Earnings
 

Hard to read the earnings call transcripts and look at the financial headlines post earnings. It seems too convenient for corporate officers to blame the drop in Express revenue squarely on the industry demand as a whole. A major part of the soft Express revenue and growth in ground is our own sales team emphasizing ground and other deferred products over Express. I personally had a Fedex Office cashier try to convince me to send ground over express because it "was a better deal", and did my stuff "really" need to be there overnight. I'm sure that is the mindset throught the service and sales team with the new focus on Drive. Our previous flagship First Overnight product has become a low margin pariah as the entire team focuses on reducing purple lift in favor of Orange and White shipping paths. I can"t believe not a single analyst challenged them on how much of the Express to Ground shift is self induced.

"When it absolutely, positively doesn't have to be there overnight"

Just look at the investor, could not make sense of it either... old JD got caught by an investor. Highlighted in bold and underlined.


from earnings call transcript...
Amit Mehrotra -- Deutsche Bank -- Analyst

Thanks, operator. Hi, everybody. I guess I just want to come back to, I think, Chris Wetherbee's question and talk about -- I mean, typically, John, we see Express profits go down, I don't know, about 50% sequentially from 2Q to 3Q. Obviously, 2Q is not what we wanted it to be, but any sense of, you know, seasonality -- normal seasonality, or are we -- is it that type of magnitude relative to where we are in the second quarter? And then, just related to that, I'm having a little bit of a hard time -- or maybe a lot of hard time understanding, sequentially, revenue was up in Express.

Packages were up, composite yield was up, DRIVE savings were up, but then profits were down. So, maybe you can dumb it down for me, but I really don't understand why profits would be down sequentially when all those pieces of mix and revenue are up sequentially. Thank you.

John Dietrich -- Executive Vice President and Chief Financial Officer

So, I'll start with the discussion on Q3 and not going to be giving Q3 guidance. But as I said, I think it's reasonable to expect that, you know, typical seasonality will apply. I will say, you know, for -- for Q3 in particular, due to FedEx Ground's very strong performance in last year's third quarter, with Ground, you know, operating margin inflecting positive by 240 basis points versus the prior year, we'll have a more difficult comparison. But I think it's fair to say, you know, seasonality will -- will play a role.

Now, with regard to the Express, you know, margins and the profits, we're going to continue to be laser-focused on that. As I said, our cost structure did not anticipate the higher demand. You cannot underestimate the impacts of all the things that Raj and Brie talked about. You know, if you -- if you look to the year-over-year decline in the U.S.

Postal Service volume, combined with, you know, some of the minimum service requirements that are required, that really has a drag on your cost. And what I will say, too, is we're really well positioned when volumes return in light of all the initiatives we're taking right now.

Earnings miss and apparently "restructuring ground"

https://finance.yahoo.com/video/fede...154303913.html

time mark 1:25: Analyst talks about shippers choosing "other alternatives" besides Air to ship products, and FedEx using less aircraft to accomplish shipping

Stock is currently down from 280 yesterday to 249 (10%) ouch.

I should have sold yesterday at 280.

Ugh.

Why are you buying single stocks, and FDX?

I bought it years ago, when it seemed like a good idea at the time.

UPS made this “philosophy” changes years ago. If a deferred product can be trucked in the same amount of time, it is much cheaper for the company. And the USPS is reducing its air footprint big time, in the name of saving money, DeJoy has been very clear about this. You will probably notice first class mail is taking longer. The much smaller air postal volume will be spread across many entities, also his desire to diversify.

This shift in delivery was bound to happen at some point. Painful for the Express side but it has always been the low hanging fruit that has yet to be picked. This combined with the “excess” pilots is not a fun situation.

It’s an interesting philosophical difference that UPS took direct action to remove excess pilots by offering incentives.

Meanwhile, management at FedEx would rather force us in to 4.a.2.b/c to lower the cost structure rather than offer financial incentives.

FedEx literally wants pilots to financially pay for managerial mistakes of poor planning.

Hear, hear! THEY over hired, and THEY should suffer the consequences, but the same players are still sending us atta boys.