Potential financial disaster looming for FedEx?

[Clyde]

I agree with you 100%. FedEx might not be susceptable to what has happened to the "legacies" having to match LCCs in terms of compensation, but there is more than one way to attack, as you wisely point out. Like you, I would not bet on having a stable job anywhere in this industry in the next 20 years, and certainly wouldn't count on a pension, even at the more stable companies.

Here's my take on stability:

Once you have retired and the check is in your name and in your account, then one can claim stability.

Both companies are very secure at the moment, and UPS and FedEx jobs are probably the most secure too. However, and this is just my advice, live below your means, invest wisely, and plan to retire on YOUR contributions. If you have a pension when you retire, count it as extra money.

Any job in any industry can be here today and gone tomorrow. But, being a good steward of your money and achieving financial independence as quickly as able will yield you more security than anything.

I am confident that I will retire from this company 27 years from now. But, I plan financially like the sky is falling. At my rate, I'll spend all of my time in the left seat with no mortgage and growing independent retirement funds.

I'm not a pessimist, but I do look at all of the potential risks out there and plan accordingly.

 

[Clyde]

While short term that may be true, I think DHL will bear watching within the next few years. They are doing things that could potentially make them a major player in the total supply chain market which includes air freight. FWIW, I was stuck in a middle seat the other day between two junior execs from two different companies. While I found their conversation a total bore, both were saying FedEx (in their opinion) was actually behind the curve in pursuing future growth. Again they were talking about total supply chain but if a company can control the supply chain then chances are they're going to secure the air freight piece. "Old fashioned" UPS has actually done a decent job in preparing for future growth.

I agree, DHL is one to watch out for. While I don't see them as a huge threat in the market, they are capable of taking up a share of it.

Cost is always a key component when offering a product, and service, dependability, and reliability are just as, if not more important. I think in the logistics and shipping industries, the customer places more emphasis on reliability and services offered by a company. I think the winners in this race are going to be the ones who can offer the best product/service out there.

 

[FastCargo]

I agree, DHL is one to watch out for. While I don't see them as a huge threat in the market, they are capable of taking up a share of it.

This to me is the threat vs a LCC cargo carrier. Unlike a startup airline, where all you need is an airplane and an office, a cargo carrier needs a LOT more. Think about it. PAX basically load themselves, transport themselves to and from your aircraft. You don't need to offer a lot of variety of destinations to start because you charge a lot more per person than a package. That's easy to start up from an LCC standpoint.

Cargo requires tracking, and transportation, not just to and from the aircraft, but all the way to a 'front door' on both sides (at least, that's what is normally expected). Also, because you charge less for a package, you need more packages to make a decent profit. Therefore, you need to offer more destinations right off the bat. All of this requires much more investment in infrastructure if you want to really compete with FedEx/UPS domestically.

DHL already has all the infrastructure in place, and uses their wholly owned companies to complete against each other to lower prices. That is what I worry about...

Cost is always a key component when offering a product, and service, dependability, and reliability are just as, if not more important. I think in the logistics and shipping industries, the customer places more emphasis on reliability and services offered by a company. I think the winners in this race are going to be the ones who can offer the best product/service out there.

This is very important. I know so many people who have switched from FedEx Express / UPS...and have switched right back, even though it's cost them more because FedEx and UPS are RELIABLE. It's amazing how many times I hear the same thing...and how much they regretted going "cheap". That's why I think DHL hasn't made the inroads into the US market like they thought they would.

FastCargo

 

[Propsync]

I think most of you are confused about what this all really is. I've been working for FedEx GROUND for nearly ten years. If you can bear with me for a couple of paragraphs, more of you will understand what is really going on.

First, this company was originally formed be Roadway Express in the mid-80's. It was aimed at UPS's ground market share, which at the time was around 80-85%. Since Roadway couldn't afford the start-up costs, they hired contractors. Each contractor buys their own truck, or tractor (for linehaul ops) and a work area/run. They are paid quite honestly, in about a dozen ways. The advantage was the driver made more money, and if they got lucky on things like accidents/maintenance, it makes for a very lucrative career.

Second, Roadway sold off what was called Roadway Package System to a holding company callled Caliber Systems. We changed our name to RPS. After UPS went on strike "Brownout", we were aquired by FedEx. Now we are FedEx Ground, the green lettered trucks for those who wondered.

Anyway, the root of the original idea has seemed to wear out. The company has exploded under the FedEx umbrella, and some of the drivers don't believe they are contractors anymore. The house seems divided when I ask some of the drivers about it. Some try to buy up more trucks and routes so they can stay at home or fill in for a sick driver of theirs, a true entreprenurial attitude. Others just want the company to buy them out. I would imagine quite a few that just have one truck can make upwards of $100K a year. But after fuel, maintenance, and lease/purchase costs of the truck, your're looking at much less. So some feel cheated as far as pay is concerned. Some say they have no control over their route. It's sometimes hard to get a day off, hours can get long, etc. But remember, they signed a contract. Just like many of us who work under contracts and we agree to what's signed.

Who's right? You decide. I see this as a way for some guys to get out and make a buck doing it. Personally, I think they would have gotten this done already if they would have unionized first. These are a few contractors here and there, even though there are quite a few drivers represented. They would have been better off with one voice.

Somebody was talking about Ground's revenue. Our revenue yield, if I can remember the annual report, is the highest of all of the units. But it's been slipping for a couple of years now. Cost has really crept in with the growth.

As far as the FedEx/UPS/DHL discussion goes, each has their own way of success. FedEx's units are the best at what they do, UPS has one point of contact that does all the same stuff FedEx does, and DHL/ Old Airborne is in a position to do what RPS did- Take away market share.

 

[FN FAL]

You just wait till somebody starts a LCC cargo airline, then your gravy train days will be over!

That's just crazy talk, FedEx already has it's own LCC airline(s)...the Feeders.

 

[dash8driver]

I think the whole "who is better, purple or brown?" argument is one not worth debating.

As far as I'm concerned, it is like Coke vs Pepsi.

naw..that one is easy. coke is better. pepsi is what i make after drinking too many cokes.






.

 

[canyonblue]

I know how to fix it. They can only drive their trucks to the states that surround Tennessee.uke:

 

[PurpleTail]

I know how to fix it. They can only drive their trucks to the states that surround Tennessee.uke:

Yea, we'll call it the Smith Amendment!

 

[Purpledog]

Fed Ex's biggest problem is that its service is more expensive and not nearly as good as UPS.

UPS Next Day Air Saver®
Guaranteed by: 3:00 P.M.
Thursday October 20, 2005
Billable Weight: 5.0 lbs.
39.94*



FedEx Standard Overnight® 300pm the next business day to most cities 38.09

Maybe I'm just not seeing it. I tried a number of different zip codes and FedEx is always cheaper. I even tried this one going to Louisville with the same variables. Hmmm.

 

[~~~^~~~]

Wow, must be nice to be Fed Ex, or UPS.

Fly I will fly my 190lb butt from Dulles to about anywhere for $39.00. Guess I could just fly there and hand deliver it

That, sports fans, is why flying cargo is a good place to be. When it has got to be there overnight, the demand curve is inelastic.

http://www.flyi.com/specials/detail.aspx?specialid=116&c=flyi-hp-00074

 

[Seeniner]

UPS ain't cheaper and...

I recently sent 2 bicycles I sold on ebay. I looked at all of the shipping options and FedEx Ground was the cheapest by about $30 (about 25% less than UPS).

If you are concerned about being able to pick up your package at the counter then I think you have shipping avenues you need to worry about...neither UPS nor FedEx locate their counters at convenient locations and going to the counter to pick up a package at UPS ain't no joy ride. The UPS Store is the best way to recieve packages from anybody...they are more expensive to send, though they claim to have UPS "counter" rates.

About 6 months ago when DHL made a marketing push toward FedEx/UPS I thought they were on to something...but nothing really came of it. Don't forget, DHL is (I believe) majority owned by Deutsche Poste.

This FedEx Ground turmoil is old news. I've been reading about it in the WSJ for almost a year. Some lawyers smell class action and the pot gets stirred.

I looked at buying a local FedEx Ground operation. What Propsync is saying is true. Also, most of the FedEx Ground operators I spoke with own the "company" and don't drive. They hire a driver for $100 a day. It is a sweet business: work your way up to 5 trucks (the max allowed I believe), have about 7 drivers and you have a cash MACHINE! On average a truck will NET $70000 year.

I didn't buy the business, another local operator snapped it up.

You can look at most any franchise, which this isn't, but is very similar to, and you will find people who hate the system but like the cash flow.

Oh if we could just make everybody happy.

 

[SWPA Pilot]

Dash8Driver - That picture of your woman not only freaks me out, it gives me a headache. Can't you get a new woman like Sandman2122?

 

[dash8driver]

if you knew what she can do with two mouths, you'd understand..




.

 

[Rez O. Lewshun]

BR549....if you post rings true, we'll remember it was YOU that said it first!!

Fins, don't make the FedEx shipping discount/jumpseat error.

The FX jumpseat is between your pilot group and thiers.

The shipping discount is between your company's pass office and fedex, for all employees.

IOW.

Jumpseat agreements... pilots only.
Shipping agreement... all employees.

 

[Lafe]

Where does ABX fit? And, does DHL still fly airplanes?

I grew up in Southern Ohio, and I am watching ABX to see if there is any possibility there for the future even though now there isn't. Out of many of the discussions here, I find it strange that one of the biggest factors isn't where you live, which is one of my biggest factors, hence the ABX watching. This seems like a good place to ask you guys where you think ABX will fit into the Brown/Purple/Yellow picture in the future?
In batting around this "where to work after the air force" thing, I want my cake and eat it too: Live where I want, not commute, make big bucks, work half the time everyone else does, have a regular, normal schedule that doesn't mess up my delicate, fragile body clock...in short I want to be a freight pilot! (rrrrrrrriiiiiiiiiiiiight!!!). Unfortunately, the reality is that my eggs all being in the "I fly airplanes" basket is directly, perfectly antagonistic to anything "normal". Unfortunately, the money and relative low-stress simply still make it all too appealing. Ok, now to the half-full glass: the other truth is, cry all you want whatever your situation, but us pilots got it good. If you don't think so, try something else for a year (and I've been shot at).

Discuss...

 

[Falconjet]

Pilots probably live where they want to live because they know that the company can close a base or move aircraft around and you can get displaced out of a domicile. Why move somewhere to get into domicile and then get displaced out? That said, place like LOU and MEM are pretty safe if you happen for fly for Brown or Purple. If ABX works for you and you live near their primary domicile/HQ that may be a perfect fit for you. Commuting isn't the end of the world, but I know I'd rather avoid it too.

Thank you for your service and I hope you find a job that you are happy with, but don't sell short the sacrifices pilots make in order to keep the schedule moving. Yes, the work isn't HARD, but getting there and surviving the constant checks and medicals and trying to balance your home life are HARD. Don't sell yourself (or the rest of us) short because it is called work for a reason.

Good luck.

FJ

 

[Lafe]

Falcon, I appreciate honest words from the heart, thank you. Thanks for the gentle correction, you're right, we do work very hard, and I know I have much to learn about the other side of sacrifices and the teeter totter of balancing family life in the civilian world once I make that transition soon. We all have sacrifices, just different kinds. I just listen to the disgust and discontent on here, and try to make my attempt to shine a little positive light when I can and get pilots to believe we're in this together even though there are a lot of us scrapping for the same left seat. Thanks for the kind words.

 

[Falconjet]

Yes, not too many jobs (except maybe police and firefighters) entail the kind of sacrifice that those in the military make every day. When I am having a bad day or getting up at 1:30 am to go to work I try to think of our troops out on the front line getting shot at and sleeping in tents and realize that I have it easy compared to them. Kind of keeps things in perspective.

The old CG (and Navy too) saying was that a bitching sailor was a happy sailor, and I think the same can often be said of pilots in general (or maybe humans in general). Perhaps that is why you read a lot of bitching and moaning on these boards. Better here I guess than being miserable all day (or night) with your coworkers!

FJ

 

[AlbieF15]

Lafe,

First--lots of airline pilots get shot at too. On their time off. For less money than they could be making at their airline job. I work with a bunch of them at FDX. Everytime I was ever in the sandbox there were a ton of guys from the Guard, and that hasn't changed during Noble Eagle or Iraqi Freedom. Please don't get too self righteous just because you are active duty--there are lots of folks in the game right now.

Next--commuting won't kill you if you keep an open mind. Read a good book or write your memoirs when traveling. I did my ACSC all while on the road. Buy your own light plane when you upgrade and fly it to work every once in a while to make your commute something to look forward to. Spring for nicer than average crashpad or home away from home. I know a lot of very happy commuters who live in their dream home in Boise, Colorado Springs, Lake Tahoe, the Keys, their Ohio farm, etc etc. If you continue to fly Vipers in the ANG I'd bet your best Q of life will be living close to your ANG base. Keep an open mind--for every dude happy in MEM or SDF there are a bunch (like me) that are very happy with our choices too.

In any case--good luck. There is some room over here on the "dark side" if you ever decide to give it a shot. See Bunker, Magnum, or a host of other Viper drivers for their take...

 

[sandman2122]

Hey Lafe,

I flew heavies in the USAF and currently fly heavies for FedEx as a dreaded "freight pilot" - I think it's a fine job - I feel lucky having the opportunity to do it - you should too if that day comes ..........