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Lead On... to the death of Expres...
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<blockquote data-quote="Ricochet1a" data-source="post: 989417" data-attributes="member: 22880"><p>In early 2008 and early 2009, UPS sales made a MASSIVE effort to gain Express customers. I witnessed this first hand as a Courier and had conversations with FedEx sales types regarding this very issue. Back in 2008/09, many customers had that "bad experience" when it came to FedEx Ground - they didn't want their volume moving through that operation. With the recession, improved service record of Ground and lower rates offered by FedEx sales to UPS customers, FedEx managed to get some of these customers back - but not back to Express, they went to Ground. </p><p></p><p></p><p></p><p></p><p>FedEx made the "change" to their pricing strategy a few years ago - look at the growth in Ground volume. The savings in labor expense has been in place for YEARS, and this is what enabled FedEx sales to offer rates below UPS rates and STILL pull in a double digit profit. </p><p> </p><p></p><p></p><p></p><p>In theory, no. Reducing Express overhead only increases the profitability of the Express opco. Now... if FedEx Corp wanted Ground to cut rates on its product even more (since FedEx saved money on the Express side of the balance sheet), they could definitely do that. However, there is definite pressure to get the profitability of Express UP, while maintaining the double digit profitability of Ground. Given that Ground can outbid UPS on virtually any contract they want, there is no reason for Ground to offer any further discount - it would only erode profit margins for no real gain in market share. </p><p></p><p></p><p></p><p>Absolutely correct. There isn't the room in the Ground standard rate chart, to offer huge discounts for large volume shippers. The Express rate chart is artificially inflated (by about 25%), so that Express can then turn around and start offering "discounts" - where no real discount is being offered. To put it another way, Express "high balls" it pricing strategy, then starts shaving percentage points off of that in order to gain customers. </p><p></p><p></p><p></p><p>I'm not making the argument that Express' ending of 3rd day service is some sinister plot - to the contrary, I pointed out the rational business reasons for doing so. </p><p></p><p>What I am pointing out to the wage employees of Express (for whom many are still under the delusion that PSP exists) is that PSP is DEAD, and their employer has been planning this for quite sometime and the effects on your soon to end "career" will be catastrophic. </p><p></p><p>Due the success of the Ground business model and simultaneous changes in demand for air shipping, the wage employee of Express is about to be shoved completely under the bus.</p></blockquote><p></p>
[QUOTE="Ricochet1a, post: 989417, member: 22880"] In early 2008 and early 2009, UPS sales made a MASSIVE effort to gain Express customers. I witnessed this first hand as a Courier and had conversations with FedEx sales types regarding this very issue. Back in 2008/09, many customers had that "bad experience" when it came to FedEx Ground - they didn't want their volume moving through that operation. With the recession, improved service record of Ground and lower rates offered by FedEx sales to UPS customers, FedEx managed to get some of these customers back - but not back to Express, they went to Ground. FedEx made the "change" to their pricing strategy a few years ago - look at the growth in Ground volume. The savings in labor expense has been in place for YEARS, and this is what enabled FedEx sales to offer rates below UPS rates and STILL pull in a double digit profit. In theory, no. Reducing Express overhead only increases the profitability of the Express opco. Now... if FedEx Corp wanted Ground to cut rates on its product even more (since FedEx saved money on the Express side of the balance sheet), they could definitely do that. However, there is definite pressure to get the profitability of Express UP, while maintaining the double digit profitability of Ground. Given that Ground can outbid UPS on virtually any contract they want, there is no reason for Ground to offer any further discount - it would only erode profit margins for no real gain in market share. Absolutely correct. There isn't the room in the Ground standard rate chart, to offer huge discounts for large volume shippers. The Express rate chart is artificially inflated (by about 25%), so that Express can then turn around and start offering "discounts" - where no real discount is being offered. To put it another way, Express "high balls" it pricing strategy, then starts shaving percentage points off of that in order to gain customers. I'm not making the argument that Express' ending of 3rd day service is some sinister plot - to the contrary, I pointed out the rational business reasons for doing so. What I am pointing out to the wage employees of Express (for whom many are still under the delusion that PSP exists) is that PSP is DEAD, and their employer has been planning this for quite sometime and the effects on your soon to end "career" will be catastrophic. Due the success of the Ground business model and simultaneous changes in demand for air shipping, the wage employee of Express is about to be shoved completely under the bus. [/QUOTE]
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