Birdsmash

“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-...pyToPasteboard

No Land 3

The whipsaw continues

wjcandee

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

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

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

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

At the rate they're buying brand new 777s and 767s, I'm not surprised.

BlueMoon

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

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

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.