FedEx to outsource more capacity
#1
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Joined APC: Oct 2012
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FedEx to outsource more capacity
FedEx to buy capacity operated by other carriers - CargoFacts.net
Faced with a shift in demand by shippers to lower-yield, deferred services, FedEx will turn to outsourced capacity in the bellies and on the main decks of passenger and freighter aircraft operated by other carriers.
The disclosure was made by David Cunningham, the President of FedEx’s Asia Pacific Division, during his keynote address at the just-concluded Cargo Facts Asia event in Hong Kong.
FedEx has said previously that it is changing its network in response to the shift of demand from high-yield to lower-yield services. The company has also said that those changes would include cutting capacity and moving lower-yield shipments to lower-cost modes. But FedEx has not specified exactly which “lower-cost modes” it would utilize – until this week’s Cargo Facts Asia.
The reliance on outsourced capacity will be a substantial change for FedEx Express, which has traditionally relied almost exclusively on owned capacity.
Cunningham’s announcement comes as FedEx celebrates its fortieth anniversary this week. Federal Express, which pioneered the air express concept, is now the world’s largest air cargo carrier (reporting 15.97 billion RTKs in 2011) and operator of the world’s largest jet freighter fleet (currently 347 units).
Cunningham broke down the total international air and ocean freight revenue pie taken by the three main groups that compete for it, over the course of the 17 years from 1994 to 2011. At the beginning of the period, 69% of the freight by revenue was carried on container ships, 26% moved as international air freight, and the remaining 6% was air express. Seventeen years later, the express traffic share had almost doubled, accounting for 11% of the total, and ocean freight’s share had also increased by five percentage points to 74%, while revenue from international air freight carriage sank by 10 points to just 15%. This is interesting because it shows how, even with overall demand rising, the combination carriers and non-express all-cargo carriers are being squeezed from both above and below.
FedEx, Cunningham said, was adjusting to these changes in traffic.
As to the Cargo Facts Asia event itself, we were joined this year by a capacity crowd at the Langham Hotel in Hong Kong, including senior executives from companies in all facets of the air freight and express industry and from all parts of the world. We will post more about the event here over the next week, but I think the best way to sum it up is to say that everyone I spoke to is planning to return in 2014 -- as am I.
Faced with a shift in demand by shippers to lower-yield, deferred services, FedEx will turn to outsourced capacity in the bellies and on the main decks of passenger and freighter aircraft operated by other carriers.
The disclosure was made by David Cunningham, the President of FedEx’s Asia Pacific Division, during his keynote address at the just-concluded Cargo Facts Asia event in Hong Kong.
FedEx has said previously that it is changing its network in response to the shift of demand from high-yield to lower-yield services. The company has also said that those changes would include cutting capacity and moving lower-yield shipments to lower-cost modes. But FedEx has not specified exactly which “lower-cost modes” it would utilize – until this week’s Cargo Facts Asia.
The reliance on outsourced capacity will be a substantial change for FedEx Express, which has traditionally relied almost exclusively on owned capacity.
Cunningham’s announcement comes as FedEx celebrates its fortieth anniversary this week. Federal Express, which pioneered the air express concept, is now the world’s largest air cargo carrier (reporting 15.97 billion RTKs in 2011) and operator of the world’s largest jet freighter fleet (currently 347 units).
Cunningham broke down the total international air and ocean freight revenue pie taken by the three main groups that compete for it, over the course of the 17 years from 1994 to 2011. At the beginning of the period, 69% of the freight by revenue was carried on container ships, 26% moved as international air freight, and the remaining 6% was air express. Seventeen years later, the express traffic share had almost doubled, accounting for 11% of the total, and ocean freight’s share had also increased by five percentage points to 74%, while revenue from international air freight carriage sank by 10 points to just 15%. This is interesting because it shows how, even with overall demand rising, the combination carriers and non-express all-cargo carriers are being squeezed from both above and below.
FedEx, Cunningham said, was adjusting to these changes in traffic.
As to the Cargo Facts Asia event itself, we were joined this year by a capacity crowd at the Langham Hotel in Hong Kong, including senior executives from companies in all facets of the air freight and express industry and from all parts of the world. We will post more about the event here over the next week, but I think the best way to sum it up is to say that everyone I spoke to is planning to return in 2014 -- as am I.
#2
Gets Weekends Off
Joined APC: Sep 2009
Position: Left seat of a Jet
Posts: 514
What can I say except every time I come to Memphis management treats me like a deprived schoolgirl by feeding me steaks and wine. I always hate myself in the morning but what can you do except to oppose or enjoy the ride.
#3
I never see that on the catering choices. I must be on the wrong jet.
#7
Gets Weekends Off
Joined APC: Apr 2012
Posts: 260
The hole in our Scope...
Para 4 of our scope clause....big hole...
Notwithstanding any other provision of the Agreement, the Company may continue to interline, co-load, code-share, part charter and enter into block space agreements with other carriers to move freight and service in International (outside the contiguous 48 states) markets as required. Within the Domestic system (the contiguous 48 United States) the use of the above shall be done only: (1) when necessary to expedite or (2) when economically necessary, unless otherwise agreed to by the parties
Notwithstanding any other provision of the Agreement, the Company may continue to interline, co-load, code-share, part charter and enter into block space agreements with other carriers to move freight and service in International (outside the contiguous 48 states) markets as required. Within the Domestic system (the contiguous 48 United States) the use of the above shall be done only: (1) when necessary to expedite or (2) when economically necessary, unless otherwise agreed to by the parties
Last edited by HKFlyr; 04-29-2013 at 03:03 PM. Reason: Spelling
#8
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Joined APC: Oct 2012
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Para 4 of our scope clause....big hole...
Notwithstanding any other provision of the Agreement, the Company may continue to interline, co-load, code-share, part charter and enter into block space agreements with other carriers to move freight and service in International (outside the contiguous 48 states) markets as required. Within the Domestic system (the contiguous 48 United States) the use of the above shall be done only: (1) when necessary to expedite or (2) when economically necessary, unless otherwise agreed to by the parties
Notwithstanding any other provision of the Agreement, the Company may continue to interline, co-load, code-share, part charter and enter into block space agreements with other carriers to move freight and service in International (outside the contiguous 48 states) markets as required. Within the Domestic system (the contiguous 48 United States) the use of the above shall be done only: (1) when necessary to expedite or (2) when economically necessary, unless otherwise agreed to by the parties
Good thing we got the A380 payscale in exchange for this language.
#10
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Joined APC: Oct 2012
Posts: 404
Same difference! How could we be so stupid as to agree to such horrible scope language. Up till now the company has always preferred to use it's own aircraft, but now with things tight overseas, Fred will use this scope language to royally screw us.
This is the perfect storm for the company. Retiring the 727 and the 767 issue. I fully expect a return to threats of furloughs and 4a2b.
This is the perfect storm for the company. Retiring the 727 and the 767 issue. I fully expect a return to threats of furloughs and 4a2b.
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