Year: 2005

Collins, Carper introduce Bill to overhaul US Postal Service

Posted by | Mar 18, 2005 | |

After months of negotiations with the White House, Senate Homeland Security and Governmental Affairs Chairwoman Collins and Sen. Thomas Carper, D-Del., introduced a bill Thursday to overhaul the U.S. Postal Service. The bill, which is largely similar to legislation approved by the panel last year, incorporates some new provisions suggested by the administration. But the sponsors have not acquiesced to the White House on two major areas of contention: shifting the responsibility for the agency’s military pensions back to the Treasury Department and giving the Postal Service access to money slated for an escrow account. The administration’s opposition to those provisions kept the bill, which was also passed by the House Government Reform Committee, from moving to the floor of either chamber last year.

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German Hermes in search of strategic partner in Europe

Posted by | Mar 18, 2005 | |

German logistics services provider Hermes Logistik Gruppe, a subsidiary of the local mail order company Otto GmbH, is looking for a strategic partner in Europe to extend its parcel delivery services range from companies to private persons, the company said on March 17, 2005.

Hermes already negotiates with a number of interested parties and expects to complete the talks by the summer of 2005, company CEO Hanjo Schneider said.

Hermes sees mainly independent logistics companies as possible partners and Schneider ruled out the possibility of co-operation with a large national postal services provider.

He declined to disclose the names of the potential partners.

Hermes is active in France and the United Kingdom with a number of partners. The company aims to significantly boost its sales in the field of private package deliveries, which currently stand at 450 mln euro (USD601.6 mln).

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Fire the Messenger: Couriers Losing Business to Imaging

Posted by | Mar 18, 2005 | |

As more banks begin to transmit digital check images across the country, couriers that haul paper checks are starting to feel a squeeze.

That’s because a growing number of banks have concluded that paying for long-distance shipping is more expensive than transmitting images to a data center near a paying bank, converting them to image replacement documents, and then either delivering the documents the last few miles themselves or hiring a courier to do so.

Banking industry observers have long warned that a decline in courier shipments would probably trigger a fee increase as the couriers seek to cover their fixed expenses from a shrinking pool of bank customers. This fee increase could prompt more banks to cut their courier use and further drive up fees.

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Thoughts on FDX’ F3Q:05 earnings report

Posted by | Mar 18, 2005 | |

FDX reported $1.03 EPS for F3Q:05 (Feb. quarter) vs. our estimate of $1.00, recently upwardly revised Consensus (First Call) of $0.98 and 45% better than $0.71 a year ago. Upside to our model was driven primarily by FedEx Ground with modest upside to Kinko’s based on our low expectations. LTL was modestly below our expectations and Express in-line.

Strong operating metrics. Operating income was up 43% y-o-y on 21.1% revenue growth (including 12.8% growth prior to Kinko’s acquisition) and 110bp of y-o-y consolidated margin improvement (150bp improvement not including Kinko’s). This compared with our expectations for 38% operating income growth on revenue growth of 19% and 100bp margin improvement.

Broad based strength. Volume and yield growth rates across virtually every product line were better than we expected (see Exhibit 1) driven by a strong economy, market share gains on the ground, continued rational but competitive pricing and a modest benefit from fuel.

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FedEx is said to acquire two express companies in China

Posted by | Mar 18, 2005 | |

FedEx is said to likely acquire DTW Express Co., Ltd. and Federal Express-DTW Co., Ltd. in China.

The Shanghai office of Baker & McKenzie, a leading global law firm in the US, has been invited to provide designs and law service for the express titan’s new round of acquisitions in the faster-growing market, where other international express companies including UPS, DHL, and TNT pile too.

These titans never want to expand here on the basis of only partnership with small-sized Chinese counterparts. They have by their nature been eager to operate wholly owned branch companies since their entry into the market. The Chinese government is set to fulfill its commitments to the WTO entry, signaling an upcoming end of the partnership.

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Freight business opens up lucrative routes for FedEx

Posted by | Mar 18, 2005 | |

When Greg Farmer backs his FedEx truck into the loading bay of a vehicle parts warehouse in Atlanta, it looks like he is too late. All of that day’s small packages are being loaded on another truck bearing the logo of UPS, FedEx’s arch-rival.

But Mr Farmer is not there to collect small packages. His cargo is three big crates, so heavy they need to be manoeuvred by forklift truck. “When I tell people I drive for FedEx they assume I deliver parcels,” says the 29-year-old driver. “I have to explain that we also handle freight.”

While small packages dominate, road freight is becoming an increasingly important part of FedEx’s business.

Freight revenues increased 19 per cent to USD747m in the third quarter and operating profits were up 46 per cent at USD54m.

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FedEx warns oil prices to hit profits

Posted by | Mar 18, 2005 | |

FedEx increased its third-quarter net earnings by a better than expected 53 per cent but warned that high oil prices would erode profits in the fourth quarter.

Alan Graf, chief financial officer, said this year’s renewed increase in fuel prices was having a “significant impact” on margins.

US light crude yesterday rose above USD57 a barrel for the first time, amid strong global demand and tight supply.

However, Fred Smith, chairman and chief executive of FedEx, said he remained confident about prospects for the company and the world economy. “We have solid momentum in the business and customer demand is strong,” he said. “Economic conditions remain favourable, and we are optimistic about future growth.”

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