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<blockquote data-quote="Ricochet1a" data-source="post: 955817" data-attributes="member: 22880"><p>The domestic market for overnight and 2nd day shipping has been completely tapped out. There is no growth beyond the growth that occurs with the economy naturally growing (which hasn't been much in the past few years). </p><p></p><p>Up to about 2000, the growth in Express shipping surpassed the growth in the economy - the annual growth of Express volume year over year surpassed the growth rate of the national economy. All of Express' growth has been in international shipping since then.</p><p></p><p>With the proverbial "pie" no longer getting larger - and just being left between Express and UPS to divide between themselves, there isn't much "selling" that FedEx sales can do for Express. </p><p></p><p>FedEx sales won't offer pricing below cost to customers just to grab them from UPS - UPS sales will offer pricing below cost for a year in order to gain Express customers. </p><p></p><p>If any of you have noticed customers that bounce back and forth between UPS and Express, this is the reason. They go to UPS when they offer a low rate, then when they increase the rate the next cycle, Express comes in with a bid that is just marginally higher than their cost and the customer switches. </p><p></p><p>Another issue that is hampering sales is the method by which shipping charges are computated. There is the "standard rate" which is the starting point, then sales offers a discount from that rate. The problem is, customers trying to perform cost comparisons between Express and UPS are left in a quandry (the customers' purchasing agents), since there isn't a flat rate fee schedule they can compare to one another to get "the lowest bid". There are actually third party companies which will compare bids by Express and UPS, then offer advice as to which is the better bargain. UPS has made it clear it doesn't want to work through these third party bid comparisons...</p><p></p><p>What many customers do is use both Express and UPS. They ship comparable packages to a given location, then track the actual billing they receive from both companies. The company which has the consistently low billing is given more and more volume. The shipping managers in these companies are directed by their purchasing/accounting department how to divide up volume, and if they should avoid using one carrier or another for pieces going to certain destinations, or beyond a certain distance. </p><p></p><p>For those who were in when DHL left the US domestic market, Express did pick up some of their volume. But in most cases, they lost that volume within 12 to 18 months since the customer was used to paying DHL rates (low), instead of Express rates. The overwhelming majority of former DHL customers are now using either UPS or USPS for their shipping. </p><p></p><p>The "growth" within FedEx Corporation is now Ground volume. It isn't growing by double digit percentages, but it is definitely growing beyond the rate of the national economy (they are grabbing market share from UPS). So far, UPS hasn't reacted too seriously to this trend - but within 5 years, they will have no choice. </p><p></p><p>Just as the "800 pound gorilla" for Express employees is the plan for FedEx to shift volume over to Ground, the soon to be "800 pound gorilla" for UPS is FedEx Ground.</p><p></p><p>It does appear that FedEx is going to move real slow to implement their vision. Looking back over the past 15 years, all of their business plans that worked, were implemented over a long time scale - no sudden moves. I think that gradual downsizing of Express full-timers will follow this pattern (as you suggested "Morgan").</p></blockquote><p></p>
[QUOTE="Ricochet1a, post: 955817, member: 22880"] The domestic market for overnight and 2nd day shipping has been completely tapped out. There is no growth beyond the growth that occurs with the economy naturally growing (which hasn't been much in the past few years). Up to about 2000, the growth in Express shipping surpassed the growth in the economy - the annual growth of Express volume year over year surpassed the growth rate of the national economy. All of Express' growth has been in international shipping since then. With the proverbial "pie" no longer getting larger - and just being left between Express and UPS to divide between themselves, there isn't much "selling" that FedEx sales can do for Express. FedEx sales won't offer pricing below cost to customers just to grab them from UPS - UPS sales will offer pricing below cost for a year in order to gain Express customers. If any of you have noticed customers that bounce back and forth between UPS and Express, this is the reason. They go to UPS when they offer a low rate, then when they increase the rate the next cycle, Express comes in with a bid that is just marginally higher than their cost and the customer switches. Another issue that is hampering sales is the method by which shipping charges are computated. There is the "standard rate" which is the starting point, then sales offers a discount from that rate. The problem is, customers trying to perform cost comparisons between Express and UPS are left in a quandry (the customers' purchasing agents), since there isn't a flat rate fee schedule they can compare to one another to get "the lowest bid". There are actually third party companies which will compare bids by Express and UPS, then offer advice as to which is the better bargain. UPS has made it clear it doesn't want to work through these third party bid comparisons... What many customers do is use both Express and UPS. They ship comparable packages to a given location, then track the actual billing they receive from both companies. The company which has the consistently low billing is given more and more volume. The shipping managers in these companies are directed by their purchasing/accounting department how to divide up volume, and if they should avoid using one carrier or another for pieces going to certain destinations, or beyond a certain distance. For those who were in when DHL left the US domestic market, Express did pick up some of their volume. But in most cases, they lost that volume within 12 to 18 months since the customer was used to paying DHL rates (low), instead of Express rates. The overwhelming majority of former DHL customers are now using either UPS or USPS for their shipping. The "growth" within FedEx Corporation is now Ground volume. It isn't growing by double digit percentages, but it is definitely growing beyond the rate of the national economy (they are grabbing market share from UPS). So far, UPS hasn't reacted too seriously to this trend - but within 5 years, they will have no choice. Just as the "800 pound gorilla" for Express employees is the plan for FedEx to shift volume over to Ground, the soon to be "800 pound gorilla" for UPS is FedEx Ground. It does appear that FedEx is going to move real slow to implement their vision. Looking back over the past 15 years, all of their business plans that worked, were implemented over a long time scale - no sudden moves. I think that gradual downsizing of Express full-timers will follow this pattern (as you suggested "Morgan"). [/QUOTE]
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