FeDEX Letters

TechGrrl

Space Cadet
If ground were actually doing real damage to UPS than ATLANTA would fire the cannons MrFedEx. If FDX ground cant sink UPS in a major double dip recession where supposedly the bottom line rules than ground really has problems. After this next contract is settled you might see some offense from ATLANTA. FDX ground will always be a 2nd rate operation if they continue to treat their non-owner(non-contractor) drivers like crap. UPS is in a much better position for a price war than FDX because wages at FDX cannot realistically get much lower. Obviously UPS drivers don't want to see a pay-cut but if needed there is a huge amount of savings that could be passed to customers. A $5.00 hr pay-cut for example would suck but not really effect my lifestyle much like it would a FDX ground driver or Express for that matter.

The last thing FDX wants is a price war from UPS. UPS would crush FDX like a bug.

Very true. For a real understanding of the two companies' relative strength, analyze Free Cash Flow. UPS' is much higher than FDX, and is of a much higher quality: real cash, not funky accounting numbers. Motley Fool recently had an article calling FDX out on this item.

On the other hand, with all that cash in the piggy bank, and no apparent plans to use it, UPS COULD crush FDX like a bug in a price war.

On the gripping hand, if UPS can't think of anything better to do with it than let it sit in the piggy bank, they need to reinstate the 401-K match -AND- raise the dividend so WE can use the money for something useful.
 

overallowed

Well-Known Member
A lot of shippers use both companies. Dell knew they couldn't selll computers to ups employees if they didn't use us.
Smart move.
 

overallowed

Well-Known Member
"On the gripping hand, if UPS can't think of anything better to do with it than let it sit in the piggy bank, they need to reinstate the 401-K match -AND- raise the dividend so WE can use the money for something useful. "

When did they ever do a 401k match? Not since I 've been here.
 

bbsam

Moderator
Staff member
Very true. For a real understanding of the two companies' relative strength, analyze Free Cash Flow. UPS' is much higher than FDX, and is of a much higher quality: real cash, not funky accounting numbers. Motley Fool recently had an article calling FDX out on this item.

On the other hand, with all that cash in the piggy bank, and no apparent plans to use it, UPS COULD crush FDX like a bug in a price war.

On the gripping hand, if UPS can't think of anything better to do with it than let it sit in the piggy bank, they need to reinstate the 401-K match -AND- raise the dividend so WE can use the money for something useful.

Then why don't they "crush Fedex in a price war?" Cash in the piggy bank? How is that good? I too read the "Fools" article. Isn't this a time to reinvest that money? I know of a couple buildings circa 1975 that could use a remake.
 

TechGrrl

Space Cadet
"On the gripping hand, if UPS can't think of anything better to do with it than let it sit in the piggy bank, they need to reinstate the 401-K match -AND- raise the dividend so WE can use the money for something useful. "

When did they ever do a 401k match? Not since I 've been here.

The 401K match was there until 2007 or 2008 when the economy circled the drain.....I think it was up to 3% and was paid in stock....
 

TechGrrl

Space Cadet
Then why don't they "crush Fedex in a price war?" Cash in the piggy bank? How is that good? I too read the "Fools" article. Isn't this a time to reinvest that money? I know of a couple buildings circa 1975 that could use a remake.
I agree with you 100%. Hence the "gripping hand" comment about reinstating the 401K match, AND paying a bigger dividend. That's if they can't figure out a better use for the money, and I would agree that upgrading infrastructure is a good use for the money.

I would also consider new lines of business a good use for the money, for instance, making loans to our small business customers. We certainly have insight into whether they are good risks, and it would be a profitable business, charge 5% over what our cost of money is.
 

bbsam

Moderator
Staff member
I agree with you 100%. Hence the "gripping hand" comment about reinstating the 401K match, AND paying a bigger dividend. That's if they can't figure out a better use for the money, and I would agree that upgrading infrastructure is a good use for the money.

I would also consider new lines of business a good use for the money, for instance, making loans to our small business customers. We certainly have insight into whether they are good risks, and it would be a profitable business, charge 5% over what our cost of money is.

I guess I still don't understand UPS policy. I know they're investing heavily overseas, as is Fedex. But Fedex is also putting huge amounts of money into the Ground infrastructure. I'd say sitting on the money is the absolut last thing UPS should be doing
 

browniehound

Well-Known Member
I agree. WE probably are biased. Note, however, that my bias is not to what Ground is today, but rather to where we are going and the strategy to get there. Long gone are the days of simply "buying" business. Fedex is continuing to invest alot of money down this road and they don't do so lightly.

I was walking through a mall last week on an off day around 930 AM in my browns and the Fed-Ex ground driver was there already while our driver hasn't left the building/got on area yet. Big advantage Fed-Ex ground.

Customers get their packages early and if UPS doesn't think this matters or doesn't care then they have there pompus heads buried in the sand. HEY UPS: customers care! They don't want their stuff at 2 PM!!!

That being said, the Fed-Ex ground struck up a conversation with me and began to tell me HIS story. Other than him being done at 2pm (YES 2 PM) every day, he's not sure about his job. He told me that soon every FE ground driver in Massachusetts will need to own a minimum of 3 routes to remain employed.

He talked about how many drivers will be barred from employement because of the capital expenditure needed to obtain 3 routes. He started to complain how their service will suffer and they will loose volume to UPS. He went on to say "be prepared because the lost volume( I say bring it on!) is coming your way because our service is going to be very bad now that we have to hire at least 2 people at about $12/hour to drive our trucks"

Now, I wouldn't put too much weight on what this guy said because he's just a typical employee peeing and moaning like the rest of us. What does he know? Is what he say really true or is it just his perception?

And its all about perception. I truly believe our air service is superior to Fed-Ex. Actually I KNOW this. At least locally it is, because the Fed-Ex driver tells me the "tricks of his trade" that he uses to get his stuff delivered by 1030 when it doesn't get it physically delivered by 1030.

Here at UPS in Massachusetts, we can't pull any "tricks" and we always have it delivered by 1030. UPS has telematics that shows where we are all the time and more importantly where we stop completed the stop. Yes, I put in a bulk stop at 1028 and finish delivering it at 1050 and shows as delivered at 1028, but that is far as we can go.

Based on what I hear from the Fed-Ex driver, I would like to generate more air volume on my route
for the simple fact that its more profitable and much easier to deliver than grounds.

But like Over9.5 said, I put in the leads to no avail. If I put in the lead and you don't sell it going on about 6 times now, then I think we need a new BD person in the area. Either that or we have too many BD people. I mean, how many do we need? People know our product. They either love us, hate us, or tolerate us, and a BD person is not going to change their minds.

Maybe job cuts should come from their ranks next time around. No? You lay-off a driver that MAKES money for with his SPHORH but keep a BD person who can't sell a good lead?

What the heck do we need any of them for as drivers do all their work? The driver gets to know the customer, he chats with the customer everyday, he plugs the business, he asks for the volume and a business card. What does the BD person do? Stand around the center talking to drivers every wedensday? Can we get rid off 2/3 of them before we lay the next driver please? Thank you...
 

Ghost in the Darkness

Well-Known Member
Makes good sense to who? The drivers are the only ones at this company that must do their job right. Imagine where we'd be if that applied to all employees?

Thats so right... drivers are expected to be perfect all the time yet so many incompetent management personelle waste so much time and money each day with asinine decisions they make. You have the OMS clerk sending you ODS pickups all day long that you have to override because she doesn't know what route to send them to so she sends them to everyone. Or she demands to know your ETA when only 15 minutes ago she begs you to go help another driver when you get your work done. You have a on-car supervisor who dispatches work in a rural area so that 3 drivers are driving by each other wondering why it takes 3 drivers to service that area. Or he adds stops to your route but doesn't move them all in the EDD so you soon realize you are driving by stops that weren't moved over. Or the Sup who takes the cover driver out on a split route to deliver and the following day when you have that area back on your route you find multiple send-agains... nss, ns#, or customers coming up and saying we delivered their package to the neighbors or 3 houses down and it sat out in the rain all night. Or the center manager who can't seem to make the necessary changes to get our air to the building on time in the morning... a lot fun telling the customer on a nice sunny day, "sorry our air is late again."
But we need to be perfect!
 

bbsam

Moderator
Staff member
Browniehound--
The Ground driver is correct and possibly incorrect at the same time. That contractors will have to own 3 or more routes is true. $12 hour? Probably not. I am in negotiations to purchase a route that makes $150,000 a year. The current contractor fills the fuel tank once every 6-7 work days. He runs over 200 stops a day and delivers over 400 pieces a day. He's been doing it for 18 years, knows the route inside out and backwards. I want him to keep running the route for me. Why would I get cheap. He needs a good paying job, I need his expertise. I could easily see paying $50,000 up front and $104,000 a year. That's quite a bit more than $12/hr. Also, if that driver is done at 2pm, shouldn't take too long to get another driver up to speed. Simply can't be that challenging so where's the drop off in service?
 

upsgrunt

Well-Known Member
Browniehound--
The Ground driver is correct and possibly incorrect at the same time. That contractors will have to own 3 or more routes is true. $12 hour? Probably not. I am in negotiations to purchase a route that makes $150,000 a year. The current contractor fills the fuel tank once every 6-7 work days. He runs over 200 stops a day and delivers over 400 pieces a day. He's been doing it for 18 years, knows the route inside out and backwards. I want him to keep running the route for me. Why would I get cheap. He needs a good paying job, I need his expertise. I could easily see paying $50,000 up front and $104,000 a year. That's quite a bit more than $12/hr. Also, if that driver is done at 2pm, shouldn't take too long to get another driver up to speed. Simply can't be that challenging so where's the drop off in service?


Several questions:

Was ground around 18 years ago for this guy to be delivering for Fed Ex?

He's an 18 year driver delivering over 200 stops and 400 pieces a day and is done by 2?

I can't see it.
 

bbsam

Moderator
Staff member
Several questions:

Was ground around 18 years ago for this guy to be delivering for Fed Ex?

He's an 18 year driver delivering over 200 stops and 400 pieces a day and is done by 2?

I can't see it.
No. He started driving as a driver for RPS 18 yeas ago. Fedex bought Ground.
As for the done by 2pm I was referring back to the ground driver that Browniehound spoke to at the mall.
 

Re-Raise

Well-Known Member
Browniehound--
The Ground driver is correct and possibly incorrect at the same time. That contractors will have to own 3 or more routes is true. $12 hour? Probably not. I am in negotiations to purchase a route that makes $150,000 a year. The current contractor fills the fuel tank once every 6-7 work days. He runs over 200 stops a day and delivers over 400 pieces a day. He's been doing it for 18 years, knows the route inside out and backwards. I want him to keep running the route for me. Why would I get cheap. He needs a good paying job, I need his expertise. I could easily see paying $50,000 up front and $104,000 a year.


He may know the route, but you must think he doesn't know his math very well.

Why would he possibly sell a route to you that makes 150 k a year to you for 50 k?

Why doesn't he keep the route , hire a driver , and sit on his ass?
 

bbsam

Moderator
Staff member
He may know the route, but you must think he doesn't know his math very well.

Why would he possibly sell a route to you that makes 150 k a year to you for 50 k?

Why doesn't he keep the route , hire a driver , and sit on his ass?
He's not given that option in the transition to the ISP model. He has three options: buy 2 more routes, sell to another, or be forced out. He's decided that selling is the best option.
 

MrFedEx

Engorged Member
He's not given that option in the transition to the ISP model. He has three options: buy 2 more routes, sell to another, or be forced out. He's decided that selling is the best option.

In other words, he no longer has the option to operate as a sole contractor operating one vehicle. FedEx just threw him under the bus, and bbsam will swoop-in and reap the benefits. Smart business move, but what about the other guy? When he signed-on, it was with the expectation that he could be a single unit contractor. Now he's being forced-out because the original Ground model is illegal. That isn't his fault.

A few years back you couldn't pick-up a newspaper or look through Craigslist without seeing several Ground "business opportunities" for sale at bargain basement prices. Truck, route and the whole deal for pennies on the dollar. Why sell something so "profitable" at an obvious loss?

In my area, Ground drivers leave the building at about the same time as UPS does, so perhaps the jump-start is only applicable in certain areas of the country. What I do know is that Ground still cannot offer UPS levels of service...at least around here. Even though they are getting better there are still lots of complaints and mis-delivered pkgs out there. bbsam probably runs an excellent operation, but I just don't see "excellence" for Ground as a whole for now. I still have customers who give me Ground stuff that was mis-delivered to the wrong city. Where I work, there are several cities along a major urban arterial, and it's possible to have street addresses that are the same for each one of them. However, one would think that seeing the city was different would kind of make a difference. Not to the Ground guy.
 

Re-Raise

Well-Known Member
He's not given that option in the transition to the ISP model. He has three options: buy 2 more routes, sell to another, or be forced out. He's decided that selling is the best option.

What is his timeframe to entertain other offers?

If the numbers you say are true about the area he delivers I would think he would be able to generate more interest.
 

FracusBrown

Ponies and Planes
QUOTE=browned out;755060]Now that UPS has invested 100's of millions of dollars to roll out telematics; maybe next year they can use some of that money to cut prices and get some of the fed ex letter business. They will more likely buy pedometers and require every driver and hourly to wear them and make sure they are moving at the required sense of purpose pace.[/QUOTE]

I think the value of telematics is way overstated, but the cost is far less than 100's of millions. Cost is about $700 per vehicle plus cost of receiver units in the buildings. A typical driver delivers more the $500,000 of package revenue per year. Cutting each package cost by .01 dollars (one penny x 200 pieces per day x 250 days) would generate about a $500 savings to the customer. Hardly enough to make a difference in sales or revenue.

It is claimed that every center that has telematics has saved for more the the install cost. If it's like most other cost savings, it really just means the cost was shifted somewhere else thats not being tracked.
 

59 Dano

I just want to make friends!
Very true. For a real understanding of the two companies' relative strength, analyze Free Cash Flow. UPS' is much higher than FDX, and is of a much higher quality: real cash, not funky accounting numbers. Motley Fool recently had an article calling FDX out on this item.

On the other hand, with all that cash in the piggy bank, and no apparent plans to use it, UPS COULD crush FDX like a bug in a price war.

Not quite. Neither company can afford a price war, which is why there isn't one and won't be one. If UPS wants to cut the bottom out of its prices --and I say this as an employee of FedEx Express-- GO FOR IT!! All it will do is eat up that mountain of cash that UPS is sitting on.

A note about the Motley Fool article... please don't be misled into thinking that the FCF entry holds some super-duper weight. It doesn't mean much of anything on its own to 99% of the people who look at it.
 

bbsam

Moderator
Staff member
What is his timeframe to entertain other offers?

If the numbers you say are true about the area he delivers I would think he would be able to generate more interest.

He has a couple interested, but with the benefit comes alot of responsibility. What happens when he's sick or on vacation? Not everyone can run that route. I can run about 85 to 90% and divert the rest to a couple of my other drivers. Time frame is Novermber 19, 2010.
 
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