A very wise move to announce our peak season hiring plans right before FDX reports. We get a bump today on the hiring news and probably another when FDX reports a beat tomorrow.
Recently most companies have been missing on the revenue side while making the manipulated EPS expectation. FDX beat revenue but was hurt by slackened LTL demand, increased ground operation costs and insurance reserve needs. They scaled back a lofty going forward projection by just $.20 or less than 2%. All in all, not bad but they're getting hammered in the pre-market. It's always tough when you're priced to near perfection.
With fuel prices so low, dies it make sense for UPS and FDX to raise the fuel surcharge? Are we driving parcels to the Post Office and forcing our customer to find other alternatives?
What's curious is that our offer was 15% higher and it gets rejected. The rationale is hard to explain. As it is, the European Commission must have known that FDX is the leader in China so why let them potentially take the lead in Europe too? Is the name FedEx just to glamorous to ignore? At minimum, they should have been compelled to divest part of TNT like we were going to have to do- but no. Methinks there's something fishy going on in Denmark and it feels like the FIFA soccer scandal.
It's a shame really that FDX gets to play this game. They stiff their ground employees to pay their pilots more. On the surface, since FDX has the higher profile air service their pilots should be paid more- it's a larger part of their business. There's a lot to consider in these negotiations.
Three story lines: 1) UPS pilots authorize strike vote; 2) FDX sees 12% increase in volume for peak; 3) FDX acquisition of TNT moves along smoothly. Talk about taking the wind out of our sails just before our earnings update....
Ryan- you're right. The Dim weight scenario was a double-edged sword. It cost us volume and gross revenues while, theoretically at least, improving margins. But it appears that without stock buybacks, we probably wouldn't have enough margin upside to meet EPS expectations. This is sure going to be a hard to predict Christmas season that will require us to be nimble. The recent acquisitions should allow us greater equipment access and flexibility but it's managing the peak season hires that most come off smoothly.
So the big headline over the weekend is the huge move towards online shopping (read shipping) vs. the visit to bricks and mortar stores. One would think UPS and FDX would be getting some love. But one would be wrong. FDX got a downgrade from Wolfe Today and both are down so far. Maybe the news was already baked into their share prices?