter," said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. "We are evaluating actions to adjust our FedEx Express U.S. domestic network capacity and improve efficiency."

    Not sure what actions they are looking at, but this doesn't sound good at all.
  2. MrFedEx

    MrFedEx Engorged Member

    I think they just took "action".
  3. I am not going to say that the Express side has not felt the penny pinching, of said corporation but the Ground side was the low cost provider for a long time, however since the Ground service has gotten better than said brown competitor, and in some cases better than said Express you see what is happening, Ground still runs like the low cost provider that they were for years, although doesn't have to cut off a foot to get packages in the system and now make more $$$$$$ look @ operating income. I am sure what Mr. Fedex is gonna say ( BLAH BLAH BLAH ) but case and point Fred only cares about the bottom line and Ground is got a better one.
    FedEx Express Segment
    For the third quarter, the FedEx Express segment reported:

    • Revenue of $6.54 billion, up 8% from last year's $6.05 billion
    • Operating income of $349 million, up 96% from $178 million a year ago
    • Operating margin of 5.3%, up from 2.9% the previous year
    FedEx Ground Segment
    For the third quarter, the FedEx Ground segment reported:

    • Revenue of $2.48 billion, up 14% from last year's $2.18 billion
    • Operating income of $465 million, up 43% from $325 million a year ago
    • Operating margin of 18.8%, up from 14.9% the previous year
  4. vantexan

    vantexan Well-Known Member

    Well he specifically named Express, and said they're evaluating so hasn't happened yet. Improving efficiency has to mean, as everything else does, maximizing profit. So what could they do that would maximize profit? Reduce payroll costs by shifting some Express volume over to Ground? If they do and we can't even get a full 40 then they'd better come up with a more substantial raise for the first two quartiles next year. Otherwise they are going to start a riot.
  5. MrFedEx

    MrFedEx Engorged Member

    Fred is a greedy bastard. Is that standard enough for you?
  6. Ricochet1a

    Ricochet1a New Member

    The key point for the casual observer here is the differential operating margins of each opco.

    Express is making a 5.3% margin and Ground is making an 18.8% margin.

    These two numbers should tell even the casual observer where the future of FedEx Corporation lies.

    Remember, Express and Ground handle roughly the same volume (piece count) currently.

    To get a rough estimate of revenue ratio per piece, divide the Express revenue figure by the Ground revenue figure - the ratio is 2.64 (it costs roughly 2.64 times as much to ship the average package through Express as it does through Ground).

    Now to compare absolute margin on a single average piece - apply the margin percentage.

    On $264 of Express revenue, the margin is $14.00 (money in FedEx Corporation's pocket)

    On $100 of Ground revenue, the margin is $18.80

    As you can see, it is actually MORE advantageous for FedEx Corporation's customers to choose Ground to move a particular piece rather than use Express.

    This is the "paradigm change" that has occurred.

    FedEx isn't making a higher absolute margin on the highest priced service (as is typical in most service applications), it is making the highest absolute margin on the LOWEST priced service.

    The reason for this is obvious - the wages that FedEx pays to Ground drivers is drastically under market "norms".

    Does anyone doubt the future of FedEx Corporation - and where it will shift service to in order to up margins on its "Express product".


    And this is because Fedex doesn't pay the Ground drivers....the contractors do.
  8. Ricochet1a

    Ricochet1a New Member

    And since these " contractors' " sole customer if FedEx Corp..... where does the money to pay the drivers really come from...
  9. MrFedEx

    MrFedEx Engorged Member

    I certainly hope that the scam gets undone one of these days. It's got to be tempting for some of the high-powered legal talent out there.
  10. Ricochet1a

    Ricochet1a New Member

    To my previous post...

    I wrote: "As you can see, it is actually MORE advantageous for FedEx Corporation's customers to choose Ground to move a particular piece rather than use Express".

    The argument is confused.

    It should be: "As you can see, it is actually MORE advantageous for FedEx Corporation to have its customers choose Ground to move a particular piece rather than use Express".
  11. TUT

    TUT Well-Known Member

    Yep, just like Temp Agencies, same idea. Millions more affected. I'd personally start there first, bigger bang for the buck.
  12. MrFedEx

    MrFedEx Engorged Member

    FedEx has deep pockets, but they also have a formidable legal department and a lot of politicians allied with Fred Smith.


    And they like to "vigorously defend themselves".
  14. MrFedEx

    MrFedEx Engorged Member

    So true. I think Ground will eventually unravel. Give it some time.
  15. bbsam

    bbsam Moderator Staff Member

    Heard that before.
  16. MrFedEx

    MrFedEx Engorged Member

    I know, and you're about to have your moment. However, things do change, and even the Master Weasel has weaknesses, particularly when it comes to following the rules.
  17. TUT

    TUT Well-Known Member

    Yep they are all the same.

    Remember the AT&T-TMobile Merge Attempt:

    You'd think after taking such a severe public beating for the failed deal (not to mention for their recent wireless price hikes and throttling), AT&T would lay low for a little while. Perhaps pause for a moment, rest leisurely on the giant bags of money created by their seemingly endless new fees, bad ideas and price hikes, and contemplate why exactly they're a company that consistently sits in last place in nearly every major customer satisfaction study. Instead Jim Cicconi popped back up today to try and blame this week's T-Mobile call center layoffs on those who opposed AT&T's awful idea. From the blog entry:

    Normally, we’d not comment on something like this. But I feel this is an exception for one big reason– only a few months ago AT&T promised to preserve these very same call centers and jobs if our merger was approved. We also predicted that if the merger failed, T-Mobile would be forced into major layoffs....Rarely are a regulatory agency’s predictive judgments proven so wrong so fast. But for the government’s decision, centers now being closed would be staying open, workers now facing layoffs would have job guarantees, and communities facing turmoil would have security. Only a few months later, the truth of who was right is sadly obvious.

    The only correct sentence in that quote is the last one. In reality, T-Mobile's financial hit came in large part because of a mass exodus of T-Mobile users (most of whom fled to Sprint) who didn't want to be AT&T customers. Sitting in gridlock for months as AT&T executives scurried to put lipstick on the pig of a deal didn't help matters. Meanwhile, the 1900 net lost jobs at T-Mobile are a drop in the bucket to the expected tens of thousands of jobs that would have been eliminated as AT&T purged T-Mobile of redundant executive, support, and retail employees. AT&T's job creation claims were proven false. Repeatedly.

    Basically these corporations are now threatening they'll can employee asses if they don't get what they want. It's bribemail.
  18. TUT

    TUT Well-Known Member

    Or how about employers asking for social site passwords during the hiring process so they can check into what you do on your own time? You got to be kidding me. How can they even think that is right. I'd give it to them right after they give me their bank account password. At least we are looking at making that practice illegal. Can't believe anyoen ever felt right trying it.

    SEATTLE (AP) — A Democratic senator from Connecticut is writing a bill that would stop the practice of employers asking job applicants for their Facebook or other social media passwords, he told The Associated Press on Thursday.

    U.S. Sen. Richard Blumenthal said that such a practice is an "unreasonable invasion of privacy for people seeking work."
    "These practices seem to be spreading, which is why federal law ought to address them. They go beyond the borders of individual states and call for a national solution," said Blumenthal, who first spoke to Politico on Wednesday.
  19. Mr. 7

    Mr. 7 The monkey on the left.

    ^^^ What a bunch of bull. I wouldn't give any passwords to anyone for any reason.
  20. Cactus

    Cactus Just telling it like it is

    I'll give 'em my password once they give me their credit card number.