FEDEX Corp expects its air express unit will lose half of its business with the US Postal Service when an existing contract expires, making more pilots expendable, according to New York's FreightWaves.
The Postal Service three years ago began shifting a large amount of volume from air to ground transportation to reduce red ink and become more competitive. Declining postal volumes have been a significant drag on fedex Express' recent performance, company officials publicly acknowledge.
Postal delivery at 29 daytime cities where FedEx flies domestically is in jeopardy of being eliminated at the end of the government's fiscal year, Pat DiMento, FedEx's vice president of flight operations and training, warned in a recent meeting with a group of supervisory pilots.
'If I were to bet, I think we lose 50 per cent of our daytime flying,' he said in an unauthorized recording reviewed by FreightWaves.
The loss of a substantial portion of Postal Service work means FedEx will have 200 to 300 more excess pilots by October, said the flight operations chief. The cargo airline plans to lower guaranteed flight hours for pilots and offer early retirement packages because it already has hundreds of surplus pilots with the shipping market in a prolonged downturn.
The Postal Service transformation has reduced the volume of First-Class mail and packages moved through air carriers by 90 per cent in the past two-and-a-half years, Postmaster General Louis DeJoy told the board of governors last summer. Air transportation expenses decreased US$600 million year over year, or 16.3 per cent, in the fiscal period ending September 30 due to lower package volumes and diversion to motor carriers.
FedEx's relationship with the Postal Service dates back to 2001. Since 2013, it has provided domestic and international air transportation for numerous postal products, including Priority Mail. FedEx has been the largest provider of air transportation capacity to the Postal Service for twenty consecutive years, according to data compiled by David Hendel, a transportation attorney at Culhane Meadows.
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The Postal Service three years ago began shifting a large amount of volume from air to ground transportation to reduce red ink and become more competitive. Declining postal volumes have been a significant drag on fedex Express' recent performance, company officials publicly acknowledge.
Postal delivery at 29 daytime cities where FedEx flies domestically is in jeopardy of being eliminated at the end of the government's fiscal year, Pat DiMento, FedEx's vice president of flight operations and training, warned in a recent meeting with a group of supervisory pilots.
'If I were to bet, I think we lose 50 per cent of our daytime flying,' he said in an unauthorized recording reviewed by FreightWaves.
The loss of a substantial portion of Postal Service work means FedEx will have 200 to 300 more excess pilots by October, said the flight operations chief. The cargo airline plans to lower guaranteed flight hours for pilots and offer early retirement packages because it already has hundreds of surplus pilots with the shipping market in a prolonged downturn.
The Postal Service transformation has reduced the volume of First-Class mail and packages moved through air carriers by 90 per cent in the past two-and-a-half years, Postmaster General Louis DeJoy told the board of governors last summer. Air transportation expenses decreased US$600 million year over year, or 16.3 per cent, in the fiscal period ending September 30 due to lower package volumes and diversion to motor carriers.
FedEx's relationship with the Postal Service dates back to 2001. Since 2013, it has provided domestic and international air transportation for numerous postal products, including Priority Mail. FedEx has been the largest provider of air transportation capacity to the Postal Service for twenty consecutive years, according to data compiled by David Hendel, a transportation attorney at Culhane Meadows.
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