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Old 12-12-2011, 03:39 AM
  #21  
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Originally Posted by Sideshow Bob View Post
Reading here, it would seem that Fed Ex is the only stock to invest in...period, because nothing bad will EVER happen.
High blood pressure, much?
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Old 12-12-2011, 03:53 AM
  #22  
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Email Isn't Killing The Post Office
Townhall.com ^ | December 12, 2011 | Jeff Jacoby

Posted on Monday, December 12, 2011 3:34:51 by Kaslin

IT'S GROUNDHOG DAY at the US Postal Service: time once again for the familiar laments about how the agency's financial losses are surging, how demand for its services is plummeting, and how officials have no choice but to close local facilities, raise the price of stamps, and reduce delivery standards.


Last week the Postal Service announced plans to cut $3 billion in costs by slowing down first-class mail service and eliminating about half of the country's 461 mail-processing centers. That would mean an end to next-day delivery of first-class mail. Although that might not seem like much of a threat for something already thought of as "snail mail," the Postal Service has insisted for decades that 95 percent or more of local first-class mail is successfully delivered overnight. When the new standards take effect next spring, two-day delivery will become the new overnight, even for mail that's just traveling down the street.


If all this sounds familiar, you aren't hallucinating.


"In 1990, the Postal Service launched a nationwide plan to intentionally slow down mail delivery," policy analyst James Bovard wrote in his 1994 book, Lost Rights. First-class letters were already taking 20 percent longer to reach their destination than they had in 1969, but Postmaster General Anthony Frank assured Congress that the reduction in delivery standards would "improve our ability to deliver local mail on time." In the weird logic and language of the American postal system, the key to success was to give the public less for its money.


The more things change in Postal World, the more they remain the same. In the 1960s, a stunning 83 percent of the agency's total budget went to wages and benefits. Three decades later, after billions of dollars had been spent on automation, labor costs still accounted for 82 percent of the budget. And in 2011? "Decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office's costs," The New York Times recently reported. "Labor represents 80 percent of the agency's expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors."


That things have been getting tougher for the Postal Service, nobody disputes. With the ubiquity of e-mail, text-messages, social media, and online bill-paying, the volume of mail entrusted to the post office has been sinking for years. In a study published last year, the Government Accountability Office noted that first-class mail, the Postal Service's most profitable business line, had declined 19 percent from its peak in 2001, and was expected to fall another 37 percent by 2020.


The Internet Age may be wreaking havoc with the post office and its mail-delivery business, but what industry in America isn't going through the same wrenching experience? And not many institutions enjoy the benefits that federal law confers on the Postal Service: It pays no income or property taxes, it's exempt from vehicle licensing requirements and parking fines, and it has the power of eminent domain. Most significant of all, it has a legal monopoly on the delivery of mail: The federal Private Express statutes make it a crime for any private carrier to deliver letters. The only exception is for "extremely urgent" letters, and even those may be delivered by a private company only if it's willing to charge a much higher rate than the Postal Service would have charged.


They don't have a legally binding monopoly, unlike the US Postal Service. Yet they're thriving, while the post office is struggling to stave off bankruptcy.


Yet with all its privileges, the Postal Service is struggling, while UPS and FedEx flourish. Why? Because they have something invaluable that the post office lacks: Competitors.


"We have a business model that is failing," Postmaster General Patrick Donahoe said last week. It's true. But it was true long before e-mail came along. What is killing the post office is the lack of genuine, head-to-head competition that forces vendors to compete for customers by pushing quality up and holding prices down. Only in a government-sheltered monopoly like the Postal Service would labor costs remain as bloated as they have, year in and year out.


More than a decade into the 21st century, there is no reason why mail shouldn't be delivered by multiple enterprises, each one competing for market share and goodwill by providing consumers with a valued service. In nearly every other area, after all, Americans embrace competition. With competition comes accountability. And only when the Postal Service is accountable -- only when its customers are free to take their business elsewhere – will the endless round of excuses and losses and service reductions finally come to an end.



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About 70% of USPS service is junk mail, they have been left holding the low margin bag. The decline of the USPS is nothing but good news for FEDEX/UPS, but most of the high margin business has already been captured.

Last edited by jungle; 12-12-2011 at 04:32 AM.
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Old 12-12-2011, 04:37 AM
  #23  
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Originally Posted by Sideshow Bob View Post
Reading here, it would seem that Fed Ex is the only stock to invest in...period, because nothing bad will EVER happen.
Nothing is a wee broad. But when it comes to the Post Office I see a win or no lose.

Now what happens after the next all encompassing Euro deal craps out. Or what happens to the dollar when one party thinks everything will be fine if we can just throw 2 trillion on the fire and the other party thinks throwing 1.92 trillion on the fire is being frugal, you will have to start another thread.
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Old 12-12-2011, 04:54 PM
  #24  
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Federal law requires that much of the first class mail be delivered to a 1-day (overnight) service standard. The closing of the MEM airport center is a result of the fact that the post office is effectively removing most first class mail from the air system by eliminating the 1 day/overnight service standard. First class mail does not compete with FedEx delivery products (think bills, junk mail and periodicals). No service standard changes are planned, as of now, for what the post office calls “competitive products” like express and priority mail.

The 250 mail processing centers on the current closure list are, for the most part, not located in cities with FedEx air hubs. In about 2 years the consolidated postal processing network will more closely resembles the FedEx network. I don’t see it so much as turning over all air ops to FedEx as much as streamlining their network to resemble the FedEx network to gain efficiency. Network efficiency is good for business, but bad for labor.

The post office may increase their weak competitive edge as a result of the new streamlined network, but the potentially huge tremor is the removal of first class mail from the air system. First class mail is essentially highly subsidized volume which makes up a substantial portion of the total volume shipped through the dedicated postal air network. Combine the overall loss in subsidized non-competitive volume with the streamlining of the existing postal network which now carries exclusively competitive product and both parties might lose interest in the current version of the dedicated postal air network in 2013.

Last edited by kjq10a; 12-12-2011 at 05:08 PM.
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Old 01-09-2012, 02:37 PM
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About 70% of USPS service is junk mail, they have been left holding the low margin bag. The decline of the USPS is nothing but good news for FEDEX/UPS, but most of the high margin business has already been captured.[/QUOTE]

That "Junk Mail" makes up a bunch of subsidized air volume in the dedicated postal network (which has most recently (since 2002) been operated by FedEx). Both FedEx and UPS will get their fair share of the "competitive product", but the reduction or elimination of the dedicated postal network will be good for profits, but bad for fleet size and staffing levels at Fed Ex.
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Old 01-09-2012, 02:38 PM
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FedEx Seen Losing $400 Million in Next Postal Contract: Freight
By Natalie Doss - Jan 5, 2012 10:01 PM MT
FedEx Corp. (FDX), the delivery company that is both a partner and rival to the U.S. Postal Service, may see a federal mail-flying contract drop by more than 27 percent in 2013 as the agency restructures. Revenue from carrying Postal Service express, priority and first-class mail in FedEx cargo jets may shrink to less than $1 billion annually once the current agreement expires and a new accord is negotiated, according to Satish Jindel, president of SJ Consulting Group Inc. in Sewickley, Pennsylvania.
A Postal Service goal of saving $2.1 billion a year isn’t reachable “without making some changes in the way they move things,” Jindel said in a telephone interview. That is “likely to result in a reduction of the number of packages that they will need transported by air.” The risk to mail flying spotlights the ties binding the U.S. agency to itslargest supplier (FDX) -- the company founded in 1971 by Chief Executive Officer Fred Smith to speed air-freight shipments. U.S. government sales make up about 3.7 percent of FedEx’s annual total, data compiled by Bloomberg indicate.
Postal Service Chief Financial Officer Joseph Corbett has said the agency will cut mail sent by air by boosting ground shipments, without giving details. Regulators discussed the agency’s financial crisis yesterday at a meeting in Washington. Some savings would come “from changes and cost elimination for people who handle the mail,” Jindel said. Some “is going to come from reducing transportation expenditures that they incur. That transportation total amount is almost $6 billion; of that, $1.4 billion is being spent on FedEx.”
FedEx Freighters
Freighters from Memphis, Tennessee-based FedEx help fly U.S. mail that needs to arrive within a few days. The Postal Service’s agreements with companies such as FedEx and United Parcel Service Inc. (UPS) mean the agency doesn’t have to maintain a large air-cargo fleet.
“The most likely outcome is that FedEx keeps the priority- mail contract,” David Ross, a Stifel Nicolaus & Co. analyst in Baltimore, said in an interview. “But maybe it’s at a lower rate or a lower guaranteed minimum” value because of the Postal Service’s dwindling mail deliveries.
The agency is struggling with a 2012 loss projected at $14.1 billion. First-class volumes tumbled 29 percent from 2000 through 2011, according to Bloomberg Industries data. CFO Corbett said in November, “We’re not looking to grow what’s in the air.”
UPS Estimate
UPS’s mail-flying contract is valued at about $95 million, according to David Hendel, a partner atWashington law firm Husch Blackwell LLP who specializes in postal contracting. FedEx’s $1.4 billion contract for fiscal 2010 made it the Postal Service’s biggest supplier, according to Hendel, who compiles an annual list of top contractors using documents obtained through the Freedom of Information Act.
FedEx isn’t speculating on the terms of any future contract, a spokeswoman, Maury Donahue, said in an e-mail. The company and the Postal Service have “a longstanding and strong relationship,” she said yesterday. The current agreement was signed in 2006 and amended several since then, filings show.
Jindel said UPS’s contract to fly mail probably won’t be cut because the sum is relatively small.Susan Rosenberg, a UPS spokeswoman in Atlanta, said, “We believe there needs to be a successful Postal Service, and we ourselves are a beneficiary of that, too.”
Trailing UPS
FedEx has lagged behind UPS for the past one- and two-year (FDX) periods, after surging ahead of its rival immediately following the bear-market low in March 2009. FedEx slid 10 percent in the 12 months ended yesterday, while UPS was up 0.3 percent and the broader Standard & Poor’s 500 Index gained 0.4 percent.
FedEx doesn’t disclose sales from individual customers, such as the Postal Service. Revenue for the fiscal year (FDX) that ended in May was $39.3 billion. The Postal Service and FedEx operate on different fiscal years.
Over time, the company may benefit from the Postal Service’s continued shrinkage, said Art Hatfield, a Morgan Keegan & Co. analyst based in Memphis, who like Stifel Nicolaus’s Ross recommends buying UPS and FedEx shares.
“Any time any competitor, theoretical or direct or indirect, lowers their level of service, it’s going to benefit everybody else,” Hatfield said in an interview.
Saturday Gain
Consultant Jindel projected that Postal Service’s proposal to end six-day-a-week deliveries may produce a net $15 million revenue gain for FedEx. The company now has a product known as SmartPost, in which FedEx moves goods from a shipper such as a catalog retailer to a postal center for the final delivery leg.
Current SmartPost customers who want to keep Saturday service could switch to FedEx Home Delivery, which generates an average of $4.60 more in revenue per package than SmartPost shipments, Jindel said.
It’s too soon to say what transport companies may pick up the Postal Service mail shipments being shifted to trucks as the agency seeks savings, Jindel said. FedEx Ground is one possibility, he said. What is clear is that Postal Service cuts and falling volumes mean fewer pieces of mail will make part of their journey on FedEx planes, he said.
“Air is the most expensive form of transportation,” he said. “If they’re going to do it right, they must be looking to bring more of that air to the ground.”
To contact the reporter on this story: Natalie Doss in New York at [email protected]
To contact the editor responsible for this story: Ed Dufner at [email protected]
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Old 01-10-2012, 04:40 AM
  #27  
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Originally Posted by matty View Post
First Class mail is different than Express mail. First Class was guaranteed to get there in 1-3 days. As far as I know, we don't carry First Class mail. We carry Express mail. Time definite stuff.

Read about it below (they've already changed their First Class delivery time to 2-3 days...as the article from Raider boy said they would...three days ago the website said 1-3 days for First Class stuff):

https://www.usps.com/send/service-chart.htm
Matty FYI

We carry a Ton of First Class Mail! If you look in many of the cans of any FDX Airplane on the afternoon outbound flights they are Full of Orange bags. These bags are full of First Class Mail.

We also Carry USPS "Express" Overnight Mail which is a different Product and is carried in Cardboard Envelopes in Plastic Bags very similar to our own Overnight envelopes.

The USPS will still need to ship pretty large amounts of first class mail on us both in the Domestic and International market. Both Express Mail and 2-3 day delivery 1st class mail will still require movement on Aircraft.

As was previously stated, how much this negatively (or not) affects FDX is anybody's guess.
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