Home
Forums
New posts
Search forums
What's new
New posts
Latest activity
Members
Current visitors
Log in
Register
What's new
Search
Search
Search titles only
By:
New posts
Search forums
Menu
Log in
Register
Install the app
Install
Home
Forums
The Competition
FedEx Discussions
"I'll Shut It Down If You Go Teamster"
JavaScript is disabled. For a better experience, please enable JavaScript in your browser before proceeding.
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an
alternative browser
.
Reply to thread
Message
<blockquote data-quote="Ricochet1a" data-source="post: 598619" data-attributes="member: 22880"><p>FedEx built its brand on service. FedEx is transforming its business model from a service oriented brand to a cost oriented brand. Business does this all the time as market conditions change. </p><p> </p><p>Tangent time..</p><p> </p><p> </p><p>For those of us who are really old, we can remember when Radio Shack was a retailer that catered to home amateur radio enthusiasts. It sold parts for radios and just about every little transistor and tube (those things that got hot and glowed) that one could need. It started to change its business model in the early 80's with the introduction of personal computers and by the late 80's, there was no home amateur radio "stock" in the store. The only reason they still call it Radio Shack is because that is the company name they're stuck with. FedEx is in the midst of a transformation of business operating pattern. It isn't as dramatic as this, but the FedEx that will exist 5 years from now will look nothing like the FedEx that existed just 5 or 10 years ago (from the employees standpoint). </p><p> </p><p> </p><p>FedEx is getting Ground packages delivered for about $13/hr. It costs about $24/hr to get Express packages delivered with wages and benefits. It costs UPS about $35-38/hr to get packages delivered with all benefit costs. FedEx wants to narrow the cost differential between Express and Ground's labor expense. By a combination of shifting volume to Ground and having a high turnover part time Courier force, FedEx can reduce its "Express" delivery labor expense from $24/hr to about $18 (accounting for all the volume which will be delivered at $13/hr expense though Ground). </p><p> </p><p>Taking 20,000 full-time Couriers and moving them to part-time will reduce Express labor hours by about 20 million per year. Take this times the cost savings of a low experience force ($6/hr), and annual savings of about $120 million can be realized. Add in the fact that part-time employees almost never unionize and hiring trends will focus on people who want short term employment rather than a career, FedEx has saved itself probably close to [20 million hours * ($6/hr Part-time force + $6/hr non-union force)] = $240 million annually. For a company that has gross revenues in the $22 Billion range right now (Express only), that is an extra 1.1% annual profit margin - they call it "gravy". </p><p> </p><p>FedEx has just under 312 million shares outstanding. FedEx went from $6 earning per share annually two years ago, to 31 cents per share for the FY which just ended. FedEx is desperately (understandably) attempting to get EPS back up to the $6 per share level PDQ. What is the effect on EPS of all this cost savings implementing all of this ROADS stuff? $240 million annual savings divided by 312 million shares = 77 cents annual EPS. </p><p> </p><p>You may be asking yourself, "What's the point of increasing EPS by 77 cents by messing with Couriers when they need to get it up $6?" Because they can... </p><p> </p><p>This is part of what many of us have been claiming all along, this is all just chicken feed (Courier feed?) for FedEx. FedEx doesn't HAVE to do this, FedEx WANTS to do this. So much for PSP.</p><p> </p><p><a href="http://ir.fedex.com/common/download/download.cfm?companyid=FDX&fileid=301430&filekey=B17EF426-CE55-435B-98EC-82242158C9AF&filename=FedExQ409Stat_Book.pdf" target="_blank">http://ir.fedex.com/common/download/download.cfm?companyid=FDX&fileid=301430&filekey=B17EF426-CE55-435B-98EC-82242158C9AF&filename=FedExQ409Stat_Book.pdf</a></p><p> </p><p> </p><p>Dumping the experienced Couriers IS THE INTENT the long term. Ground drivers have an average experience level of between 1 and 2 years in most locations. They are getting the job done from FedEx's viewpoint. Again, you are speaking about what is, and FedEx is moving towards what will be. </p><p> </p><p>Take a look at the link above. It is FedEx's own statement. You'll notice they don't call Express and Ground and Freight "Operating Companies", they call them "Segments". They are marketed as integrated segments of the same corporation, FedEx Corporation. You will also see the effect of the writedown that Kinkos is costing Fedex right now. This isn't actual cash flow, but accounting charge offs. They give revenue per operating divsion, but not expense, so no way to tell if Kinkos is actually profitable or not. </p><p> </p><p>When the technology is perfected - and it will be - the need for experienced, full-time, career Couriers will go out the window. </p><p> </p><p>Getting a truck organized with 200+ pieces and 80 stops takes some experience. Getting a truck organized with 80 pieces and 35 stops is a lot easier. When the 2nd and 3rd day volume is pulled, the need for high experience levels will drop dramatically. </p><p> </p><p>FedEx has made a decision to dramatically cut labor expense and eliminate a potential pool of unionization within Express, the full-time Courier. The mechanics and RTD's will eventually unionize, even under RLA. But getting 20-24,000 Full-time Couriers that are potential union members reduced to part-time status (or retire early) is the intent behind the rapid introduction of the ROADS technology. </p><p> </p><p>Some Express Couriers think that ROADS as it exists is all there will be. Check the ROADS poster Monday. In the upper right hand corner. </p><p> </p><p>V3.0....</p><p> </p><p>It is just starting.</p></blockquote><p></p>
[QUOTE="Ricochet1a, post: 598619, member: 22880"] FedEx built its brand on service. FedEx is transforming its business model from a service oriented brand to a cost oriented brand. Business does this all the time as market conditions change. Tangent time.. For those of us who are really old, we can remember when Radio Shack was a retailer that catered to home amateur radio enthusiasts. It sold parts for radios and just about every little transistor and tube (those things that got hot and glowed) that one could need. It started to change its business model in the early 80's with the introduction of personal computers and by the late 80's, there was no home amateur radio "stock" in the store. The only reason they still call it Radio Shack is because that is the company name they're stuck with. FedEx is in the midst of a transformation of business operating pattern. It isn't as dramatic as this, but the FedEx that will exist 5 years from now will look nothing like the FedEx that existed just 5 or 10 years ago (from the employees standpoint). FedEx is getting Ground packages delivered for about $13/hr. It costs about $24/hr to get Express packages delivered with wages and benefits. It costs UPS about $35-38/hr to get packages delivered with all benefit costs. FedEx wants to narrow the cost differential between Express and Ground's labor expense. By a combination of shifting volume to Ground and having a high turnover part time Courier force, FedEx can reduce its "Express" delivery labor expense from $24/hr to about $18 (accounting for all the volume which will be delivered at $13/hr expense though Ground). Taking 20,000 full-time Couriers and moving them to part-time will reduce Express labor hours by about 20 million per year. Take this times the cost savings of a low experience force ($6/hr), and annual savings of about $120 million can be realized. Add in the fact that part-time employees almost never unionize and hiring trends will focus on people who want short term employment rather than a career, FedEx has saved itself probably close to [20 million hours * ($6/hr Part-time force + $6/hr non-union force)] = $240 million annually. For a company that has gross revenues in the $22 Billion range right now (Express only), that is an extra 1.1% annual profit margin - they call it "gravy". FedEx has just under 312 million shares outstanding. FedEx went from $6 earning per share annually two years ago, to 31 cents per share for the FY which just ended. FedEx is desperately (understandably) attempting to get EPS back up to the $6 per share level PDQ. What is the effect on EPS of all this cost savings implementing all of this ROADS stuff? $240 million annual savings divided by 312 million shares = 77 cents annual EPS. You may be asking yourself, "What's the point of increasing EPS by 77 cents by messing with Couriers when they need to get it up $6?" Because they can... This is part of what many of us have been claiming all along, this is all just chicken feed (Courier feed?) for FedEx. FedEx doesn't HAVE to do this, FedEx WANTS to do this. So much for PSP. [URL]http://ir.fedex.com/common/download/download.cfm?companyid=FDX&fileid=301430&filekey=B17EF426-CE55-435B-98EC-82242158C9AF&filename=FedExQ409Stat_Book.pdf[/URL] Dumping the experienced Couriers IS THE INTENT the long term. Ground drivers have an average experience level of between 1 and 2 years in most locations. They are getting the job done from FedEx's viewpoint. Again, you are speaking about what is, and FedEx is moving towards what will be. Take a look at the link above. It is FedEx's own statement. You'll notice they don't call Express and Ground and Freight "Operating Companies", they call them "Segments". They are marketed as integrated segments of the same corporation, FedEx Corporation. You will also see the effect of the writedown that Kinkos is costing Fedex right now. This isn't actual cash flow, but accounting charge offs. They give revenue per operating divsion, but not expense, so no way to tell if Kinkos is actually profitable or not. When the technology is perfected - and it will be - the need for experienced, full-time, career Couriers will go out the window. Getting a truck organized with 200+ pieces and 80 stops takes some experience. Getting a truck organized with 80 pieces and 35 stops is a lot easier. When the 2nd and 3rd day volume is pulled, the need for high experience levels will drop dramatically. FedEx has made a decision to dramatically cut labor expense and eliminate a potential pool of unionization within Express, the full-time Courier. The mechanics and RTD's will eventually unionize, even under RLA. But getting 20-24,000 Full-time Couriers that are potential union members reduced to part-time status (or retire early) is the intent behind the rapid introduction of the ROADS technology. Some Express Couriers think that ROADS as it exists is all there will be. Check the ROADS poster Monday. In the upper right hand corner. V3.0.... It is just starting. [/QUOTE]
Insert quotes…
Verification
Post reply
Home
Forums
The Competition
FedEx Discussions
"I'll Shut It Down If You Go Teamster"
Top