FedEx adopts PSR

[greyhounds]

BaltACD

Remember, back in the foggy mists of time, the railroads dumped LCL traffic - Less than Car Load traffic.

CSSHEGEWISCH

LCL traffic fell dramatically when the railroads started charging for pickup and delivery.

 

OK, I’ve got to respond to these.  Way back many years ago when I got out of the US Army, I chose to go to Northwestern University to get a Master of Science degree in transportation.  (I did get financial aid; I could never have afforded NU on my own.)

 

I had to research and write a master’s thesis.  I researched and wrote “The Transportation of LCL/LTL Freight by Railroad.”  My thesis advisor said I had to explain why this freight diverted to truck.  I spent a summer working on an LTL freight dock and I spent many days and nights in the Transportation Library.  There was no Internet back then.  You found books and publications, read them, and took notes.  I do know about this stuff.

 

1)    The railroads “dumped” LCL because the idiot government economic regulators would not let them cover their costs of handling such freight.  The fool regulators blocked intermodal development and would not allow freight rates to cover the costs of carload movement.  What would you do?

 

2)   The railroads were “ordered” to charge for pick up and delivery.  The idiot government economic regulators allowed truckers to provide the service but restricted the railroads from doing so.  Guess which one got the freight.

 

The railroads, particularly the New York Central, tried extremely hard to compete for this freight.  They were blocked by the government idiots.   A similar thing happened with perishable traffic.    

 

 

 

 

 

 

 

 

 

 

[Backshop]

The one customer mentioned, Sports South ships the great majority of their product via Ground/Express.  They are one of the top 5 largest shooting distributors.

[Paul Milenkovic]

Backshop

Just a few points...

Express and Freight are two entirely separate operations.  Freight came out of the original American Freightways of Harrison, AR (not Razorback) and Watkins Motor out of Lakeland, FL.  UPS bought Overnite but is in the process of selling them to a Canadian trucking conglomerate at a large loss.  UPS is the largest "trucking company" but that is mostly their parcel business.

 

Is this like Southwest Airlines Ground?

Southwest Airlines Now Taking Passengers To Destinations By Shuttle Bus (theonion.com)

[SD60MAC9500]

 

Wouldn't be surprised if the customers they pruned was cheap freight anyhow. Keep you're top acounts dump the lowballers.. That's what you do when capacity runs tight.

 

 

[BaltACD]

greyhounds

Here's the link:

https://www.freightwaves.com/news/fedex-freight-prunes-1400-customers-to-protect-service-levels

Doesn't sound like PSR - it sounds like a White Flag surrender.

[greyhounds]

Here's the link:

https://www.freightwaves.com/news/fedex-freight-prunes-1400-customers-to-protect-service-levels

 

[BaltACD]

Backshop

Just a few points...

Express and Freight are two entirely separate operations.  Freight came out of the original American Freightways of Harrison, AR (not Razorback) and Watkins Motor out of Lakeland, FL.  UPS bought Overnite but is in the process of selling them to a Canadian trucking conglomerate at a large loss.  UPS is the largest "trucking company" but that is mostly their parcel business.

As I recall, UPS bought Overnite from Union Pacific's holding company.

[Backshop]

Just a few points...

Express and Freight are two entirely separate operations.  Freight came out of the original American Freightways of Harrison, AR (not Razorback) and Watkins Motor out of Lakeland, FL.  UPS bought Overnite but is in the process of selling them to a Canadian trucking conglomerate at a large loss.  UPS is the largest "trucking company" but that is mostly their parcel business.

[Overmod]

Package delivery is express, not LTL.  Different operating model and charge structure entirely.  A sort of intermediate example is food delivery to chain restaurants... and the kind of staff and equipment to optimize that.

I originally 'made my bones' with Dave Quesnel of CF by discussing modular dunnage for more rapid LTL operation, to give some of the practical effect of internal containerization without the high fixed costs.  It's a very different thing from giving a bunch of subcontracted people the keys to a van full of parcels and a touchscreen route computer.

Incidentally -- as we are apparently being carefully watched for any non-railroad thread diversion -- there have been interesting proposals over the years for rail 'LTL' (including less-than-container loads out of containers) using some expedited service (often involving self-propelled equipment very reminiscent of Kneiling's).  These can be unexpectedly attractive where "PSR" just-in-time delivery and pickup can be reliably guaranteed to shippers.

[BaltACD]

Isn't package delivery the ultimate of LTL service?  One package does not a truck load make!

[Ulrich]

LTL is great as it involves a much more substantial "competitive moat" than TL does.  Anyone can get into the TL business.. all you need is a truck and a driver and a subscription to Loadlink. LTL on the other hand requires a terminal network, and the ability to service a large area is part of what sets one carrier apart from another.  I'm surprised to hear this about Fedex.. I've used them with good results.. even used them for LTL into the Northwest Territories.  

[Gramp]

Might those 1,400 be slow-pay LTL customers?  The Press is prone to shoehorn "reality" into the picture It wants to frame. 

[CMStPnP]

So then why does Schnieder Intermodal have a whole section of their intermodal pages setup for LTL?  I guess I miss what is so bad about it?

[samfp1943]

[quote user="greyhounds"]

I like PSR.  I know a lot of you don't.  But I believe it to be a good concept that has had some faulty implementations.

 

So anyway, today’s Wall Street Journal reports that FedEx just told 1,400 LTL customers that the FedEx freight trucks won’t show up anymore.  I’ve noticed a whole lot of FedEx trailers and containers on intermodal trains.  They say their system is getting overwhelmed and they’ve jettisoned 1,400 customers to deal with that.

The report also says that FedEx is the largest LTL carrier in the US.  I don’t know if they set out to be the largest LTL carrier, but apparently, they are. 

 [/quote]

 

  This post really got my attention. Admittedly, I have been retired since 2003.   So , personally, just currently, an interested bystander, observer.   I was amazed to read that Fed Ex was stated to be "..The Largest LTL carrier in the US..". I would have bet the ranch, that it would be UPS.   What had happened to change that?     Had been no merger of the two companies(?)   The major differences 'had been'    UPS was unionized and FedEX wasn't... UPS was covered under the National Labor Relations Act, and FedExX was covered by the Railway Labor Act { particularly, enjoying the  pro-non strike provisions, of that act}.

 

UPS had roughly, some 240,000 employees (Teamsters(?)  and FedEx had roughly, some 125,000 of which some 4,000 were members of the ALPA (Airline Pilots Assoc).  Classifications of employees  was a big bone of contenion since the strike in 1997 {The Big Brown- out} .   Washington, D.C. political posturing and lobbying efforts have played a major role, as the two companes fought each other, to 'gain' positions as they attemted to via 'legislation'  for their bottom lines.   

 

Around 2000(?) Fed Rx bought into the trucking business with the prchase of the Harrison,Ark trucking companty 'Razorback Express'  and in about 2003(?) UPS answered with its purchase of the Richmonde,Va. 'Overnite Express'. 

     Around the time of the early 2000's(?) UPS started TOFC services with BNSF. FedEx has answered with their TOFC service, also out to the West Coast. Both companies also have purchased containers as well as some of ther trailers. By quantity, UPS seems to have the lead on TOFC/COFC equipment(?).                          I would also guess they [UPS & FedEx ] 'rail' their services to the East coast as well. I do not get to see that; except in the occasional magazine photo.

 

I would also guess that the implementation of PSR by the railroads could be considered othing less than an 'enhancement' for their delivery services by either FedEx and UPS.  

 

With the current 'political environment in Washington; my guess would be that the 'advantage' poitically woukd seem to shift towards UPS and its 250 K (?) union employees.   

    The retail customers become 'pawns' as the two giants, and more recently, Amazon, all seem to use the same tools ; to get to deliver to their retail customer's  as cheaply as they can.   

[CSSHEGEWISCH]

LCL traffic fell dramatically when the railroads started charging for pickup and delivery.

[BaltACD]

tree68

I take this to mean that FedEx has somehow found themselves with a "side gig" of LTL, which is far different than their core business of parcel delivery.  I know I've seen their trucks marked "Freight."

Apparently it's not making the money they had hoped it would.

Would this be comparable to railroads wanting to dump carload traffic?

Remember, back in the foggy mists of time, the railroads dumped LCL traffic - Less than Car Load traffic.

[tree68]

I take this to mean that FedEx has somehow found themselves with a "side gig" of LTL, which is far different than their core business of parcel delivery.  I know I've seen their trucks marked "Freight."

Apparently it's not making the money they had hoped it would.

Would this be comparable to railroads wanting to dump carload traffic?

[BaltACD]

What kinds of customers are the 1400?  Any names that we would recognize?

[greyhounds]

I like PSR.  I know a lot of you don't.  But I believe it to be a good concept that has had some faulty implementations.

 

So anyway, today’s Wall Street Journal reports that FedEx just told 1,400 LTL customers that the FedEx freight trucks won’t show up anymore.  I’ve noticed a whole lot of FedEx trailers and containers on intermodal trains.  They say their system is getting overwhelmed and they’ve jettisoned 1,400 customers to deal with that.

The report also says that FedEx is the largest LTL carrier in the US.  I don’t know if they set out to be the largest LTL carrier, but apparently, they are.