Fedex International Mail Contract

[Gumbydammit]

I keep hearing about an international mail contract...does anyone have the gouge on this?

 

[Michael Knight]

BTW... how long is the USPS - FedEx contract good for. When it expires, will it be re-bid by other companies, namely: Airborne, UPS, DHL, etc... or is there a guarantee for FedEx to keep this conract.

I'm just curious if 5 years from now the contract is given to someone else... what does that mean for FedEx. Maybe some FedEx guys here know the percentage of cargo the USPS contract provides and answers to my other questions.

Thanks,
Mike

 

[habubuaza]

There was never a bid put out on the FedEx USPS contract. The post office just gave it to them. Yes, I'll say it again, the post office GAVE FEDEX A 7 YEAR 6.3 BILLION $ CONTRACT. NO BID. The former Post Master General is now on the Board at FedEx.

 

[Lonestar]

Good Question

When Fed Ex was awarded the USPS contract, there was still several years left on the existing contract (with Emery and their subcontractors: Express One, Ryan, Kittyhawk). I don't know exactly how it will work out for Fed Ex, but I do know that there are a bunch of guys (my ex-coworkers) on the street because of this NEW contract.

 

[Spur]

As mentioned previously the contract is for 7 years. This means it will expire in 2008. However, the view from the top is that the Post Office will continue the contract after it expires based on the service they get and the money they are saving.

With regards to the fact there was no bid. IMHO the Post Office was looking to consolidate its mail carrying to one main air carrier with an extensive network and the capability to carry alot of freight. Really the only two US carriers that fit this requirement are UPS and FedEx. After the contract was annouced, there was a lot of hoopla from different voices, but one remained amazingly silent-- UPS. Buzz is they were offered the contract first, and TURNED IT DOWN! because they thought it would compete with their own service.

 

[profile]

Actually, FedEx has about double the total lift capacity of UPS, so it is questionable that UPS could even fly the full contract. In fact, I'd say there is no question -- they couldn't do it.

 

[VaB]

RUMOR

I also heard this one the other day. Obviously just a rumor, but it was a fun one to hear. "The long range planners at FedEx say that we'll need between 7000 - 8000 total pilots by the year 2007". Probably obvious B.S., but still, I wouldn't mind that many guys here.

Since we'll probably get the contract "given to us" again in several years, we might need that many.

We'll see.

 

[Michael Knight]

Well, I guess it makes sense to give it to FDX over UPS anyway to level the playing field between the largest 2 in the U.S. as far as total tons moved (not just by air). It wouldn't look that fair to give it to UPS. Still, no bid or chance for smaller companies that had the contract seems suspect if it is true that the former Post Master General is now on the FDX board. Hopefully that won't turn out to be a future corporate scandal.

I guess we'll have to wait a few more years to see if the contract is renewed. Anyone know what percentage of cargo moved by FDX is from USPS.

Those rumors of 7000+ sound good considering all the retirements I hear will happen during this decade.

 

[profile]

Well, this already went through the courts with people trying to find some scandal and all those attempts didn't turn up anything, so I'm not worried about any future "findings". As for the BOD, well, I personally hope the former Postmaster IS on the Board. We certainly can use his insight in running the contract.

My impression was that the contract was put out for bid, but you had to bid the whole thing, no more "patchwork" of different operators and procedures (which was adding a lot of cost). I think that FedEx was the only one in a position to bid on it, in terms of lift. UPS was offered a contract a few years back but turned it down. I don't know that they looked at it this time at all.

 

[Gumbydammit]

profile,
what you say sounds totally reasonable considering what I've seen and know about government contracts...I hear the current one saves the USPS $1 billion / year...good on 'em!

 

[Michael Knight]

Profile,

It does make sense for the USPS to want one company to do the entire contract. Do you know what percentage (approx) that the USPS cargo makes up and if it that is expected to increase (I heard the USPS wanted FDX to take more but was unable to right now)??

Mike

 

[profile]

Sorry, don't know about what percentage the USPS makes up, but it is a high percentage of the domestic day system at this point. Some cities were already running day flights for the second day stuff, but not nearly as much as now. The USPS deal has allowed the company to move our own stuff during the day from cities that otherwise would not have justified a day flight, and so a lot of trucking has no longer been required. I have also heard that the USPS wants us to carry more and we are currently max'd out, but nothing concrete.

 

[HA25]

profile,

I didn't know that Fedex had twice the air lifting capacity as UPS, is this directly related to the number of aircraft, or the type?

Also, any OFFICIAL hiring numbers for fedex for remainder of 02 and 03?
What are the retirements like?

 

[profile]

The numbers of aircraft are available through AvWeek, just look it up. FedEx is well over double. LH is the #2 with a bit over half the lift (if you include all their pax aircraft).

As to the hiring numbers, no guess, see other threads here for some guesses that others have made. Retirement numbers are very high as a percentage of the number of pilots, I'll let someone else post them, I have to run.

 

[F18-FDX]

Nothing "official" on hiring, but the best guess and the word going around is continued classes of 12, 2 per month thru Oct or Nov, then stop as usual for peak, hopefully kick off with more of the same in Jan.

I can't remember the exact retirement numbers, they were out a few months ago, but in rough terms less than 100 this year, over 100 in the next couple, then between 150-200 every year through about 2025.

 

[9drvr]

FedEx contract --- Good work!!!!

I would like to make a few comments on the USPS mail contract, and in closeing, a simple request.

First, congratulations to FedEx on the win.

You have the management expertise, aircraft lift, maintenance and logistics support and infrastructure to do well.

I know whereof I speak.....i am a out of work/furloughed Emery DC-8 Captain.

Emery was ask, told, and begged to get more aircraft and end their reliance on a fleet of ill maintained, financially strapped airlift contractors. The USPS wanted the cost controlled at one level; at Emery, not at the contractor.

When the USPS wanted the status of a certain trip or maintenance delay, Emery had to jump through hoops to contact contractors, get answers and find solutions. Emery never had control on the contractors cost, and as such, no control on spare parts, maintenance, training and all the scams and under-table dealing. This ultimately lead to less reliability, and less service to the USPS, and the lose of the contract.

FedEx has management control at every level of the operation, and is doing very, very well. GO FEDEX!!!

Sorry about hurt feelings to my air cargo friends, but you also know this is the truth.

Emery's inept mismangement and bungleing of the contract, equals my and many other hard working Emery and contractor flight crews termination and furloughs.

In closeing, may I ask for some assistance???

Do any readers on this forum know of the true, correct hiring status at FedEx, my #1 choice and UPS, DHL, and Airborne??

With 20 years + experience in air cargo, I have yet to be contacted, much less interviewed at these 4 companies.

I have 14,000 hrs total, 8000 hours of 4 engine heavy jet, 5000 hours heavy jet PIC, no accidents or violations. Embry-Riddle degree, high level security clearence and current US passport.

If any reader can provide any assistance in the job search, I will be in your debt. This will sincerely, be very, very much appreciated.

Best wishes to everyone in this troubled airline economy.


9drvr.

 

[habubuaza]

Tremendous amount of misinformation about USPS and the contract. Too much to get into all of it. The ANET contract was not done by Emery. The ANET contract was awarded to Emery and Subbed out to Ryan and Express One. Ryan and Express One was able to share the contract after a law suit in the mid 90's SHOWING THAT THE INITIAL ANET CONTRACT WAS AWARDED AFTER POSTAL OFFICAL WAS PAID OFF BY KITTY HAWK!!!! Yes, the USPS does have a history of this. And yes, people went to jail. It took a law suit to bring this out not some bogus congressional hearing.. hint.. hint.. The reliability was extremely high always in the 93-98% range. All aircraft and crews were cat2 or 3 delays/cancellations were almost non existent. PMPC or 2nd day air which Emery did do with 8's had nothing to do with Anet. The one carrier for airlift theme you guys are throwing around goes against the USPS' own charter. They ALWAYS want to have more than one source for airlift for obvious reasons, the least of which is to avoid interruptions due to labor disputes. One man and one man only convinced the Postal Board to sign off on this FEDEX/USPS deal. This is all old news and I don't understand why people are trying to change history. Try looking up Wall Street Journal Archives they did a great report on the USPS/FedEx deal a while ago. Anyway what's done is done, and don't be so convinced that nothing will ever turn up in the future.

 

[trashauler]

thanks for someone getting it right I still have an award one the office wall for 99.3 ontime performance by kitty hawk wnet contract and usps is paid fedex more for less than all the other contract airlines when you include wnet,dnet,and anet

 

[VaB]

Back to the original question

I know this thread has headed off in some other direction, but I rode on the crew bus the other day with one of the manager types. Someone asked him about the international postal thing and he said that it was all rumor and he wasn't sure where it was coming from.

Maybe he was just saying that since May 2004 is quickly approaching, but the captain I was flying with said that he felt this particular guy wasn't really a BS artist. So who knows. Just thought I would throw that out there. Most of the stuff I've heard on the crew bus so far has been wrong, so we'll see.

 

[AlbieF15]

Couple other points against international mail contract:

1-Domestic mail was a great benefit to FedEx, as it allowed more revenue with only moderately more expense. Although the company needed more aircrew, ramp agents, maintainers, and hub manpower, the fact is most of the domestic fleet was parked during the day. Thus, the daily flying hours went up on the airframes (UTE rate in mil speak), but no new airframes were required. 727s were manned at about 5 crews/plane, reflecting the lower UTE rate. Conversely, the international fleet already has a much higher UTE rate, and MD11s are manned at about 9.5/1. The MD-11 you fly into England isn't parked....while you sleep another crew arrives from the hotel to take the jet across the pond. So...it takes more crews to man international widebodies, and capacity on the jets is already full. So...to take on the international mail would like involve A) buying more planes and B) manning them at a higher rate than was required by the domestic mail contract. Both these factors mean the profit margin on international ops would likely be lower than the domestic contract, due to the extra crews, airframes, and additional manpower required. During indoc, Don Barber, VP Air Ops, told us "the mail contract is like ice cream....very good in moderate amounts, but unhealthy for us if we eat too much..." I translated that to mean "what we got is about right...."

2-If you read any of the international press, right now the European Union is a bit torqued at the US, claiming Bush is backing off "free trade" with certain protections for US steel and agricultural products. Our "war on terror" lost a lot of European support when it morphed into "attacking Iraq". The climate over there could really get nasty if we bump DHL off the contract, simply because it is (on paper) 30% German owned. Even if we could prove it is 51% German, sticking a knife into DHL right now would have serious political fallout on the other side of the Atlantic. I don't think Bush wants to aggrevate another old friend right now...

However...I have wanted an MD-11 right seat since I showed up in Memphis. I've been wrong before, and I'm sure I'll be wrong again, so maybe I'm wrong this time too....