How does FEDEX UPS make money

[captain caveman]

Airline pax drive themselves to the airport and "self load". We have to have a whole team of people and equipment to load, move, then distribute and deliver the cargo. The airline's job is done when the passenger steps on the airport curb--our company's job is still far from over at that point.

True, except that most passengers check a bag. The bag needs to be processsed, moved, damaged, loaded, unloaded, sorted for connecting flights, lost, found and claimed. More than likely the revenue that the airline receives for the passenger and bag is far less than an express shipper would get for just transporting the bag.

 

[JohnQ]

I also discovered a couple of weeks ago that, now that FedEx owns Kinko's, you can use your discount there instead of hunting down the sometimes-inconvenient FedEx Service Center. That's saving me a TON of driving!

Are you sure? I certainly hope that you arecorrect. Recently, however, as I drove 30 minutes to the nearest Service Center, the rep there told me that you still cannot use Kinko's for the airline discount. In fact she told me that even FedEx employees cannot use Kinko's for the discount, but must use a Service Center office.

I hope that she was wrong.

 

[Goose17]

Kinkos discount

I have used it many times. There are some growing pains with the new aquisition, but you should get a discount if they are accepting packages for shipment there.

Goose17

 

[iflyhigh]

What everyone seems to forget, is that the legacy carriers were once all cargo operations. (Of course before consolidation.) Flying passengers was second. The passenger was extra money. They sat on top of the cargo and did not complain when it took a little longer.

Its amazing to hear CEO of legacy carriers say their is no money in freight, when that was where they initially earned their money back in the 1930's.

iflyhigh

 

[Wingsweep]

I'm no business man, but...

I'm not a business man, but I can use a calculator. One advantage cargo has over pax is this: You can raise the price of shipping a letter or box by, say, 10% and most people won't balk. On a $15 letter or $30 box, the delta would be in the range of $1.50 to $3. Raising the price on a $400-1000 plane ticket by 10% is another bucket of worms. I'm not saying this is the whole story; for example, small changes obviously effect volume shippers much more than individuals. However, the advantage of dense shipping is not that hard to understand. Later dude...

 

[F18-FDX]

It seems the basic answer is that you can make millions more shipping boxes and letters rather than people, so with that in mind why dont the airlines increase some cargo operations or even start a small cargo operation like NWA does with?

It is hard to just "start a small cargo operation". As has been discussed before on this forum it is extremely difficult to start a small operation and be competitive. Serious customers aren't interested unless you are 1-reliable and 2-have a have a large enough network to get the package where they want it (not always a large city). A recent Wall Street Journal article about DHL (an already well-established company) trying to break into the domestic market stated that they would have to pump another $3-5 Billion (yes, with a "B") into the market to be competitive with FedEx. Not too many Toms, Dicks or Airlines out there with that kind of cash to start a small operation.

Very hard to "cherry pick" in cargo.

 

[JohnQ]

Recently, however, as I drove 30 minutes to the nearest Service Center, the rep there told me that you still cannot use Kinko's for the airline discount. In fact she told me that even FedEx employees cannot use Kinko's for the discount, but must use a Service Center office.

I hope that she was wrong.

FYI, I am correcting myself. I just mailed a package at Kinko's, and evidently the word has finally gotten out. Now I just have to drive 5 minutes versus 30! However, one thing to keep in mind: for time critical FedEx express shipments, the employee discount is fantastic. However, if shipping time does not matter, it is cheaper to ship via Ground (without any discount) than Express with the discount.

 

[say again]

People will pay more to ship packages than they will for themselves!!!

It's almost more expensive taking a cab to the airport than the actual plane ticket. Sad, very sad.

 

[psysicx]

Less competition.

 

[IHaveAPension]

Here's a psysicx type question... Does FedEx fly people?