27MAR

So far, Fedex has done the following. The question to answer is why?

1. Fired the entire training pro staff.
2. Bought back $10B of fedex stock in 2 tranches
3. Cancelled the remaining orders for 76’s
4. Culling Mechanics from 2500 to 2000
5. Combining all the subsideries into one company again.

01APR24

FedEx now out as USPS’s primary cargo supplier. How the company is moving forward

A longtime contract between FedEx Corp. and the United Postal Service is coming to an end this summer. The Memphis-based shipping giant announced Monday it will no longer be USPS’ main air-cargo supplier, and rival United Parcel Service will replace FedEx. According to a U.S. Securities and Exchange Commission filing on April 1, FedEx Corp. announced the agreement between FedEx Express and the USPS for domestic transportation services will expire by its terms on Sept. 29, 2024. FedEx said the decision was made on March 29, after extensive discussions with the U.S. Postal Service. The company issued the following statement on Monday: “FedEx and the United States Postal Service have had a long and productive relationship for more than 20 years. Over time, our respective strategies have shifted as we transform our networks and operations for the future. We have long said we would extend the contract with the USPS if we could agree to commercial terms in the best interests of FedEx shareholders. Although we were unable to reach mutually agreeable terms, we remain committed to delivering outstanding service through the completion of our contract in September,” the company statement said.

Negotiations between FedEx and U.S. Postal Service appeared to be progressing well toward deal

During FedEx’s recent third quarter’s earnings call on March 21, company executives suggested that a new deal between FedEx and USPS looked to be something that both were working to make happen. “We made significant progress in negotiations for a new contract that aligned with our ongoing network transformation plans, while providing the USPS with the operational reliability and outstanding service we have delivered for them for more than two decades,” Brie Carere, FedEx’s executive vice president and chief customer officer, said on the call. “A new, multiyear agreement would provide a more efficient network with service to fewer markets. It would allow us to better adjust our overall network to demand.”

What’s next for FedEx once the contract with USPS ends

The company also stated on Monday at the end of USPS contract, FedEx will implement adjustments to its network that will drive efficiencies and create more flexibility. FedEx noted the elimination of structural costs currently in place to support postal service volume will be addressed and, in conjunction with its DRIVE efforts, FedEx profitability will improve in fiscal year 2025 and beyond.

What do pundits think how the USPS loss will impact FedEx

USPS was the largest customer for FedEx’s air-based Express segment, even as payments declined after the postal service shifted letters and packages from planes to more economical trucks as part of an operational revamp. USPS represented just about 4% of Express’ annual revenue, according to a Reuters calculation.

“It’s not a huge loss for FedEx, but it will impact their density. …You’re losing consistency in terms of revenue from a pretty significant partner, but it wasn’t the most profitable business for them…it’s not all negative,” said Faisal Hersi, an equity analyst at Edward Jones.

Corey Davis is the Collierville and Germantown reporter with The Commercial Appeal. He can be reached at Corey.Davis@commercialappeal.com or 901-293-1610.