One thing that is true is Fred doesn't have the lobbying power overseas that he enjoys in the U.S. If anti-trust issues promoting competition is the sole issue, the answer should be clear as UPS found out a few years ago. The more options a shipper has the better. Let FDX build out in Europe like we did. We're slowly building out in China and didn't buy the 3rd largest.shipping entity there to do it. Our attempt at TNT got turned down- why should their discounted ($4.4B vs $7B) attempt fare any better?
Hunkey- I'm just like you. My advisor has actually not performed well for me for a few years now and my own non-UPS investments (SFL, VGR and T) have outdone his with excellent dividends. But you're right, I can live very nicely off the dividends, my UPS pension that starts next year and SS shortly. I trust UPS to weather the market storms better than most. It's clearly a conservative, low beta, decent dividend play.
Look at it this way. UPS has 702M+ shares outstanding. FDX has 282M so their EPS is much higher. In addition, their forward P/ E is 13.78 while ours sits at 17.36. Due to FDX's ground growth (thru their troublesome IC model) is markedly higher than UPS's due to a smaller critical mass. Plus, sadly Fred can do no wrong and has the ear of the market while UPS plods along behind the scenes. It's been the bane of our existance for quite some time.
Interesting data from both CSX and Union Pacific on lower volume. Coal shipments presently and perhaps fuel car shipments in the near future are down. I recall that not too long ago they were squeezing us for pricing and service for our TOFC's causing us operate more feeders and sleeper movements. Now it would seem the table have turned to our pricing/service advantage. Presumably, this scenario, along with cheaper fuel, should help bolster Q2 and going forward.
This is a good discussion point. FDX will be revamping 20% of their aircraft fleet (641 planes) by 2023. With this latest news, they now have firm orders for 106 767-300 fuel efficient planes plus five 777 freighters. By comparison, we own 237 planes with 302 more chartered in. For those with some accounting background, it would be interesting to know how advantageous it is to utilize a greater depreciation scenario vs. having to pay chartering expenses. I've heard something about FDX taking advantage of corporate tax loopholes to write-down much of this expense while greatly gaining in reduced fuel costs. Seemingly, this is part of the TNT growth strategy. Speaking of strategy in general, it sure seems FDX does a better job of clarifying what theirs is vs. UPS. At times it seems our best strategy is hoping the independent contractor model FDX uses gets wiped out. The problem is, by placing huge Boeing orders like this, they're indirectly lobbying targeted, sympathetic congressmen and senators with the old "if restricted by IC issues, we can't continue to grow like this" arguments. They're smart guys over there while we're so blandly conservative it hurts.
Any predictions? Seems like oil price should help a it's a tailwind initially. I wonder if we've been rejecting the unprofitable packages and how much dim charging is helping us? Ideally, our C/S folks are hard at work with valued shippers to help re-design carton size. In theory, a mutually beneficial approach to space utilization should work to all party's best interests.
I was doing the covered call thing for awhile but during the step up in share price kept having o buy them back and move them forward. I was happy the last couple batches expired. Now I wish I'd sold some a few weeks back. BTW, VGR is a really interesting stock. 7%+ dividend is very secure and they've been adding a 5% stock dividend to it each year for about a decade. So it' a 12% a year combined dividend. It's holding up well in this onslaught.
If it wasn't so pathetic, it'd be funny. A recent UPS headline talks about UPS using tricycles to deliver pachages in some communities. Meanwhile, today's 24/7 lead story is a $10B+ potential plane order by FDX to Boeing. What gives here? TNT acquisition and major plane efficiency/capacity upgrade by competitor while UPS.......
down to the $54's. This bodes well for Q3 as the surcharge adjustment lags. It could be offset by lower volume in Europe given the lack of clarity in the Eurozone. Hopefully, the whole situation finds a way to screw over the FDX acquisition of TNT although it probably made the whole process easier. It would be nice to report a blow-out Q2 but the Texas area floods might put a damper on that. Thoughts?
But, their going forward advice is solid. If the TNT acquisition is on target, they're in good shape. I actually thought they'd miss with the Texas and surrounding states flooding problems this past quarter.
$288M for FedEx ground drivers for mis-classifying 2000 thru 2007. An additional master case is pending. The California case with 2,300 drivers resulted in one of the biggest settlements ever in this category. FDX claims to have changed its practices but seriously, how can this be? Drivers are told how, what and when to perform their duties. They're under strict control of FDX management. I hope the Department of Labor doesn't stop here.
This goes to the heart of the Fred Smith slickness. UPS went to this accounting system in Q4 2011. The purpose of the revision is to make the obligations and the company's performance more transparent. This mark to market method measures gains and losses on a yearly basis. I thought the other information they released today- the cost of the court loss and the mandated payment of independent contractor costs that were "avoided" in the past. Slick- real slick......
FDX buying TNT for much improved Europe presence. Meanwhile, we had to pay a deal collapse premium. FDX retiring older fleet components for better fuel performance and tax advantages. FDX well into its multi-year profitability improvement program. The market can readily analyze all this. I wish we could have a well defined action plan. I think investors may not be able to project the future as readily with UPS. Clarity is needed.