Snows no problem. However another huge ice storm large enough to close the interstates? That would be bad luck to have it two years in a row. Doubt that it will happen, and they have taken steps to keep Amazon from dumping on us in the Southwest because FedEx or other carriers can't take the extra volume. Now we can charge a surcharge for breaking their contract volume- and even refuse the work if we think it's necessary! Can't see THAT happening, though. We just don't turn ever turn away work, we make it happen
dudesbag, not sure why my post is not showing up but here we go again, I think you hit the nail right on the head, management at UPS has to be worried about the space being used up by oil tankers on the rails but I do not see the rails forgetting about UPS as it is the hand that's feeds them. The rails will do whatever is necessary to handle UPS volume because in the end they know that UPS will always use them and will only increase in the future baring any economic letdown. When the Republican gain control they will push through a lot more pipelines and that will mean free up space on the rails that is why I know the rails know this is only a temporary thing with oil and will not let one of their best customer suffer. If we have to use more sleeper teams it will add to cost but not as much as what could have been because of the lower fuel costs. Also I think that with our supply change logistics we also have the future ability to ship much of the freight from sites much closer to all customers thus lowering the need for rails.
Sentiment: Strong Buy
Thinking back to last weeks earnings call, some real good things. Smart to allow people the option of a consolidated delivery point in urban areas. Nice to see us reverting back to the pre-B2C business model of consolidated delivery being the most profitable. Hopefully, people see this as advantageous to them. Then I'm thinking about our international strength in in Europe. Despite an ongoing malaise there, we did fine in the international export/import/intra-Europe business. Not too shabby.
fuel surcharge by itself will be a big positive for UPS during the 4th quarter. The fuel surcharge is calculated based on the price of fuel 2 month prior. 2 months ago, oil prices were at $100 per barrel.
Looking forward to q4.
You seem to be the person with the clarity on what's going on in the center/hubs so I have question for you. Historically, UPS has been a significant user of the TOFC network while FDX has not. Several times, inlcuding during the CC, there have been references to continued rail service disruption. I live near a freight train location and see a remarkable increase in the # of oil/chemical cars being transported. Is this at the expense of meeting their service capacity and obligation to us? Are we re-evaluating our approach to that type of service and perhaps moving into more sleeper tractor trailer operations? If so, wouldn't the expense be magnified?
Don, UPS use to hedge fuel costs but as you know now we pass it on as surcharges. Listening to the CFO this morning he indicated that the fuel saving was going to be a positive to earnings going forward but not as much as one would think because they then pass the savings onto the shippers through lower or no surcharge. I am also with you in the camp that I think it will have a much more positive impact on earnings then we are being lead to believe. Either way I had in mind that the first quarter we would really see the fruits of all the changes that UPS put into place would be the 4th quarter report (January) so I am really pleased that I was one quarter off and I look forward to the coming year because I do think all of us shareholders are going to be pleased with the results. The costs have now been taken into account so now I expect a long period of success.
One area that I am still a little concerned about is the hugh increase we will see in driver helper teams, having come from the Centers I know that in the past some center teams rely on more helper hours and that is not a bad thing if we are getting better production from the teams and that translates into less areas needed to be loaded and delivered which in itself leads into less expense for rentals and fuel usage, it is a fine line but I know each center will be held to account for any increase in helper hours.
Sentiment: Strong Buy
Since you know the business and are the expert here, what about the cost of fuel (jet a and for the trucks) being down 20% YOY? Why didn't they cover this on the earnings call? I have followed the airlines for years and have spreadsheets on this dynamic, but what is the story here?
Doing simple math, ignoring surcharge aspects and volume variances (a lot higher volume this year so even more beneficial to cash flow and EPS than this math) that should drive annualized fuel savings of at least $900m pretax, which is say ~$600m after tax or some 70 cents/share -- or what 25 cents YOY for the Dec Q? I know costs are up for the surge and new tech, but so is gross margin and pricing and operating leverage is now in the numbers... so where is the jump in estimates for fuel, or what am I missing.
TIA for any insights you may have.
go ahead and sell , foolish mood , ups dividend in December , low oil prices orion implemented , peak has began expense of upgrading almost completed SELL YOUR STOCK, no one is going to follow your advise
Sentiment: Strong Buy