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Birdsmash
12-04-2018, 09:13 AM
“Amazon also also may "see meaningful gross cost savings," Shanker said. By bringing express shipping costs in house, Morgan Stanley estimates Amazon will pay about $6 a unit — rather than about $8 a unit for UPS and $10 a unit at FedEx.
"This implies that in 2019, the ~$2-4 savings per package could result in [$1 billion to $2 billion] savings for Amazon, or [3 percent to 6 percent] of its global shipping costs," Shanker said.“

https://www.cnbc.com/2018/12/04/ups-fedex-shares-fall-after-morgan-stanley-highlights-amazon-air.html?__source=iosappshare%7Ccom.apple.UIKit.ac tivity.CopyToPasteboard


No Land 3
12-04-2018, 01:06 PM
The whipsaw continues

wjcandee
12-04-2018, 02:11 PM
The whipsaw continues

The Morgan Stanley piece is actually embarrassing. For example, they state that things are really going to get going when all 40 aircraft are delivered. 🙄🙄 Everything they say, at least everything that was reported on CNBC, appears to be a wild-ass guess and is probably wrong, because it appears to me, at least, that several of their underlying assumptions are incorrect. Which is weird, because so much of the stuff is in the public domain, but analysts and media types seem to have no actual interest in, or aptitude at, ferreting it out. The basic premise of the article, which is that Amazon Air is going to take some amount of low-margin air business from FedEx and UPS, is basically a truism, so it's a silly read as far as I can see. The premium business for those two carriers, which is overnight delivery, is entirely unaffected by Amazon Air at the moment, and is likely to be so for a very long time if not forever. The capital investment necessary to do reliable overnight air is huge and probably not worth it. Right now, Amazon Air plugs into the existing Amazon organic ground delivery Network and or the USPS. These low cost last-mile options work fine for second day, and even overnight where the origin Distribution Center is very local. However, they would be well-challenged to get me my package next-day if it's coming off of a plane that left ONT at 9 p.m. or 10 p.m. for ABE or BWI, much less if it had to be sorted at a hub. They operational quality necessary to accomplish that just costs massive money and would seem to defeat the purpose of getting in the business in the first place.


CallmeJB
12-04-2018, 02:33 PM
The Morgan Stanley piece is actually embarrassing. For example, they state that things are really going to get going when all 40 aircraft are delivered. ���� Everything they say, at least everything that was reported on CNBC, appears to be a wild-ass guess and is probably wrong, because it appears to me, at least, that several of their underlying assumptions are incorrect. Which is weird, because so much of the stuff is in the public domain, but analysts and media types seem to have no actual interest in, or aptitude at, ferreting it out. The basic premise of the article, which is that Amazon Air is going to take some amount of low-margin air business from FedEx and UPS, is basically a truism, so it's a silly read as far as I can see. The premium business for those two carriers, which is overnight delivery, is entirely unaffected by Amazon Air at the moment, and is likely to be so for a very long time if not forever. The capital investment necessary to do reliable overnight air is huge and probably not worth it. Right now, Amazon Air plugs into the existing Amazon organic ground delivery Network and or the USPS. These low cost last-mile options work fine for second day, and even overnight where the origin Distribution Center is very local. However, they would be well-challenged to get me my package next-day if it's coming off of a plane that left ONT at 9 p.m. or 10 p.m. for ABE or BWI, much less if it had to be sorted at a hub. They operational quality necessary to accomplish that just costs massive money and would seem to defeat the purpose of getting in the business in the first place.
My observation is that Amazon's goal is to make overnight shipping of products irrelevant. They aim to have all the products you want already in one of the warehouses close to you, making overnight or even same day delivery cheap and convenient.

There will always be a need for overnight, cross-country shipping of many things. But Amazon tries to reduce that need for their products as much as possible.

airbus300
12-04-2018, 02:42 PM
From the montley fool article today mentioning Amazon, UPS, Fedex, etc:

FedEx stock may look cheap when valued on GAAP earnings, but the company's free cash flow is currently running negative -- and in fact, FedEx has been burning cash for more than two years straight.

Can this be confirmed or denied?

BoilerUP
12-04-2018, 03:07 PM
A review of 2018 and 2017 10-Ks shows a 18% drop in cash from 17 to 18, after a 12% rise from 16 to 17.

Given revenue & income growth along with CapEx, I don’t quite think the sky is falling in Memphis.

Adlerdriver
12-04-2018, 04:46 PM
- and in fact, FedEx has been burning cash for more than two years straight.
At the rate they're buying brand new 777s and 767s, I'm not surprised.

BlueMoon
12-04-2018, 05:13 PM
From the montley fool article today mentioning Amazon, UPS, Fedex, etc:

FedEx stock may look cheap when valued on GAAP earnings, but the company's free cash flow is currently running negative -- and in fact, FedEx has been burning cash for more than two years straight.

Can this be confirmed or denied?

Cash flow from operations - capex = free cash flow.

It very well could be negative the last few years as they invest in the updating the operation.

Fy 2018
Cash from operations $4.6 billion
Capex $5.6 billion

Fy 2017
Cash from operations $4.9 billion
Capex $5.1 billion

zerozero
12-04-2018, 10:19 PM
If investors are betting against UPS & FedEx they're flat out drunk on Amazon Kool-Aid.

All they need to do is pull back the curtain just a little bit to see the dead body.

But whatever. A fool and his money are soon parted.

Reactivity
12-05-2018, 07:48 AM
If investors are betting against UPS & FedEx they're flat out drunk on Amazon Kool-Aid.


Nobody appears to be betting on Atlas or ATSG any more than they're betting against FedEx or UPS.

http://tinyurl.com/ydb6pudp

The people who write that stuff are paid to provide content that will drive page views to generate advertising revenue and attention to their own paid services. FedEx is (or at least was for a long time) a recommendation of one of The Motley Fool's paid newsletters.

filejw
12-05-2018, 02:08 PM
My observation is that Amazon's goal is to make overnight shipping of products irrelevant. They aim to have all the products you want already in one of the warehouses close to you, making overnight or even same day delivery cheap and convenient.

There will always be a need for overnight, cross-country shipping of many things. But Amazon tries to reduce that need for their products as much as possible.

Yes this is the long term goal ! Strategic warehousing that makes two day delivery via truck viable nation wide . I don’t doubt they will have the volume to do this within a few years .

wjcandee
12-05-2018, 03:47 PM
Hard to do in real life. One Amazon program to do this ended up introducing all sorts of counterfeit and beyond-expiration stuff into the system.

CallmeJB
12-05-2018, 05:25 PM
Hard to do in real life. One Amazon program to do this ended up introducing all sorts of counterfeit and beyond-expiration stuff into the system.
That is interesting. I had not heard of this particular failure. Can you expand?

wjcandee
12-05-2018, 06:20 PM
Sure. What they did was try to utilize the significant stocks of particular SKUs of certain products that had not been acquired by them, but rather were in the warehouse as a result of being put there by participants in Fulfillment by Amazon, which is something offered to Marketplace users.

They figured if there was, say, a hoverboard with a particular SKU in Cleveland, but it was owned by a Marketplace participant, they could use that (with the owner's permission) to fulfill an Amazon order in Cleveland, rather than airmail one in from California. Fair enough. But what they discovered was that things under the same SKU weren't necessarily authentic or even in date, the way they would be if Amazon directly sourced them. So they got a lot of complaints about very popular products being counterfeit or out of date, not because Amazon didn't properly source them, but because they were relying on the good faith of Marketplace participants. Big mistake.

And some of the products that were being faked would just blow your mind, because who would think it would be worth doing so? But they did. I don't know if they still use the program at all, or merely severely restrict it, but it was a huge fiasco. Counterfeits from Marketplace participants in general are I'm sure still a problem, but at least now if it says shipped from and sold by amazon.com, it is likely to be authentic, which wasn't always true when this program was in place. It might be shipped from and it might be sold by, but it wasn't necessarily sourced by Amazon.

midnightshuttle
12-07-2018, 12:06 PM
Soooo Amazon will take over the world and make a big swirl love child of Purple and Brown.......some one is spiking the ATI Koolaid again



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