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Q2 2020 Earnings

Old 12-17-2019, 04:48 PM
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Default Q2 2020 Earnings

All metrics deteriorating Q2 2019 to Q2 2020, at a good clip. Revenue decline $500M, operating margin cut in half, operating income almost half, and that is with a much lower EPS TNT hit. Lowered 2020 fiscal year guidance, from an already lowered number, further reduction of flight hours, boy, I did not think it was going to be this ugly.

Fedex your YEARS had YOY revenue increases, that is 2 quarters now where it has declined.

More than the loss of revenue, which can be partially attributed to Amazon, the biggest concern seems to be the sharp reduction in operating margin, which is how much money they are making per unit of revenue.

Hopefully the trade deal phase one agreement will help, Fedex put a lot of eggs in one basket (China).

We all want Fedex and UPS to be healthy and growing, for all our sakes!!
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Old 12-17-2019, 06:52 PM
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Last 6 of 7 quarters were a miss on earnings estimates for FDX. I too hope that FedEx can figure out a way to stay profitable and healthy. Regrettably, it seems like more of the same from management on excuses for why they aren’t performing as a company. How many times do we need to the excuse “weakening global trade”? How about, we messed up with the TNT acquisition or we postured too heavily in China?
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Old 12-18-2019, 08:35 AM
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Originally Posted by rvfanatic View Post
I too hope that FedEx can figure out a way to stay profitable and healthy.
FedEx is profitable. What am I missing?
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Old 12-18-2019, 08:39 AM
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Originally Posted by PurpleToolBox View Post
FedEx is profitable. What am I missing?
Isn’t that what “stay profitable” implies?
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Old 12-18-2019, 08:49 AM
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Originally Posted by PurpleToolBox View Post
FedEx is profitable. What am I missing?
If you wait till its in the red you are dead. These numbers should be concerning to everyone. There are lots of threats out there.
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Old 12-18-2019, 09:03 AM
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Originally Posted by MEMA300 View Post
If you wait till its in the red you are dead. These numbers should be concerning to everyone. There are lots of threats out there.
Shack, you nailed it
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Old 12-18-2019, 09:30 AM
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Default Massive Amazon warehouses

This is a major threat to us. Once they finish building warehouses, there wont be near as much need for moving freight by air. The freight will be stored in these massive warehouses in strategic locations around each US city. Not moved by airplanes but by trucks at a fraction of the cost. Can they house everything that one needs overnight ? No I dont think so. Can they house 60 percent of what they need. Probably. In any case I see this as a huge threat. International is a different story.
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Old 12-18-2019, 10:18 AM
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Originally Posted by Cobia296 View Post
This is a major threat to us. Once they finish building warehouses, there wont be near as much need for moving freight by air. The freight will be stored in these massive warehouses in strategic locations around each US city. Not moved by airplanes but by trucks at a fraction of the cost. Can they house everything that one needs overnight ? No I dont think so. Can they house 60 percent of what they need. Probably. In any case I see this as a huge threat. International is a different story.
https://www.cnn.com/2019/11/20/tech/...ing/index.html
Amazon wants to ship you anything in 30 minutes. It's going to need a lot of robots
By Matt McFarland, CNN Business

Updated 1:07 PM ET, Wed November 20, 2019

Washington, DC (CNN Business) — Amazon is burning through billions to get you stuff faster. It'll spend more than $35 billion on shipping costs this year, more than twice what it spent two years ago.

The company recently warned investors it'll drop an extra $1.5 billion this holiday season as it works to transition to one-day shipping for Prime members. Profits are shrinking. And yet, this may prove to be a modest undertaking compared to Amazon's future delivery ambitions.
"When we have a full drone fleet you'll be able to order anything and get it in 30 minutes if you live near a hub that's serviced by drones," Amazon CEO of Worldwide Consumer Jeff Wilke told CNN Business. "That's only possible because of robotics."

Amazon has built out a network of costly fulfillment centers across the US and the world. Inside lies a critical advantage, robots that have made the buildings faster and more cost-efficient. They may well pave the way for a new era of same-hour deliveries.

"When we have a full drone fleet you'll be able to order anything and get it in 30 minutes if you live near a hub that's serviced by drones. That's only possible because of robotics."

Jeff Wilke, Amazon CEO of Worldwide Consumer

It all started with an acquisition Amazon made years ago that doesn't even rank among its five biggest deals by dollar value. In 2012, Amazon (AMZN) bought the robot startup Kiva Systems for $775 million. Today it has a fleet of 200,000 Kiva robots supercharging its fulfillment centers, alongside the more than 500,000 employees it's hired since the acquisition.
To continue to speed up delivery times and stay ahead of competitors, Amazon will need even more robots. Amazon is testing robots that carry packages on sidewalks. It's invested in self-driving vehicles.

Amazon's robot push could trigger more successes, but also exposes it to harder challenges than operating in environments it controls, like fulfillment centers.

CNN Business spoke with current and former Amazon executives as well as robotics experts to explore how one robot has already transformed Amazon, and how the next generation of robots may forever change Amazon once again.

Amazon first dabbles in robots

Nothing seemed impressive about Amazon's first robot.

It didn't walk like C-3PO or talk like Rosie the Robot. It didn't even have arms, legs or a face. Its stubby frame was only good for sliding under a bookshelf and moving it.
"A homemade microwave on wheels," was how one potential customer described it to Jason Reneau, an early employee at Kiva Systems, which invented the robot in 2002.

The startup was so desperate for business it offered full refunds to entice customers.

"There's no way that works," recalled Nick Swinmurn, founder of Amazon subsidiary Zappos, of the first time he saw a Kiva robot.
Industrial robots weren't new when Amazon first experimented with Kiva robots. For decades, automakers had used giant robotic arms to help assemble cars. Manufacturing plants relied on primitive robots to move materials on fixed routes.

However, Kiva Systems was the only company trying to use mobile robots to speed up ecommerce warehouses. It figured out how a flock of free-ranging robots could safely bring bookshelves to stations manned by humans, who would pick merchandise from the shelves to complete an order. Then the robots return the shelf to a resting spot, sliding around hundreds of nearby robots. Barcode stickers on the floor help the robots know their location and avoid collisions.

Before the Kiva robot, e-commerce employees in warehouses had to walk up and down long aisles, to retrieve goods from shelves.

"You see all these articles about people having to walk 15 miles a day," said Dave Glick, a former Amazon executive who helped integrate the Kiva robots. "You're spending capital to make humans more efficient. Now they're picking more things and standing in one place, so it's not as physically grueling." (Amazon has been criticized over the years for difficult working conditions and injuries in its fulfillment centers.)
9 challenges Amazon faces on its 25th birthday
Amazon bought Kiva Systems in March 2012, kicking off a whirlwind. Kiva's senior engineers flew to Seattle and holed up in a conference room for a week with Amazon leaders. Glick's team prioritized building a proof of concept with Kiva's technology. By early 2013, Amazon was shipping some packages with the help of Kiva robots out of a facility south of Seattle, according to Glick.

Before the end of 2014, Amazon fulfillment centers were home to 15,000 Kiva robots.

Amazon has redesigned the robot four times since buying Kiva, according to Tye Brady, the chief technologist at Amazon Robotics. Seemingly small changes -- the latest robot is several inches shorter -- have allowed Amazon to make its bookshelves bigger. More goods are packed in existing warehouses, saving millions on new warehouse costs.

"That was quite a slam dunk," said Rian Whitton, a robotics analyst at ABI Research. "They scaled it very impressively and in a short period of time."

Robots shift from factory floors to the skies

Today Amazon's robot ambitions extend far beyond its fulfillment centers. These new teams operate independently of the initial Kiva Systems group. Amazon doesn't say how many employees work on robotics, only that they're among the tens of thousands working on artificial intelligence.

Amazon is testing four-wheeled delivery robots that roll on sidewalks. Earlier this month, Amazon announced plans for a new facility outside Boston to design and build robots. It's invested in a self-driving car startup, and Amazon goods have been seen being hauled by a self-driving truck. Amazon has spent more than six years developing drones, which may one day drop packages in backyards assuming regulators allow it.
This July, Amazon held its first-ever "Botapalooza," an internal conference that brought together robotics employees from across the company. Amazon wants to encourage collaboration among its robotics teams, which can use the help.

"We're still encountering things that we didn't really consider would be on sidewalks — parked cars, kids' bicycles," said Sean Scott, who leads the Amazon Scout program that delivers packages with sidewalk robots. It's testing in Snohomish, Washington, and Irvine, California.

Sometimes garbage cans or recycling bins block the robots. Stray cats have stalked them. Amazon had to halt its Washington tests in February following heavy snowfall.

"We're at the early days of all of this," Scott said. "We're just getting started in terms of the capabilities of what we can unlock."

While sidewalks are tough for robots to master, flying above it all isn't necessarily easier.

Amazon's drone will have to avoid telephone wires draped across backyards and streets. They'll have to dodge tree branches, birds and dogs patrolling backyards. Amazon has built a way for the drone to automatically find a safe landing place in case of an emergency landing.

"We'll fly as soon as we're safe, not any moment sooner," said Gur Kimchi, who leads Amazon's drone efforts.

More robots, more problems

Amazon risks a public backlash if something goes wrong with its newer robots. And unlike with Kiva, there's competition. Major companies such as Alphabet, FedEx and UPS are all investing in drone delivery.
Amazon will also have to face questions about the impact of robots on jobs. Amazon's dive into robotics has coincided with hundreds of thousands of new hires. Amazon entered 2012 — the year it bought Kiva — with fewer employees than Microsoft and Apple, and roughly as many as Google. Now it has more employees than Microsoft, Apple, Google and Facebook combined. Amazon is the only one to have deployed robots at scale, putting it right at the center over the debate — and fears — over automation. The concern is that, while it's adding workers today, it will be eager to offload them, especially the least skilled and vulnerable ones, once the robots are ready.

"I do worry sometimes when people equate [artificial intelligence] and robotics with job loss," Wilke said. "If you look at these kinds of technological innovations over the years it tends to be the case they don't eliminate jobs, they tend to change jobs and change work. This is true for us."

A study from the consulting group McKinsey has cautioned that as many as 375 million workers will need to change their occupational category by 2030 due to automation.
Some robotics analysts CNN Business spoke with predicted that Amazon would try to add robotics and automation to its entire operation. They described it as inevitable given Amazon's focus on efficiency and pleasing customers.

Amazon plans to retrain 100,000 employees
Pete Wurman, who co-founded Kiva and has since left Amazon, said that during his tenure he encouraged the company to fund its "picking challenge," a now defunct competition for academics and small companies to automate the process of removing goods from shelves. Eventually, he expects some of the picking process to be automated.

But Wurman cautions that what's easy for humans — like identifying and taking handmade jewelry in a clear bag off a shelf — has proven incredibly tough for machines. He said he's optimistic on the long-term societal implications of automation.

"We're really good at seeing how they'll take away the jobs we know about," Wurman said. "But we're really bad about seeing the jobs that will be created."

Correction: An earlier version of this story incorrectly stated when Amazon Scout halted operations in Washington due to snow.
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Old 12-18-2019, 12:19 PM
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Originally Posted by Cobia296 View Post
This is a major threat to us. Once they finish building warehouses, there wont be near as much need for moving freight by air. The freight will be stored in these massive warehouses in strategic locations around each US city. Not moved by airplanes but by trucks at a fraction of the cost. Can they house everything that one needs overnight ? No I dont think so. Can they house 60 percent of what they need. Probably. In any case I see this as a huge threat. International is a different story.
First off, there's still going to be a need to move freight by air -- especially express delivery. Amazon was only 2% of FedEx's business. eCommerce only makes up 13% of all logistic movements and Amazon owns roughly half of that 13%. FedEx is still growing because eCommerce is growing. However there is still the rest of logistic movements that aren't eCommerce. Currently with the trade disputes and slowed economies of Europe and China, the rest of the shipping sector is flat but it is going to come back. I don't know why everyone believes FedEx only moves eCommerce goods.

FedEx ignored Amazon for too long. FedEx/UPS were unable to supply Amazon's shipping demand. Why? Because their shipping is low yielding revenue and the last mile of shipping is very expensive. Fred Smith continues to say that it took FedEx 40+ years to build out their network and that there's no way that Amazon can do that in a fewer years. I disagree with him. Amazon has been in business for 25 years now. They're been building their model ever since then. And there now have warehouses near most of the population in the USA.

Amazon's problem is that it will see more and more competition. Walmart is no slouch. And nearly every brand has an online website to sell their stuff. In the USA, can Amazon significantly increase their market share? No. The majority of people who could use Amazon are already using doing so. If anything they stand to lose customers as the competition catches up.

On Cyber Monday of this year, Fedex estimated that they would move 33 million packages that day. Instead they shipped 37.8 million.

Should Amazon get into the business to business and other logistic models, then yes Amazon as a shipper will become a threat to FedEx. But, before that, UPS is at bigger risk as they rely on at least 10% of revenue from Amazon.

This quarter's earnings disappointment were caused by a host of reasons. However, if FedEx has a losing third quarter, then it is time to panic and question the board
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Old 12-18-2019, 01:07 PM
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It has been stated by analysts that UPS was better able to adapt to the e-commerce boom. Also we have been heavily investing in pharma around the world. Our capex is beginning to bear fruit as evidence in recent quarterly earnings. We waited too long to begin to spend and grow the company as needed but are catching up. We’ll see how the next one looks.
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