FedEx is severing ties with Amazon
08-07-2019 | 03:20 PM
#11
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Joined: Aug 2012
Posts: 781
Likes: 14
That's a good example of how to lie with statistics. The lack of Amazon blew a huge hole in FedEx Expess volume, as it now will with ground. People at Express are already being laid off, working reduced hours, etc. Ground is an independent contractor model, and all those folks who invested in trucks, etc., are going to have a very sad year.
FedEx was the most-expensive ground and express option for Amazon. Amazon will expand the use of other providers and organic delivery, who will be happy for the business. FedEx has to pray that e-commerce continues to expand and that in the next 3-5 years, other shippers will take most of Amazon's place. (If there is a downturn, all bets are off.) Even with a decent amount of growth, it will be an okay time for the FedEx executives, and a tough time for the folks on the front line.
It will be interesting to see if FedEx will feel a need to change its fleet plans and/or its air network operations due to the substantially-lower volume, or whether it will try to fly the same routes with the same metal for a couple of years until they are able to replace the volume (if they are able to replace the volume). Or maybe they will cut prices dramatically to fuel volume (as they have done with their slowest Express service to their biggest customers to move Ground volume to the Express division to mask the size of the volume loss). If they do that, though, what was the point of the exercise?
At the end of the day, this is only going to slow FedEx Express's need for planes and pilots. How much remains to be seen, but if the effect on the ground-handling, sorting, drivers, etc., is any indication, it's not good.
So while some on here who hate Amazon are cheering, those who want the music to keep playing as pilots move up the ladder should be nervous. Slowing movement to the top tier pilot jobs at FedEx actually hurts all the people who are cheering because they think this somehow hurts Amazon, which it doesn't.
FedEx was the most-expensive ground and express option for Amazon. Amazon will expand the use of other providers and organic delivery, who will be happy for the business. FedEx has to pray that e-commerce continues to expand and that in the next 3-5 years, other shippers will take most of Amazon's place. (If there is a downturn, all bets are off.) Even with a decent amount of growth, it will be an okay time for the FedEx executives, and a tough time for the folks on the front line.
It will be interesting to see if FedEx will feel a need to change its fleet plans and/or its air network operations due to the substantially-lower volume, or whether it will try to fly the same routes with the same metal for a couple of years until they are able to replace the volume (if they are able to replace the volume). Or maybe they will cut prices dramatically to fuel volume (as they have done with their slowest Express service to their biggest customers to move Ground volume to the Express division to mask the size of the volume loss). If they do that, though, what was the point of the exercise?
At the end of the day, this is only going to slow FedEx Express's need for planes and pilots. How much remains to be seen, but if the effect on the ground-handling, sorting, drivers, etc., is any indication, it's not good.
So while some on here who hate Amazon are cheering, those who want the music to keep playing as pilots move up the ladder should be nervous. Slowing movement to the top tier pilot jobs at FedEx actually hurts all the people who are cheering because they think this somehow hurts Amazon, which it doesn't.
08-07-2019 | 04:04 PM
#12
Line Holder
Joined: Nov 2013
Posts: 210
Likes: 5
From: Boeing, left side
I don’t know the person, but just food for thought.
08-07-2019 | 11:38 PM
#14
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Joined: May 2005
Posts: 1,286
Likes: 1
The lack of Amazon blew a huge hole in FedEx Expess volume, as it now will with ground.
...
It will be interesting to see if FedEx will feel a need to change its fleet plans and/or its air network operations due to the substantially-lower volume, or whether it will try to fly the same routes with the same metal for a couple of years until they are able to replace the volume (if they are able to replace the volume). Or maybe they will cut prices dramatically to fuel volume (as they have done with their slowest Express service to their biggest customers to move Ground volume to the Express division to mask the size of the volume loss). If they do that, though, what was the point of the exercise?
...
It will be interesting to see if FedEx will feel a need to change its fleet plans and/or its air network operations due to the substantially-lower volume, or whether it will try to fly the same routes with the same metal for a couple of years until they are able to replace the volume (if they are able to replace the volume). Or maybe they will cut prices dramatically to fuel volume (as they have done with their slowest Express service to their biggest customers to move Ground volume to the Express division to mask the size of the volume loss). If they do that, though, what was the point of the exercise?
By all accounts, the Amazon freight was extremely low yield. When Amazon is absorbing the costs of “free” shipping, it would have to be. If Express could replace even a portion of that volume with higher yielding volume, they’re actually probably better off.
08-08-2019 | 03:53 AM
#15
Gets Weekends Off
Joined: Jan 2011
Posts: 307
Likes: 0
PW305, it is not only the voluntary buyouts, our Annual Incentive Bonus will not be paid this year although last year the company said that it would be paid at 50% regardless of company performance. Yes we are in retraction just as we were several years ago. I seriously doubt Mr Smith is sitting on his hands. Our volumes may be down....for now. But they will return, just as they have in the past. FedEx has not become the company it is by sitting around. Forget the doom and gloom, upgrading the fleet with new aircraft, expanding international networks, list goes on.
08-08-2019 | 08:41 AM
#16
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Joined: May 2006
Posts: 1,115
Likes: 5
From: Excessed WB Capt.
I get multiple weekly prime packages. Not one has come by FDX. Most are USPS. Amazon is greatly helped by not delivering packages for the public so the rules are different for their drivers. It will be an interesting decade.
08-08-2019 | 09:00 AM
#17
Gets Weekends Off
Joined: Feb 2007
Posts: 3,045
Likes: 1
From: FO
I wonder how many amazon packages are shipped via usps that end up on FedEx due to the postal contract.
Also, I was unaware of layoffs. I know they said they are going to offer buyouts to some folks, but that could be a cost saving measure. Offer buyouts to people who have been around 20+ years and then hire someone at year one pay and beniefits to replace them.
08-08-2019 | 11:58 PM
#18
Gets Weekends Off
Joined: Mar 2014
Posts: 185
Likes: 0
Time will tell if it’s a good move.
It does put UPS into a strange position. It adds volume but at what expense? The added volume will UPS be able to handle without service failures? The service failures customers will blame UPS not FDX because UPS is the carrier. Could make UPS look bad.
If UPS follows FDX in cutting ties with Amazon now, the blowback will be on UPS. Amazon will blame service failures on UPS pulling the plug.
In short term FDX loses volume but could come out of this smelling like a rose. I feel Amazon will pull the plug on UPS once domestic network is fully functional. I feel Amazon is going to team with DHL providing domestic last mile service in North America and DHL providing international service for Amazon. This will give DHL their second chance in North America and Amazon the international network it needs. Both companies are using the same ACMI carriers already.
It does put UPS into a strange position. It adds volume but at what expense? The added volume will UPS be able to handle without service failures? The service failures customers will blame UPS not FDX because UPS is the carrier. Could make UPS look bad.
If UPS follows FDX in cutting ties with Amazon now, the blowback will be on UPS. Amazon will blame service failures on UPS pulling the plug.
In short term FDX loses volume but could come out of this smelling like a rose. I feel Amazon will pull the plug on UPS once domestic network is fully functional. I feel Amazon is going to team with DHL providing domestic last mile service in North America and DHL providing international service for Amazon. This will give DHL their second chance in North America and Amazon the international network it needs. Both companies are using the same ACMI carriers already.
08-10-2019 | 11:57 AM
#19
Gets Weekends Off
Joined: Sep 2007
Posts: 1,506
Likes: 0
From: 777 Captain in Training
Had a talk with the local manager at ramp while waiting to JS to mem. He said his area is going to save a lot by dropping Amazon because they were delivering many low yield Amazon packages to the extreme rural areas. He said at least now if they have to the package will provide more revenue. FWIW
08-15-2019 | 01:32 PM
#20
On Reserve
Joined: Jan 2010
Posts: 17
Likes: 0
From: Left seat hauling trash
Had a talk with the local manager at ramp while waiting to JS to mem. He said his area is going to save a lot by dropping Amazon because they were delivering many low yield Amazon packages to the extreme rural areas. He said at least now if they have to the package will provide more revenue. FWIW
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