When FedEx begins to outsource to Ground/Home Division; AGFS will hardly notice any difference. The line haul system will remain virtually unchanged. The pilots and mechanics won’t notice any change, and the ramp crews loading and unloading the aircraft won’t notice a change. The only change within AGFS will be the PM sort work groups, they will be virtually eliminated. Cargo containers will be able to be taken off the aircraft, and loaded directly onto roller bed trailers for transport to Ground terminals for sorting by Ground employees.
Express will still pickup all “express” packages, divide it between overnight and 2nd/3rd day for loading, and send it on its way to the ramps. The ramps will send off overnight cargo in the early evenings, the hubs will sort it and it will continue to the destination ramps. The 2nd/3rd day cargo will be sent to the hubs on the returning aircraft (in some locations 3rd day cargo will be moved by tractor trailer), and it will be sorted and then sent on to the destination ramps. Here is where the change within AGFS will occur. Once the cans are taken off the aircraft in the PM; there would be no need for Express employee handlers to sort it by station. The loaded cargo containers from the hubs can be transported directly to the Ground terminals, where Ground employees (who are paid less than Express handlers) can sort the packages. The commit time for non-overnight packages would enable Ground to integrate the delivery of these pieces within their routes with minimal change in their route system. With the slight bump in volumes for Ground, additional routes (helpers…) could be added to Ground, to enable commit times to be maintained.
Express Couriers would only deliver overnight packages under this scheme. The ramps would conduct their AM sort as they do currently, and then transport the freight to the delivering stations. Here is where the next change FedEx is implementing would show itself. With the ROADS system, the AM sort can be run with handlers that don’t know a thing about the actual routes or route boundaries. The little white label that I’m sure most of you have seen on Ground packages that you may have had delivered to your residence allows handlers to pull packages to be loaded onto deliver y trucks by looking at the route number on the label. The label also assists handlers in placing the packages into stop order, since the computer software has a predetermined route path built into its matrix.
Right now, Express is having some technical glitches in the implementation of the ROADS system. The software cannot quickly differentiate between route boundaries, so route balancing isn’t possible with the current software. However, with continued refining of the software, the ability to balance routes will be solved. This could be easily accomplished by coding drop zones into the route assignment matrix, and then balancing loads once the majority of the freight has been loaded onto delivery trucks. Once this is ironed out, Couriers (who are paid more than handlers) won’t be needed to run the AM sorts. Lower paid Handlers can run the AM sort, and get the trucks loaded. The Couriers would only need to pre-trip their vehicles, and then leave the building, much as UPS drivers do now.
A change to the software within the Power-pad would enable Handlers to perform the “van-scans” when loading the packages, along with having the information entered as to which address is indicated for each package. The Couriers would no longer need to know what stops they have to make. The data in the Power-pad would indicate the next address to deliver, and how many pieces are to be delivered to that stop. The Courier would make the stop, make sure they took the indicated number of pieces (as indicated by Power-pad software) and perform a POD. Courier productivity would increase.
Since only overnight volume would be delivered by Express Couriers, they could all be turned into part-time employees to accomplish their deliveries. Since they wouldn’t be working the sort, it would be quite possible for them to clock-in, pre-trip their vehicle, get the download from the van scans into the vehicle and start their route. They could accomplish their route and be back at the station within 6 hours easily (and probability within 4.5 to 5 hours). With the non-overnight volume being taken off Express, Standard Overnight commit times could be advanced by a few hours, giving a further competitive advantage to Express in overnight shipping. With AM delivery routes being able to get their freight off within 4.5 to 5 hours, no overtime would be incurred by Express; further reducing cost structure for Express. From a strict business stand point, it makes sense. From a “PSP” stand point, the career Courier is being thrown under their truck, so to say.
As far as what goals to give any contract negotiators in a contract negotiation; trying to keep non-overnight volume within Express would be a definite goal for current Couriers (it is our “rice bowl” so to say). But let’s get real; the pilots don’t give a darn about the work conditions of other Express employees. They (along with UPS pilots) are the highest paid pilots in the US airline industry. As long as the line haul system isn’t changed, they have no reason to worry about how the delivery scheme is made. They are making their money flying the aircraft. How the packages are delivered are of no concern to them. Push for too much in a contract, and a lock-out is what will happen.
This is why I’m convinced that the only realistic option for a contract would be the restoration of the “traditional pension plan”, a 4 year top out for Couriers (applied retroactively) and possibly an increase in the “contributions” Express makes toward the cost of health benefits (reducing our premiums). Any other “goodies” thrown into the negotiation would only invite either a lock-out, or the introduction of Ground drivers into the Express network to break a strike. Even with a successful unionization, not all Couriers would join the Union, or honor a strike if the unionized Couriers did indeed choose to hit the picket lines. This is why a concerted strike with both Couriers and Mechanics would be necessary for any chance of success.
A strike by just the Couriers would be defeated by FedEx. There would simply be too many Couriers which would cross a picket line, and FedEx could lure enough current Ground “helper drivers” to get their volume delivered. Fred would throw a bone to the non-unionized Couriers to get enough to come in to keep Express operating. This is why concerted action with the mechanics would be necessary to have any chance of success. The mechanics had their pension gutted too, and they’re none too happy right now. If they were to organize and strike at the same time as the Couriers, FedEx would have no choice but to return to the “traditional pension plan”.
As far as getting guarantees for Express to maintain a certain amount of full-time Couriers, or to keep all Express volume within the Express network, that would be doubtful. The mechanics want their pension restored and a cessation of out-sourcing of maintenance. They could be successful in accomplishing this if they organized. As far as the Couriers are concerned, we’d be “piggy-backing” off the mechanics in a strike. Express will eventually change its business model, to having its DGO operation run by primarily part-time employees, nothing is going to change that. Fred has seen the cost structure of Ground, and he likes what he sees. He can’t try the charade of having Express employees work as Independent Contractors, but he can reduce his cost structure to squeeze out labor costs. By shifting volumes to Ground, and moving Express delivery operations into a part-time scheme, he can reduce costs, while maintaining the “illusion” to customers of a seamless network. Remember, most customers don’t have a clue that Ground and Express are separate operating companies. They look at the UPS model, and assume that FedEx is a completely integrated company. Whether their packages are delivered by someone with a FedEx truck with its logo painted in green or orange makes no difference.
Fred has created a parallel package delivery operation to Express; and its cost structure is a fraction of Express’. With the implementation of technology (ROADS) and new Power-pad software, he can squeeze even more cost out of his labor expense. No union is going to stop this. The only thing that can happen is for a union to restore the pension plan to the employees that built Express, so they can have something to show for their years of effort and commitment. Once all the bugs have been ironed out of ROADS, it will be too late. Express will begin to implement a part-time work scheme, and any attempt by Couriers to organize then would be met with a lock-out. All Fred would have to do, is to open the hiring spigot, and get in a flood of college students and people who want part-time work with some semblance of health insurance, to fill out the staffing requirements. The customers would (presumably) not notice any change in their service, and FedEx would have reduced their labor costs even more.