Flyinhigh

I don't know the details of the contract between FedEx and the USPS (penalty clause, escape clause, etc.) but I don't see how this could not impact FedEx. I think we do carry some first class mail (never went back to look in the cans) and if so there will be some changes. Perhaps the USPS will go to a more regional approach and use trucks more (FSD/OMA/ICT get trucked to MKC, ORF/RIC get trucked to IAD, etc.).
The USPS business model is outdated and is in serious trouble. Like any large government agency they are slow to adapt to change. When the last time any of you bought a stamp or paid a bill by mail? The bulk rates negotiated by large shippers are essentially money loosers. The current and future retiree obligations and unsustainable. There is a government bailout in the USPS's future (can you say "too big to fail".)
FedEx may pick up some business due to reliability issues (mail order pharmacy, on-line retail), but this will all go at night with the other FedEx stuff. The biggest impact I see in our future is a loss of a lot of our daytime flying. We may go back to longer weekend layovers like it used be before the USPS.

kwri10s

Sure there is no way they could just cancel a contract...

If I was a betting man I'd say at least for the near term you wont see new hires. If I was the company hiring guru, I'd wait until the post office gives better indications of where they are planning on cutting. Worst case, no more day flying domestically. Back to 2009 bid packs. Best case very little change, but we move a whole lot of first class mail.

Unknown Rider

You know that we move a lot of first class mail, how? From what I understand, we carry express or priority mail for the USPS.

OKLATEX

WASHINGTON, Aug. 1 /PRNewswire/ -- The U.S. Postal Service (USPS) and
FedEx Express, a subsidiary of FedEx Corp., have agreed to a new contract
for domestic air transportation of postal express shipments. The new
agreement continues through September 2013, and supercedes the current
contract which was set to expire in August of 2008.
In 2001 the Postal Service and FedEx Express signed a seven-year
contract for airport-to-airport delivery of Priority Mail, Express Mail and
First-Class Mail within the United States. The contract announced today
replaces the final two years of that contract and adds five additional
years of service.
"The new contract allows the Postal Service and FedEx to continue our
successful business relationship," said Postmaster General John E. Potter.
"This relationship benefits postal customers by allowing us to maintain our
high service standards while keeping costs affordable."
"Reaching a new agreement a full two years ahead of schedule is proof
positive of the excellent relationship that FedEx has developed with the
U.S. Postal Service," said David J. Bronczek, president and chief executive
officer of FedEx Express. "We are proud of the trust the Postal Service has
placed in us and their confidence in our fast, reliable and efficient
service."
The new agreement is worth approximately $1 billion a year for a
minimum of seven years. FedEx Express will fly about 4 million pounds of
U.S. mail every business day. The 2001 retail agreement, giving FedEx the
opportunity to place FedEx self-service collection boxes on postal
property, is not affected by today's announcement. That portion of the
contract expires in 2009.
Since 1775, the United States Postal Service and its predecessor, the
Post Office Department, have connected friends, families, neighbors and
businesses by mail. An independent federal agency that visits more than 144
million homes and businesses every day, the Postal Service is the only
service provider delivering to every address in the nation. It receives no
taxpayer dollars for routine operations, but derives its operating revenues
solely from the sale of postage, products and services. With annual
revenues of $70 billion, it is the world's leading provider of mailing and
delivery services, offering some of the most affordable postage rates in
the world. The U.S. Postal Service delivers more than 46 percent of the
world's mail volume -- some 212 billion letters, advertisements,
periodicals and packages a year -- and serves ten million customers each
day at its 37,000 retail locations nationwide.

SOURCE U.S. Postal Service





We also have the Global Express Guaranteed contract. I believe first awarded in 2004, renewed in 2009. DHL had it before us.

Regarding the main postal contract, from what I have read, it was set to expire at the end of September 2013, with us still flying Priority and some First Class. I have also read that we get around a $1.3 Billion a year with this contract.

Our MEC chairman summed it up best in his last email, it is too early to tell how it will affect us.

My hope is that retirements willl soften any loss of flying that we see.

FDXLAG

Most of the things I have read the Post office is closing about half of its postal processing centers. That means there will only be about 500 left. Any bets that the ones we deal with arent on the could be closed list, and if they are think they will shift our business to the one ten minutes down the road that is staying open?

In my opinion the post office is cutting a lot of overhead, most of the changes I have read about involve slowing delivery of 1st class overnight mail. We dont fly the mail from jfk to ewr. We fly the mail from gfk to ewr.

Semi civil service employees are the real costs the post office needs to control and it sounds like they are trying. I think they make money by having FDX handle a lot of their mail overhead. This could mean more business for us. Just my opinion.

kjq10a

The Jet Cove, TN Annex (on MEM airport) and the Louisville, KY Annex (adjacent SDF airport) are both on the list to be closed.

FDXLAG

There are 2 other postal processing centers in Memphis. The fact that they are closing their airport centers could just as easily be seen as the Post Office turning all air ops over to us.

It is all speculation, but I prefer to think of us as the outsourcer as opposed to the outsourcee.

MD10PLT

Seems pretty simple to me. The USPS is reducing the quality of their service. People pay extra for the higher quality of service FedEx provides. They will either choose to pay the USPS for first class/express mail, let FedEx handle some of the transportation, and get less quality service, or they will pay more for the FedEx guarantee. Which ever they choose FedEx wins.

Sluggo_63

...or they may choose UPS. This is where I think it may hurt us. Before, UPS had it's customers, FedEx had theirs, and USPS customers were unwittingly FedEx customers. Now, if the USPS customers (formerly our customers) don't have the USPS option, they have to choose FedEx or UPS, so we may lose some of those to Brown.

Sideshow Bob

Reading here, it would seem that Fed Ex is the only stock to invest in...period, because nothing bad will EVER happen.