heavycargo

Fred Smith and the rest of the leadership better wake the heck up!! Amazon is the sleeping giant that is going to continue to wreak havoc on Fedex's stock and future operations. Wall street isn't buying the denial and hopefully TNT does not sink the ship.

When you have executives like Sean Haley punching out and joining amazon it's about time to probably sober up because its coming.

"After an abrupt resignation in 2018, a former FedEx exec has a new home with Amazon.

Sean Healy, who spent 32 years with Memphis-based FedEx Corp., most recently as the regional chief operating officer for FedEx Express Europe, resigned in October 2018. The Memphis Business Journal recently learned he is now a director with Amazon."

Executives like Healy and Bronczek don't quit newly appointed positions because everything is going well. There is some serious turbulence within the toxic leadership culture that is just now showing it's face.

Once his noncompete is complete you better believe Bronczek will be recruited and most likely waving the Amazon Prime flag as well.

"FedEx has listed Amazon among competing companies in non-compete agreements recently with high-ranking departures David Cunningham, former FedEx Express president and CEO, and David Bronczek, former FedEx Corp. president and chief operating officer."

Change happens and what awesome yesterday may not be what is fashionable tomorrow.

FreightMonkey

Totally agree


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airbus300

Don't be so pessimistic (Is what my wife told me just before they shut down one of my previous companies).

heavycargo

Fred Smith said the threat was "Fantastical"

Dave Clark SVP of Amazon responded with his tweet.



Amazon is not playing games. They have the capital and they are making the slow moves to become the predominant feature in this space. The hubris at the top of the Fedex ladder will end up being costly if things don't change.

PurpleToolBox

I agree with you. I didn’t know about Clark’s tweet. That’s scary.

But what should FedEx do?

heavycargo

I think the first step is to be honest about the current changing landscape. What use to be a duopoly is about to seriously change.

Secondly, get rid of the notion that the old way of doing business is going to guarantee future security. Yes, there is value to having a logistic network that is well trenched, however that's the old way of thinking in terms of how things work today. Technology and the ability to quickly deploy a massive army of individuals with cell phones to help in any city around the world has changed the way of doing business. Ask the Yellow cab taxi drivers how things are working out for them these days.

I don't think its coincidental that the press in Memphis is reporting seeing more and more Amazon vans driving around town delivering packages. Amazon has put Fedex on notice in a very obvious manner.

Amazon has a valuation of almost a trillion dollars. Conservatively 3 to 4 times the operating income depending on who is reporting. They currently have the benefit of operating at a serious discount as a result of their CMI/ACMI contracts. They will continue to do this as long as its profitable. This is exactly how UPS started their airline in 1981 using Evergreen and Orion. We are not seeing anything necessarily new here with their approach. They own their own iron and they are leasing others. They have just rolled out their first 737 and there are a lot more to come.

In the early 1970s UPS was completely caught off guard when Fedex showed up on the playing field. Things seem eerily familiar.

The long term problem with Fedex is at the end of the day it's just a logistics company with many arms. Fedex is feverishly trying to reinvent itself in the wake of the changing markets creating new solutions in terms of ecommerce and supply chain logistics. It just doesn't have the appeal that Amazon does in terms of reinventing itself into a preferred household name.

It's probably a fact that over 90% of the individuals reading this post are happily paying Amazon Prime customers. Therein lies the reality and the problem that is not so obvious at the moment. Amazon has changed the way that you and the world does business. You will witness in a short period of time when your prime accounts automatically enroll you into their Amazon shipping program making it extremely easy to ship packages unlike waiting at the DMV like shipping stores or partner shopping centers. At the click of the button Amazon will command over 65% of the U.S. population enrolled in their shipping program. Automatic billing fast and easy. They are going to make money on the delivery and the pick up automatically.

Amazon has destroyed or disrupted almost every sector it has reached. Ask the freight forwarders, shipping cargo companies and others that are seeing the wave of change. Amazon owns and is operating cargo shipping across the seas. This is massive in terms of supply chain solutions.

"News of Amazon's intent to get into shipping freight across the ocean first broke last year when the company gained approval from the Federal Maritime Commission to act as a Ocean Transportation Intermediary. "

(https://www.engadget.com/2017/01/26/...ocean-freight/)

(https://www.ttnews.com/articles/rise-amazon-logistics)

People here are just thinking in terms of airplanes and airlines. Amazon has a massive footprint. Why is this important to understand or ignore if you wish?

Fred Smith has always boasted about two things which seem to protect Fedex which is his network and business to business model. The network though valuable, can be created quicker then most people believe using technology these days. What about the protected business to business model Fred hangs his hat on?

Imagine being a struggling company desperate for business and you have to make a choice who will provide your shipping needs. Fedex can get your packages from point A to B. Amazon will not only deliver your package they have the capability of plugging your business into the biggest online market place in the world they own, instantly changing the way you do business and drastically increasing your bottom line. What's the better solution? In the near future its no longer going to be good enough to just be a logistics company. At the moment I can't imagine Fedex creating an online market place that can compete with Amazon. Amazon has already won the hearts of its faithful customers it will soon earn the respect and loyalty of businesses.

Fedex needs a fresh infusion of talent which has the capability of thinking beyond it's myopic perspective and more along the lines of these internet giants. Instead they depend on their next protege Raj who is strapped with little breathing room.

"Subramaniam’s effectiveness will be compromised because he will be holding six jobs at once"

All is not well at the top. It's not coincidental that Bronczek immediately departed after Fred changed his mind concerning the mandatory retirement age excluding himself from the process. Bronczek was the golden child being groomed with big plans ahead of him. Hand him 2.5 million dollars on the way out and he can smile waiting for his 5 year noncompete to be over with.

(https://www.bizjournals.com/memphis/...ement-age.html)

"To connect the dots, one must understand the stature held by Bronczek at the $69 billion Memphis-based giant. A 42-year FedEx veteran, Bronczek was held in such high esteem, especially by Smith, that when the legendary founder relinquished the president’s role in 2016, Bronczek was tapped to succeed him. The 64-year-old Bronczek was also the only management member besides Smith to serve on the board."

"A statement issued late yesterday said Bronczek made a “personal decision” to retire."

He made a personal decision not to put up with Fred's B.S. and move on less than one month after his promotion.

(https://www.freightwaves.com/news/ai...ises-questions)

Put down the Purple Kool Aid folks and start asking the hard questions.

MEMFO4Ever

Save money, keep your resume current, stay in touch with buds at OAL, and be ready to bolt. It will get ugly sooner rather than later. Amazon is only the giant that it is because of rock bottom costs. A lot of that has to do with very low wages and terrible working conditions. IMO the purple Titanic is already surrounded by icebergs with no navigable safe passage. Simply, it is already too late.

howardhughes8

While both Fedex and UPS have been slow to accept reality, UPS seems to have come to the realization that Amazon IS a competitor and a threat, and started (albeit slowly) evolving with the recent SMB initiatives, to mention one change. Fedex has traditionally been more innovative and aggressive in the sector, and I sincerely hope senior management does wake up quickly. UPS has traditionally been like the tortoise, not the hare, but leadership seems very stable, unified and disciplined right now.

There was an article/analysis published recently that reads “Fedex vs UPS, similar but yet different models” (or something like that). Good piece for all Purple and Brown folks to read.

Fedex is a wonderful company, phenomenal aviation job, no doubt. I hope for the sake of my good friends at purple Fred wakes up and tackles the Amazon threat head on.

AutoBrkOff

Right now it may be 'fantastical' but I believe this is exactly what we're going to start hearing more of during contract 2020 negotiations. Whether accurate or perceived the storm clouds will be on the horizon. Perhaps we'll even be heading into an economic downturn. Expectations will be managed. Plan for the worst, hope for the best.

The Duke

It’s interesting. I read articles all the time that make it seem like the Amazon threat is overblown and other articles that indicate the sky is falling regarding the Amazon threat to Fedex. Zero clarity regarding this subject.

I am concerned by the sudden departures of Cunningham and Bronczek with little to no explanation (that I’ve seen).

Can Amazon continue to do what it’s doing and develop its own network organically? How much of a network do they need? Would acquiring Fedex down the road be of any benefit to Amazon’s logistics plans? If an acquisition were to occur, would there be a whipsaw of the various pilot groups or would Amazon be content with their new “crown jewel”?

I really like working here. I need another 15-18 years. If Amazon is a genuine threat, I hope the folks up top have a plan and strategy to counteract that threat. I also wonder how public perception of Amazon over time will influence the future of that company. Seems to be a growing unease in this country about the size and scope of Amazon’s business aspirations.