FedEx SmartPost to Drive Busiest Day in FedEx History
FedEx SmartPost is an arrangement with the USPS where USPS does the last-mile delivery to the customer’s residence.
MEMPHIS, Tenn-FedEx Corp. (NYSE: FDX) expects to move more than 17 million shipments – almost double its daily average volume – through its global networks on December 12, the projected busiest day in company history. The 10 percent year-over-year increase will be driven by FedEx SmartPost, a residential shipping service designed for online and catalog retailers, as well as expected increased volume at FedEx Ground and FedEx Home Delivery. Read more
CNBC Host: Let FedEx Absorb USPS – PMG: Let USPS Absorb Them
”PMG Pat Donahoe appeared recently on “The Kudlow Report,” to represent the Postal Service’s position on the need for congressional action to address the USPS requirement to pre-fund retiree health benefits, frequency of delivery and allow the Postal Service to access overpayments to the Civil Service Retirement System and Federal Employees Retirement System. Donahoe explains to CNBC host Larry Kudlow that legislative changes are “not a bailout.” Read more
Editorial: Not all post offices should pay their way
Filed under: APWU, fedex, post office closings, postal, postal news, ups, usps
In an editorial by the Concord (New Hampshire) Monitor they wrote:
The postal service has since the 1980s operated as an “independent establishment of the executive branch” and, as such, is expected to be self-supporting. For the most part, it is. But in exchange for its monopoly on first and third-class mail, it is charged with providing universal service, which means delivering mail at a loss in many parts of the nation.
Some 26,000 of the service’s post offices operate at a loss. The service has embarked on a long and cumbersome review of 2,000 of those offices to decide how many to close. By law, it is not allowed to close offices solely because they are losing money. Doing so in some cases makes sense. In other cases – for example, when the nearest alternative post office would be many miles away – a money-losing office shouldn’t be closed.
Some conservatives want to end the postal service’s monopoly and let private companies deliver rural mail. Rural residents, of course, would be charged rates commensurate with the cost of delivery. A move in that direction, however, would be a tragic break with history and a breach of the social contract, one that would be economically and sociologically devastating to much of rural America. Read full article
Not so fast! At a meeting last year the Postal Service briefed APWU National officers about plans to consolidate operations in large stations and branches. USPS conceded that:
…among the reasons for closing stations and branches is that there are fewer “procedural requirements” for closing stations and branches than for small post offices. They also said that 34 percent (now 35%) of current postal revenue comes through alternative access, and that they are striving to increase that percentage.
The reasons given by USPS on what Triggers a station/branch to close or consolidate:
Operational Efficiencies
Declining Office Workload
- Retail Transactions
- Mail Volume
Proximity of Other Facilities
Loss of Lease; No Suitable Alternate Quarters
Economic Savings Offered through Alternative Service
So is it closing money-losing stations/branches, a way to increase alternative access to postal services or both?
APWU expressed its concern that USPS may be attempting to circumvent the contract:
We also believe that if management backfills the stations and branches it closes with contract postal offices (CPUs), this would violate the procedural requirements on subcontracting in Article 32.1 of the Collective Bargaining Agreement.
The other point to ponder: In many of the locations where stations/branches are closing or consolidating sits FedEx Kinkos and UPS stores. So USPS customers may choose to utilize alternative companies in lieu of traveling the extra distance for USPS alternative access to mail services. Only time will tell.
Below is a timeline USPS developed for closing Post Offices (9 months or longer) vs. “Classified” Station/Branches (4 months)
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Task Name [Post Offices]
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Duration1
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Authorization to Study
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10 days
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Review & Investigation Study (data gathering)
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25 days
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Community Input
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25 days
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Proposal* Posting & District Manager Review and Approval
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100 days
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Headquarters Review & Final Determination
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30 days
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Final Determination Posting and Customer Appeal Period*
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30 days
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If appealed, 120 days are added to timeline for PRC Review
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Office Closeout (60 days after posting of final determination)*60 days
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Classified Stations/Branches
Task Name
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Duration1
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Authorization to Study
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5 days
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Review & Investigation Study (data gathering)
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15 days
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Community Input
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20 days
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Proposal (No Posting)
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10 days
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Headquarters Review & Final Determination
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10 days
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Union Notification and Office Closeout (60 days after HQ Decision)
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60 days
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FedEx Is Again USPS’s Largest Supplier For 8th Straight Year
FedEx transports Express, Priority and First Class Mail, and earned postal revenues of $1.373 billion (corrected) in fiscal 2010. While at the top of the list, FedEx’s postal revenues declined from a high point of over $1.6 billion. Another postal competitor, United Parcel Service (UPS) , is the Postal Service’s 12th (corrected) largest postal supplier, earning $95 million in revenue – a $12 million increase from last year.
Husch Blackwell’s Postal Service Contracting practice group today released its list of the top 150 U.S. Postal Service suppliers for fiscal year 2010, and for the eighth straight year FedEx claimed the No. 1 spot with Northrop Grumman jumping from fourth to second. The list is compiled by David P. Hendel, a partner in the firm who has served clients’ postal contracting needs for 29 years. This is the 15th year for the list.
First-place FedEx transports Express, Priority and First Class Mail, and earned postal revenues of $1.373 billion in fiscal 2010 – falling slightly from the $1.4 billion it earned in fiscal 2009. Another postal competitor, United Parcel Service, is the Postal Service’s 12th largest postal supplier, earning $95 million in revenue – a $12 million increase from last year.
“Once again, transportation and technology providers stand atop the list of the Postal Service’s largest suppliers,” said Hendel, who compiles the list from information obtained under the Freedom of Information Act. “But unlike last year, in fiscal 2010 more top suppliers had declines rather than gains in postal revenues.” The sharp decline seen in postal spending over the previous several years has stabilized; spending in FY 2010 totaled $12 billion, a 1 percent decrease over FY 2009. By contrast, postal spending in FY 2009 declined more 19 percent from FY 2008.
Second-place automation supplier Northrop Grumman earned $494 million in postal revenues. Northrop Grumman provides automation design, equipment fabrication, field deployment and logistics support to the Postal Service.
Other companies in the top 10 include third-ranked Kalitta Air, an air transportation and mail distribution service for military mail bound for Iraq and Afghanistan; trucking contractor Pat Salmon & Sons, Inc. in fourth place; systems manufacturer Siemens in fifth; computer company Hewlett-Packard in sixth; transportation company Wheeler Bros., Inc. in seventh; advertising agency Campbell-Ewald in eighth; consulting company Accenture in ninth; and the number 10 spot was secured by technology company IBM.
“Opportunities for facility contractors continue to decline in 2011 as the agency is unlikely to build many new facilities in a time of decreasing mail volume,” Hendel said. “But opportunities do exist for modifying existing facilities and retrofitting facilities for energy conservation purposes.”
Other trends identified in FY 2010 figures:
* Increased spending on ground transportation – up 5.3 percent from FY 2009
* Decreased spending on domestic air transportation – down 2 percent
* Decreased spending on international air transportation – down 26 percent
* Spending on supplies and services remained stable
The firm’s Postal Service Contracting group assists clients in contracting with the U.S. Postal Service, and its members are knowledgeable regarding the needs specific to the postal industry. Hendel has developed and presented several training courses on postal contracting. He also writes a monthly column on postal contracting issues for the National Star Route Mail Contractors Association. He has represented hundreds of postal contractors on a wide range of issues.
——
Top 12 USPS Suppliers for 2010
Federal Express Corporation
$1,373,140,689
Northrop Grumman*
$494,601,395
Kalitta Air LLC*
$371,823,791
Pat Salmon & Sons Inc*
$142,869,164
Siemens*
$134,774,653
Hewlett Packard Co*
$133,240,521
Wheeler Bros Inc
$124,868,868
Campbell-Ewald (includes payments to 3rd parties)
$121,573,393
Accenture
$115,091,627
International Business Machines
$114,588,310
Mail Contractors of Arkansas Inc*
$104,668,098
United Parcel Service Co*
$95,068,821
Top 150 USPS suppliers for Fiscal Year 2010
Census Bureau Selects FedEx Over USPS
Census Bureau Selects FedEx Over USPS
In barely a month, the Census Bureau will begin sending states details collected in the 2010 Census, enumerating inhabitants down to the block level. But in a theatrical touch, the data will be delivered overland to the states the day before it’s made public, mostly via Federal Express.”They’ve got very good tracking and next-day delivery,” McCully said of the selection of FedEx over the U.S. Postal Service, which will be tasked with delivering census data to Indian reservations.
full story via Washington Post
FedEx Ground To Increase Shipping Rates
Press Release
December 3, 2010
FedEx Corp. (NYSE: FDX) will increase shipping rates for FedEx Ground and FedEx Home Delivery by a net average of 4.9% effective January 3, 2011.
The FedEx Ground and FedEx Home Delivery full average rate increase of 5.9% will be partially offset by adjusting the fuel price threshold at which the fuel surcharge begins, reducing the fuel surcharge by one percentage point. FedEx SmartPost rates also will change.
FedEx previously announced on Sept. 29, 2010 that it will increase shipping rates for FedEx Express also effective January 3, 2011 and that FedEx Express and FedEx Ground will implement a change to the dimensional weight volumetric divisor from 194 to 166 for U.S. domestic services.
Details of dimensional weight charges, surcharge changes and new rates can be found at www.fedex.com/us/2011rates.
FedEx SmartPost to Drive Busiest Day in FedEx History On December 13
More Than 223 Million Shipments to Move Through FedEx Networks During the Holidays
MEMPHIS, Tenn., Nov. 11, 2010 – FedEx Corp. (NYSE: FDX) expects to see its busiest day in company history when it moves almost 16 million shipments around the world on December 13. This is a more than 12 percent increase from last year’s busiest day when the company handled 14.2 million shipments.
For the overall holiday season, FedEx is expecting a total volume increase of approximately 11 percent compared to 2009. FedEx forecasts more than 223.3 million shipments will move through its global networks between Thanksgiving and Christmas.
More than half of the holiday season volume increase will be from FedEx SmartPost shipments. FedEx SmartPost volume is largely driven by online retailers and cataloguers who ship high volumes of lighter shipments to residential customers. FedEx SmartPost has a completely integrated national network that picks up, sorts and delivers packages directly to U.S. Postal Service facilities for final delivery to residences. The affordable rate structure allows retailers to offer discounted shipping to customers during the holidays and beyond.
During the week of December 13, also the busiest week of the year for FedEx, the company expects to move more than 63.1 million shipments compared to last year’s busiest week of 57.5 million shipments. Items such as books from large internet retailers and retail inventory such as apparel, personal consumer electronics and luxury goods will drive FedEx holiday volumes.
“Once again, the FedEx work force of more than 285,000 team members will make the holidays happen for millions of FedEx customers across the globe,” said Frederick W. Smith, chairman, president and CEO of FedEx Corp. “We are optimistic about the volumes during the holiday shipping season and expect growth to be driven mainly by FedEx SmartPost with U.S. domestic ground packages and global air express shipments contributing to volumes as well.”
On average, more than 8 million packages move through the FedEx systems daily.
The FedEx Outlook
FedEx is encouraged by the anticipated increase in holiday volume. The impact of the expected higher volumes was included in the company’s earnings guidance issued in September.
The Holiday Retail Outlook
According to the National Retail Federation (NRF), holiday sales are expected to increase a moderate 2.3 percent this year to $447.1 billion. This growth is slightly lower than the ten-year average holiday sales increase of 2.5 percent. In 2009, sales increased 0.4 percent. NRF also found that retailers will continue to focus on supply-chain efficiencies and inventory control.
Online holiday sales are forecast to climb 15 percent compared to last year according to the research and consulting firm Deloitte.
FedEx Ground . . . For the Holidays and Beyond
Year over year, FedEx Ground volumes on its busiest day are expected to increase by 1.8 million packages. Approximately 50 percent of this increase is due to volume growth at FedEx SmartPost.
Retailers, cataloguers and other customers are increasingly discovering the unique value proposition available for high volume, lightweight residential packages offered by FedEx SmartPost.
“All three of our ground services continue to grow and attract new customers based on our outstanding overall service and unique attributes,” said David Rebholz, president and CEO of FedEx Ground. “One major factor is speed, as FedEx Ground is faster to more overall locations and FedEx Home Delivery is faster to more residential locations than UPS Ground.”
FedEx Ground continues its nationwide network expansion to boost daily package volume capacity and further enhance the reliability, speed and service capabilities of its network.
The network enhancements have resulted in accelerating ground service delivery by one day or more in approximately two-thirds of the United States since 2003. FedEx Ground now delivers more than 61 percent of packages in two days or less and more than 82 percent of packages in three days or less.
FedEx Busiest Day of the Year . . . A History of Growth
FedEx has experienced steady growth in holiday volumes over the last several years. A historical breakdown of busiest day volumes follows:
- Dec. 12, 2005 – 9.8 million shipments
- Dec. 18, 2006 – 10.6 million shipments
- Dec. 17, 2007 – 11.5 million shipments
- Dec. 15, 2008 – 12.0 million shipments
- Dec. 14, 2009 – 14.2 million shipments
- Dec. 13, 2010 – 16.0 million shipments projected
Will FedEx Target Certain ‘Custom’ers for Rate Increases?
Lower volume customers would receive a “Dear John” letter while higher volume customers would get the message delivered in person by the sales team accompanied by something along the lines of “we’d love to keep your business, but unfortunately not at current margins. We think this proposed pricing is a win/win and still offers lower-than-market pricing and value.”
full story via Big Fat Marketing Blog
AT & T Ships Products To Postal Employees Using USPS Discount Program Via FedEx, UPS
The U.S. Postal Service has an “agreement with AT&T Wireless to provide discounted wireless phone service, phones, and accessories to postal employees.” However, whenever Postal Employees order products online at AT & T’s website, the items are shipped via FedEx or UPS. An AT & T representative explained that shipping costs are cheaper using FedEx or UPS.
So let me get this straight, Postal Employees order products from AT & T online and its boosts the shipping volume for its largest competitors? If USPS signs an agreement with a company (which may include shipping) shouldn’t one of the prerequisites be that products are shipped via the U.S. Postal Service?
The USPS also has wireless phone service, phones, and accessories agreements for its employees with Verizon Wireless, Sprint Nextel Wireless, T-Mobile Wireless and U.S. Cellular. It will be interesting to find out if any of these companies utilize USPS for shipping its products to Postal Employees.
AT & T Ships Products To Postal Employees Via Fedex, UPS
USPS OIG: Federal Express – Transportation Agreement – Northeast Areas
This report presents the results of our self-initiated audit of the Federal Express (FedEx) transportation agreement. The objectives of our audit were to determine whether selected transportation operations were effective and economical (Project Number 09XG027NL000). See Appendix A for additional information about this audit.
On August 2, 2006, the U.S. Postal Service signed a new 7-year agreement with FedEx. FedEx transports time sensitive mail for the Postal Service, including Express Mail®, Priority Mail®, and First-Class Mail® (FCM). FedEx transportation is usually more expensive than commercial air carrier or surface transportation, and Postal Service policy requires transportation managers to balance service and cost in determining the best transportation mode. In addition, the Postal Service uses Terminal Handling Services (THS) contractors to prepare and load mail into containers for transport on FedEx planes. The containers include both bypass and mixed containers.
Bypass containers hold mail bound for the same destination airport and move through or “bypass” the sorting operations at the FedEx Memphis hub at no additional cost to the Postal Service. Mixed containers hold mail bound for various destination airports and must be sorted at the Memphis hub onto departing planes. The Postal Service is required to pay FedEx for sorting mail at the Memphis hub.
Conclusion
It was more effective and economical in some cases for the Capital Metro, Eastern,Great Lakes, and Northeast Areas to use ground transportation and domestic air carriers as well as to sort mail at Postal Service plants than to use FedEx to perform these functions.1 Because the areas used FedEx, the Postal Service incurred about $35.3 million in unnecessary costs. If these areas implement our recommended changes, we estimate the Postal Service could save $170.6 million over a 10-year period.
Transporting Surface Mail on FedEx
We concluded that in some cases using ground transportation was more advantageous than using FedEx. By flying surface mail on FedEx instead of using cheaper ground transportation, the Postal Service spent about $32.1 million more than necessary during fiscal years (FYs) 2007 and 2008. This occurred because plant employees did not properly segregate surface mail classes from FCM and Priority Mail. By using ground transportation, the Postal Service could lower overall FedEx lift requirements and save about $138.3 million over 10 years. See Appendix B for our detailed analysis of this topic.
Mixed Versus Bypass Air Containers
Finally, it was more advantageous in some cases for the Postal Service to sort mail than use FedEx to do it. During the period May 1, 2008, through April 30, 2009, the Capital Metro, Eastern, Great Lakes, and Northeast Areas unnecessarily spent about $1.5 million to pay FedEx to sort mail because processing plants did not separate and distribute it in available bypass containers.3 If these areas properly sort and distribute this mail, the Postal Service could avoid about $14.9 million in unnecessary costs over 10 years. See Appendix B for our detailed analysis of this topic.