UPS buys the old Emery Worldwide operation

[UPSer]

Associated Press
CNF to Sell Forwarding Business to UPS
Tuesday October 5, 1:00 pm ET




CNF to Sell Menlo Worldwide Forwarding Business to UPS in Cash, Debt Deal


PALO ALTO, Calif. (AP) -- Transport and logistics company CNF Inc. on
Tuesday said it agreed to sell its Menlo Worldwide Forwarding business to
United Parcel Service Inc. for $150 million cash and the assumption of about
$110 million debt.
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CNF said the sale would result in an after-tax loss of about $260 million,
while UPS expects the deal to slightly boost earnings in 2005. The
transaction is expected to close in the fourth quarter.

Analysts surveyed by Thomson First Call put UPS' 2005 earnings at $3.35 per
share.

The sale includes Menlo Worldwide's air and ocean forwarding operations in
more than 175 countries, its North American services and facilities, its
Dayton, Ohio-based operations hub, Menlo Worldwide Expedite! and Menlo
Worldwide Trade Services.

Menlo Worldwide Forwarding employs more than 8,000 people and posted 2003
gross revenue of $1.9 billion.

The company is not selling its Menlo Worldwide Logistics, Menlo Worldwide
Technologies, Vector SCM or Con-Way Transportation Services units.

CNF said it would reschedule its planned Oct. 18 third-quarter earnings
report and will present results on the basis of continuing and discontinued
operations.

Shares of CNF rose $2.06, or 4.9 percent, to $43.91, while shares of UPS
fell 24 cents, or less than 1 percent, to $77.03 in midday trading on the
New York Stock Exchange.

 

[GoABX]

This is pretty big news. First, the giant is not sleeping with respect to countering DHL, more may follow. Two, DHL had discussions with Emery 3+ years ago - slap in the face. And third, unless they handle the (contracted) air side like they did Challenge Air, the company might use this to challenge IPA during negotiations. Interesting for everyone. Also looks like they didn't pay too much either; 8% of sales in cash ~ about double that with debt. Good move for UPS.

 

[767-300ER]

What contractors beside World presently operate out of the Dayton hub?

Any predictions on what UPS will do with them?

This will be interesting indeed...

 

[T-Gates]

What contractors beside World presently operate out of the Dayton hub?

Any predictions on what UPS will do with them?

This will be interesting indeed...

Custrom Air Transport, Express.Net, Ryan, every now and then a Kalitta 727 or a Tradewinds A300 too. I think ABX is/was running a DC-8 out to SCK too.

Using Challenge as a guide, I don't see too bright a future for the Emery contractors, hope I'm wrong though.

 

[UPSer]

Custrom Air Transport, Express.Net, Ryan, every now and then a Kalitta 727 or a Tradewinds A300 too. I think ABX is/was running a DC-8 out to SCK too.

Using Challenge as a guide, I don't see too bright a future for the Emery contractors, hope I'm wrong though.

Why do you hope you are wrong? Wouldn't you rather see UPS taking over the entire operation which would result in UPS hiring and expanding. The result would be the creation of many more "career jobs" at UPS. Where would you rather be, at UPS or some bottom feeder contractor?

The contractors will always find new work. They can start lobbying DHL for routes, saying that they can undercut ABX and Astar.

 

[T-Gates]

Why do you hope you are wrong? Wouldn't you rather see UPS taking over the entire operation which would result in UPS hiring and expanding. The result would be the creation of many more "career jobs" at UPS. Where would you rather be, at UPS or some bottom feeder contractor?

The contractors will always find new work. They can start lobbying DHL for routes, saying that they can undercut ABX and Astar.

You're right, the acquistion of Menlo will most likely create expansion within UPS and create new jobs in all fields within the company. And you're right that I'd most definately rather be at a place like UPS than a Custom Air Transport. But my point was that I just hate to see anybody having to join the masses on the street without any greater prospects.

But unfortunatley, realism steps in and you see the inevetable staring you right in the face. A sad truth of the industry that most if not all of us have come to realize.

Just my .02.....

 

[CCDiscoB]

Any predictions on what UPS will do with them?

Good question

Wouldn't you rather see UPS taking over the entire operation which would result in UPS hiring and expanding.

Not really. I'd like to see World keep the contract.

The result would be the creation of many more "career jobs" at UPS.

We'll have to see about that. When was the last time you guys hired, 1980?

Where would you rather be, at UPS or some bottom feeder contractor?

BOTTOM FEEDER!! Not really. You make it sound like everything is rosey over at UPS.

 

[FearlessFreep]

Why would it create more "career" jobs? The "Emery" operation is non-union, why would UPS pick that up and turn it into a union operation. Emery was specifically a BTB heavy weight niche freight carrier. It is my understanding that UPS has a drop-dead dim weight and that they will accept nothing greater than that weight. From what I have heard this policy is because of union restrictions. Maybe this has all changed.

If the above is true I would think that UPS would keep the "Emery" operation intact and use it for heavy oversized lift.

Otherwise don't care, lost my job at Emery, doesn't look like I would ever be able to get on with UPS. Not going to cry over spilled milk.

Good Luck To All Of Us!

 

[Clyde]

Good question

Not really. I'd like to see World keep the contract.
We'll have to see about that. When was the last time you guys hired, 1980?



BOTTOM FEEDER!! Not really. You make it sound like everything is rosey over at UPS.

Last time we hired was September 6, 2001.

Agreed, everything isn't exactly rosey. But compared to a lot of other carriers, we have very little manuer and a lot more flowers in our garden.

 

[FearlessFreep]

Just visted the UPS website for package tracking purposes. Saw this in their news area:

"The acquisition reinforces UPS’s strategy of providing broad supply chain solutions to enable global commerce. As a result of the acquisition, UPS will expand its global capabilities and add guaranteed heavy air freight services around the world, enabling customers to reach the global marketplace faster. This also means UPS will introduce new time-definite products such as overnight, two-day and deferred heavy air freight in North America."

Guess my assumption was correct.

 

[Rhoid]

And what assumption was that?

 

[kevdog]

This also means UPS will introduce new time-definite products such as overnight, two-day and deferred heavy air freight in North America."

Guess my assumption was correct.

Emery has "time-definite" products. Called Gold.

Guess your assumption was wrong.

 

[FearlessFreep]

Assumption being the utilization of Emery as the heavy weight freight operation.

Emery was specifically a BTB heavy weight niche freight carrier. It is my understanding that UPS has a drop-dead dim weight and that they will accept nothing greater than that weight. From what I have heard this policy is because of union restrictions. Maybe this has all changed.

If the above is true I would think that UPS would keep the "Emery" operation intact and use it for heavy oversized lift.

And from the UPS website:

and add guaranteed heavy air freight services

and deferred heavy air freight in North America

 

[freightdawgs]

All of this talk sounds like a good question for UPSer.

So who will fly the heavy stuff? UPS or Emery contractors?

 

[Rhoid]

All of this talk sounds like a good question for UPSer.

So who will fly the heavy stuff? UPS or Emery contractors?

I'm sure UPS has in their contract that they must fly all domestic volume, since the Menlo volume will soon be UPS volume, UPS pilots should fly all of it.

 

[CCDiscoB]

I'm sure...

Are you SURE, or are you speculating?

...UPS has in their contract that they must fly all domestic volume, since the Menlo volume will soon be UPS volume, UPS pilots should fly all of it.

That's like saying since Delta owns ASA, Delta pilots must fly ASA aircraft, which is certainly not the case. What if they keep the operation under the Menlo name.

What is UPS's acft utilization rate? Can they operate out of Dayton, and fly their own schedule with the aircraft they have? There are a lot of aircraft going through Dayton every evening.

...domestic volume...

What about international volume?

 

[Rhoid]

They have about 20 odd 727s plus about a half dozen 8s parked right now. It will be interesting to see if UPS decides to bring the flying inhouse or keep it outsourced and face the certainty of problems with the IPA.

 

[Publishers]

missing

What am I missing? There was no Emery flying anymore for them to deal with. Menlo was a freight forwarding company that had some people supplying dedicated lift.

One thing that Tigers proved was that it is really difficult to merge heavyweight freight product with overnight time sensitive product. $200 million is not much of a purchase for a company like UPS so what am I missing.

My guess is that they leave it alone or put it together in a different program. As to the flying, they use outside transportation all the time of one kind or another. Too early to tell what will happen here.

 

[boomlrd]

no changes likely

Just talked to someone in the know out at UPS, he said no changes are likely, at worst there will be one or two UPS widebodies there in Dayton to pick up the added volume. Right now they usually sort about 2 millions lbs. a night at Dayton, it most likely will go to 3 million with UPS using the space. Still UPS likes cheap non-union labor, so unless the UPS pilots union gets some sort of legal injunction against this, it will just be the same. Express.net, World, Custom Air Transport, etc. will still handle the bulk of Dayton freight. Oh yea, Ryan is gone they no longer have a contract with Emery, it was all picked up by Custom Air Transport and Express.net. So who really knows? It will be a few years before UPS really makes serious labor changes there, unless they pay Tony Romeo (CAT owner) a large buyout on the contract, which doesn't make sense.

 

[Rhoid]

Here are exerpts from the UPS/IPA contract concerning scope, it seems that the contractors days or nights are indeed numbered.....

It is agreed that all present and future domestic flying on


​

aircraft with a payload weight of more than 12,899 lbs.​

including but not limited to, revenue flying, ferry flights,​

charters, training flights, test flights, or other utilization of​

Company owned or leased aircraft in and for the service of the​

Company, or any affiliate of the Company, shall be performed​

by crewmembers on the United Parcel Service Crewmember​

Seniority List in accordance with the terms and conditions of​

this Agreement or any other applicable agreement between the​

Company and the Association, except as otherwise provided in​

this Agreement.​

It is the Company's intent to handle permanent


​

increases in volume through the acquisition of​

additional airlift capacity rather than subcontracting,​

and to utilize crewmembers on the United Parcel​

Service Crewmember Seniority List to the maximum​

extent possible as they are available and qualified.​

For the purpose of preserving work and job opportunities


​

for the crewmembers covered by this Agreement, the​

Company agrees that no work or services of the kind,​

nature or type, and including new operations, covered by,​

presently performed, or hereinafter assigned to the​

collective bargaining unit will be subcontracted,​

transferred, leased, assigned or conveyed in whole or in​

part, to any other person or non-unit crewmembers, except​

under circumstances described elsewhere in this Article.​