FedEx tries to win customers from rival United Parcel Service Inc with price cuts!

Discussion in 'FedEx Discussions' started by amazondriverdude, Jun 24, 2019.

  1. FedEx stock falls after WSJ report of price cuts to support Express business

    Shares of FedEx Corp. FDX, -1.22% fell 1.3% in premarket trading Monday, after The Wall Street Journal reported that the package delivery giant has been offering big discounts in an effort to attract online merchants to its Express delivery service. The report comes after FedEx's announcement earlier this month that Express ended its contract with Amazon.com Inc. AMZN, +0.19% as FedEx tries to win customers from rival United Parcel Service Inc. UPS, -0.84%and ahead of FedEx earnings due out on Tuesday. The WSJ report, citing people familiar with the matter, said among FedEx price cuts was to offer guaranteed two-day air service for the same price as shipping items through its ground division. FedEx's stock has dropped 32% over the past 12 months through Friday, while rival UPS shares have slipped 10.1% and the Dow Jones Industrial AverageDJIA, +0.29% has rallied 8.7%.
     
  2. bacha29

    bacha29 Well-Known Member

    Proves conclusively what we've talked about for a long time. Ground contractors are simply a means to an end. An end for which they are not part of. This move will only serve to further devalue the market price of XG contracts. The OPCO never tried to hide the fact that it is not in the enterprise building business for anyone other than themselves. Ground contractors exist for only two reasons to supply cheap trucking and to keep the unions out. Too much capacity is the bane of the industry and now comes the rate war that many knew was coming.
     
  3. MassWineGuy

    MassWineGuy Well-Known Member

    Well, looks like the Express hiring freeze might become a glacier. Glad I put my uniform request in when there was some money around.
     
  4. Fred's Myth

    Fred's Myth Nonhyphenated American

    @bbsam
    Are WAGN?
    Or, are WAEN?
     
  5. bbsam

    bbsam Moderator Staff Member

    I honestly don’t see how you get this from the article. Ground is not having any problem whatsoever keeping trucks full of volume.

    And of course Express has to do something about their prices. Ground is expensive. Express is outrageous.

    But seriously, how does the article reflect on Ground?
     
  6. bacha29

    bacha29 Well-Known Member

    Boxes are hard to come by in the rural areas. Taking volume away from them is much more impactful than the cities and it's the economic challenges facing rural area contractors that pose the greatest threat to the network. When they now have to find a way to make 7 day a week service pay you don't take boxes off of Ground and give to Express. It's the principle of the matter than stands out the most. Seeing what they're doing here how can any contractor dare to put additional capital at risk when you run on single year contracts that XG makes abundantly clear is not binding upon themselves?
     
  7. bbsam

    bbsam Moderator Staff Member

    Did you read the article? It’s not across the board price reduction. They are specifically going after UPS customers and they can easily target pricing for specific zip codes. And the article says it’s for Express.

    They may get more Ground in package deals. The idea that this somehow would negatively impact Ground is a real head scratcher to me. If anything getting UPS business going to Express would only open doors when they see how much Ground is than Express.

    I think you’re trying hard to put that square peg in a round hole again.
     
  8. bacha29

    bacha29 Well-Known Member

    When you're in an area where you can easily get 20 miles or more tied up in a stop going in there with two boxes rather than 3 because the third one went on Express you feel the impact. Not to mention the question if they take this volume off of you and there's no resistance what's there to say they won't take something else later on. Remember Express is still the corporate darling because it's Fat Freddy's creation. Ground was simply nailed onto it and to this day is still not considered an equal.
     
  9. bbsam

    bbsam Moderator Staff Member

    It all makes sense to me. There’s been a lot of talk about Smartpost coming our way. This seems to make that far easier to implement.
     
  10. Ou812fu

    Ou812fu Polishing toilet bowls since 1966.

    You obviously don't understand what is going on. One big problem with your reasoning. Is that if only offered to some companies. The current ones you have might just get up and switch.
    Think of a bigger picture. Why would someone on the end of your street pay only $1 for 1000 gallons of water. When you have a guy next door that is paying $100 for a gallon. I'd be watching that hose of yours. Because at night you would be losing 1000' s of gallons of water to that neighbor.
     
  11. MAKAVELI

    MAKAVELI Well-Known Member

    Other articles have stated they are going after both UPS and FedEx ground customers.
     
  12. bbsam

    bbsam Moderator Staff Member

    That makes room for Smartpost
     
  13. MAKAVELI

    MAKAVELI Well-Known Member

    Are you paid the same rate for SmartPost vs. Ground?
     
  14. bacha29

    bacha29 Well-Known Member

    Probably paying contractors a lower rate for it .A rate that after awhile will be the same rate for all boxes hauled by XG contractors. I can just hear them now. "You hauling Smartpost at a lower rate so we don't see why you can't haul all of your boxes for the same rate as Smartpost." They'll use Smartpost like a sledgehammer on contractors in order to drive down rates.
     
  15. bbsam

    bbsam Moderator Staff Member

    Yes
     
  16. Star B

    Star B White Lightening

    Express prices are outrageous. Let's put it this way. I sell on Fleabay.

    It is always cheaper to ship via the post office using priority mail than XS with my employee discount. That should tell you something...

    Now, I would never ship my fleabay stuff using my discount, as that's prohibited, but I just randomly check the rates just because I'm interested to see where the company is in competitiveness.
     
  17. bbsam

    bbsam Moderator Staff Member

    I think what they want is full trucks and high profits. Selling 2 Day at Ground prices will do both. They can deliver far than Amazon they lose and make the same profit since Amazon had crazy discount.

    But they aren’t going to scavenge everything they can out of Ground which will still have the higher return.

    You can say a lot about Fedex. What you can’t say is that they are stupid business people.
     
  18. 59 Dano

    59 Dano This is 1980, can't you afford a f***ing haircut?

    Sniff some glue, drink some paint thinner, then re-read it.
     
  19. 59 Dano

    59 Dano This is 1980, can't you afford a f***ing haircut?

    Would you like to venture a guess as to what percentage of stops would even remotely resemble such a scenario?
     
  20. bacha29

    bacha29 Well-Known Member

    Haven't been out to BFE in a while have you? Probably never.