I think the first step is to be honest about the current changing landscape. What use to be a duopoly is about to seriously change.
Secondly, get rid of the notion that the old way of doing business is going to guarantee future security. Yes, there is value to having a logistic network that is well trenched, however that's the old way of thinking in terms of how things work today. Technology and the ability to quickly deploy a massive army of individuals with cell phones to help in any city around the world has changed the way of doing business. Ask the Yellow cab taxi drivers how things are working out for them these days.
I don't think its coincidental that the press in Memphis is reporting seeing more and more Amazon vans driving around town delivering packages. Amazon has put Fedex on notice in a very obvious manner.
Amazon has a valuation of almost a trillion dollars. Conservatively 3 to 4 times the operating income depending on who is reporting. They currently have the benefit of operating at a serious discount as a result of their CMI/ACMI contracts. They will continue to do this as long as its profitable. This is exactly how UPS started their airline in 1981 using Evergreen and Orion. We are not seeing anything necessarily new here with their approach. They own their own iron and they are leasing others. They have just rolled out their first 737 and there are a lot more to come.
In the early 1970s UPS was completely caught off guard when Fedex showed up on the playing field. Things seem eerily familiar.
The long term problem with Fedex is at the end of the day it's just a logistics company with many arms. Fedex is feverishly trying to reinvent itself in the wake of the changing markets creating new solutions in terms of ecommerce and supply chain logistics. It just doesn't have the appeal that Amazon does in terms of reinventing itself into a preferred household name.
It's probably a fact that over 90% of the individuals reading this post are happily paying Amazon Prime customers. Therein lies the reality and the problem that is not so obvious at the moment. Amazon has changed the way that you and the world does business. You will witness in a short period of time when your prime accounts automatically enroll you into their Amazon shipping program making it extremely easy to ship packages unlike waiting at the DMV like shipping stores or partner shopping centers. At the click of the button Amazon will command over 65% of the U.S. population enrolled in their shipping program. Automatic billing fast and easy. They are going to make money on the delivery and the pick up automatically.
Amazon has destroyed or disrupted almost every sector it has reached. Ask the freight forwarders, shipping cargo companies and others that are seeing the wave of change. Amazon owns and is operating cargo shipping across the seas. This is massive in terms of supply chain solutions.
"News of Amazon's intent to get into shipping freight across the ocean first broke last year when the company gained approval from the Federal Maritime Commission to act as a Ocean Transportation Intermediary. "
(
https://www.engadget.com/2017/01/26/...ocean-freight/)
(
https://www.ttnews.com/articles/rise-amazon-logistics)
People here are just thinking in terms of airplanes and airlines. Amazon has a massive footprint. Why is this important to understand or ignore if you wish?
Fred Smith has always boasted about two things which seem to protect Fedex which is his network and business to business model. The network though valuable, can be created quicker then most people believe using technology these days. What about the protected business to business model Fred hangs his hat on?
Imagine being a struggling company desperate for business and you have to make a choice who will provide your shipping needs. Fedex can get your packages from point A to B. Amazon will not only deliver your package they have the capability of plugging your business into the biggest online market place in the world they own, instantly changing the way you do business and drastically increasing your bottom line. What's the better solution? In the near future its no longer going to be good enough to just be a logistics company. At the moment I can't imagine Fedex creating an online market place that can compete with Amazon. Amazon has already won the hearts of its faithful customers it will soon earn the respect and loyalty of businesses.
Fedex needs a fresh infusion of talent which has the capability of thinking beyond it's myopic perspective and more along the lines of these internet giants. Instead they depend on their next protege Raj who is strapped with little breathing room.
"Subramaniam’s effectiveness will be compromised because he will be holding six jobs at once"
All is not well at the top. It's not coincidental that Bronczek immediately departed after Fred changed his mind concerning the mandatory retirement age excluding himself from the process. Bronczek was the golden child being groomed with big plans ahead of him. Hand him 2.5 million dollars on the way out and he can smile waiting for his 5 year noncompete to be over with.
(
https://www.bizjournals.com/memphis/...ement-age.html)
"To connect the dots, one must understand the stature held by Bronczek at the $69 billion Memphis-based giant. A 42-year FedEx veteran, Bronczek was held in such high esteem, especially by Smith, that when the legendary founder relinquished the president’s role in 2016, Bronczek was tapped to succeed him. The 64-year-old Bronczek was also the only management member besides Smith to serve on the board."
"A statement issued late yesterday said Bronczek made a “personal decision” to retire."
He made a personal decision not to put up with Fred's B.S. and move on less than one month after his promotion.
(
https://www.freightwaves.com/news/ai...ises-questions)
Put down the Purple Kool Aid folks and start asking the hard questions.