FedEx to Meld Air, Ground Units --- Push for efficiency unwinds an operating strategy long touted by founder Fred Smith

"FedEx Corp. is combining its Express and Ground delivery units into a single business, changing an operating structure championed by founder Fred Smith and criticized by investors and analysts.

The moves are designed to simplify interactions with customers and accelerate cost-cutting efforts, FedEx Chief Executive Officer Raj Subramaniam said in an interview. They will also help the parcel-delivery giant adjust to a business model driven by e-commerce instead of one predominantly focused on business-to-business services, he said.

The FedEx chief was among executives who outlined improvement plans at an investor event Wednesday, pledging to increase utilization of trucks and planes by getting rid of surplus equipment and get better at forecasting customer demand.

"There is opportunity to continuously improve the efficiency of our operations," said Mr. Subramaniam, adding, "Our customers are going to see a difference."

Shares of FedEx rose 1.5% to $229.93 in trading on Wednesday.

FedEx is grappling with a monthslong downturn in shipping demand and has embarked on a plan to cut billions of dollars in operating expenses in the coming years. As of last May, the company, based in Memphis, Tenn., had 412,770 U.S. employees, or about 75% of its total full- and part-time staff. It expects its U.S. head count to be down by roughly 25,000 by the end of May.

An activist investor, D.E. Shaw, last year pushed FedEx to make changes to its business and got three people added to the company's board.

Mr. Subramaniam said the corporate reorganization has the support of Mr. Smith and the board.

Mr. Smith, who founded the company in 1971 and long served as its CEO, has said that FedEx's model of each business unit operating independently with its own leadership team helped drive the company's success. That meant operating the Express business, which often uses planes and operates as a premium service, and its less costly Ground business as separate networks to ensure that time-sensitive packages arrived on time.

A surge in e-commerce shipments in recent years and higher costs associated with delivering packages to homes pushed the company to bring the operations closer together to avoid duplication.

Previously, FedEx has dispatched Express and Ground trucks to move packages in the same neighborhoods, sometimes creating confusion for customers and extra costs for itself.

Customers, for now, have to compare the pricing and dispatch windows for Express and Ground deliveries separately. With one set of business rules to consult, customer support would improve, said FedEx Chief Customer Officer Brie Carere.

The new structure more closely resembles that of FedEx's chief rival, United Parcel Service Inc., which has long run a single network to handle air and ground shipments. Unlike UPS, which has a unionized workforce of employees who make deliveries, FedEx will continue to rely on contractors to make deliveries to customers in addition to its employees.

FedEx expects the reorganization to be completed by June 2024 and added that its full transition to an integrated air-ground network will take several years. FedEx Freight, which consolidates small shipments into trailer loads, will continue to operate as a stand-alone company under FedEx.

FedEx Express CEO Richard Smith -- Mr. Smith's son -- and FedEx Ground CEO John Smith (no relation) will gain additional responsibilities in the new structure.

The reorganization will help shift FedEx to "one van, one neighborhood deployment" for parcel deliveries, and "one truck, one service area" for freight, John Smith told investors Wednesday.

Drivers across the Express, Ground and Freight divisions are projected to cover 3.4 billion miles in the year ending in May, or the equivalent of 100 trips to Mars.

"What I'm saying is: we want to make fewer trips to Mars," said Mr. Smith, drawing some laughs.

FedEx added that it will use more of the freight-rail network for goods that need to move across longer distances, citing lower costs when compared with trucks.

For deliveries by air, FedEx plans to change its flight schedules to minimize the number of miles that a package travels. It also plans to make additional reductions to its trans-Pacific routes, and retire a portion of its fleet earlier than previously anticipated.

A range of companies have sought to make changes in their operations in recent months to be more efficient or cut costs, often by reducing employee head count.

Since September, FedEx has sped up changes to its cost structure to adjust to weaker levels of demand. It has reduced flights and parked more planes and equipment, suspended Sunday deliveries in more markets, furloughed drivers and laid off managers.

Shares of FedEx have risen 12.7% in the past 12 months through Wednesday's close. The S&P 500 fell by 8.7% over the same period.

FedEx also said Wednesday it is boosting its annual dividend rate by about 10%, or 44 cents, to $5.04 a share." [1]

1. FedEx to Meld Air, Ground Units --- Push for efficiency unwinds an operating strategy long touted by founder Fred Smith
Fung, Esther.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 06 Apr 2023: B.1.

Mažmenininkas „Walmart“ įgyvendina geresnę tiekimo grandinės strategiją

   „Walmart visapusiškai įsitraukia į savo tiekimo grandinę.

 

     Mažmenininkas per dvi dienas trukusį investuotojų bendruomenės susitikimą, kuris baigėsi trečiadienį, pakartojo jo tikslą per ateinančius trejus ar penkerius metus kasmet padidinti pardavimus 4 procentais ir padidinti veiklos pajamas daugiau, nei tiek. Vyriausiasis finansų direktorius Johnas Rainey trečiadienį sakė, kad bendrovė mato, kad veiklos pajamų augimas bus žymiai didesnis, nei pajamų augimas. Panašu, kad investuotojus pasiekė ši stulbinanti žinia: „Walmart“ akcijos po bendrovės pristatymo pabrango apie 1,7%.

 

     „Walmart“ apibūdino keletą skirtingų svertų, kuriuos jis gali patraukti, kad ten patektų, įskaitant daugiau kategorijų didesnės maržos bendrųjų prekių pardavimą.

 

     Tačiau tai, kas tikrai pajudins adatą, yra jos investicijos į tiekimo grandinę ir technologijas, kurios, „Walmart“ nuomone, sumažins išlaidas ir padidins pristatymo greitį bei tikslumą. Galiausiai, atrodo, kad tikslas yra išlaikyti ir išplėsti savo elektroninės prekybos klientų bazę, kuri yra labai svarbi, didinant didesnio pelno srautus, pavyzdžiui, reklamą.

 

     „Walmart“ neabejotinai deda pinigus ten, kur nori: nors mažmenininkas pernai padidino kapitalo išlaidas JAV parduotuvėms 72%, palyginti su 2017 m., daugiau, nei dvigubai, padidino savo išlaidas tiekimo grandinei ir technologijoms. Bendros kapitalo išlaidos išaugo iki 2,8% visų pajamų praėjusiais metais ir tikimasi, kad per ateinančius kelerius metus jos išliks didesnės. 2017–2021 metais „Walmart“ kapitalo išlaidoms skyrė vidutiniškai 2% pajamų.

 

     Didelių investicijų į tiekimo grandinę paminėjimas gali paskatinti įtarimus investuotojams, susipažinusiems su perdėtu „Amazon“ vykdymo tinklu, tačiau atrodo, kad „Walmart“ planuose daugiau dėmesio skiriama esamo turto naudojimo gerinimui. Įtaisytas „Walmart“ pranašumas yra tas, kad jis jau turi didžiulį parduotuvių tinklą, kuris yra 10 mylių atstumu nuo 90% Amerikos namų ūkių. Pigiau yra skirti plotą elektroninei prekybai, nei statyti visiškai naują vykdymo centrą. Tokiose parduotuvėse „Walmart“ jau pastebėjo didesnį internetinių užsakymų rinkimo greitį ir didesnį savaitgalio parduotuvių srautą, nes pardavimų salė yra mažiau perpildyta darbuotojų.

 

     Tačiau galiausiai „Walmart“ planuoja automatizuoti didžiąją dalį šio rinkimo. Ji užsibrėžė tikslą per trejus metus aptarnauti 65 % savo parduotuvių automatizuojant ir 55 % įvykdymo centro apimties perkelti per automatizuotus įrenginius. Bendrovės duomenimis, vieneto savikainos vidurkiai dėl to gali pagerėti maždaug 20 proc. Kadangi tai yra patobulinimai užkulisiuose, „Walmart“ gali prireikti pateikti daugiau duomenų, pvz., reguliariai atnaujinti vidutinį pristatymo laiką ir rinkimo greitį, kad investuotojai galėtų įvertinti pažangą.

 

     Galiausiai „Walmart“ turės įrodyti, kad gali padidinti savo grąžą iki tokios, kokia buvo, prieš pradėdant daug investuoti į elektroninę prekybą. Per pastaruosius penkerius metus jos investuoto kapitalo grąža vidutiniškai siekė 9,1 % – toli nuo 13 % iki 15 %, kuriuos „Walmart“ patyrė, prieš elektroninei prekybai tampant svarbia jos verslo dalimi.

 

     „Walmart“ ateitis yra labiau, nei bet kada, paremta technologijomis. Jos skaičiai turės pateisinti su šiuo žodžiu susijusius lūkesčius." [1]

 

1. Walmart Pushes Supply-Chain Strategy
Lee, Jinjoo.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 06 Apr 2023: B.12.

Walmart Pushes Supply-Chain Strategy

"Walmart is going all in on its supply chain.

The retailer, in its two-day investment community meeting that concluded Wednesday, reiterated its target to increase sales by about 4% annually over the next three to five years and to expand operating income by more than that. Chief Financial Officer John Rainey said on Wednesday that the company sees a path for operating-income growth to be markedly higher than revenue growth. The bullish message seems to have gotten through to investors: Walmart shares gained about 1.7% after the company's presentation.

Walmart has outlined several different levers it can pull to get there, including selling more categories of higher-margin general merchandise. 

But what will truly move the needle is its investment in supply chain and technology, which Walmart thinks will reduce costs and result in better delivery speed and accuracy. Ultimately, the goal seems to be to retain and expand its e-commerce customer base, which is central to increasing higher-margin profit streams such as advertising.

Walmart is certainly putting its money where its mouth is: While the retailer increased its capital expenditures on U.S. stores by 72% last year compared with 2017, it more than doubled its spending on supply chain and technology. Its overall capital expenditures have increased as a result to 2.8% of its total revenue last year and are expected to stay elevated over the next few years. Between 2017 and 2021, Walmart devoted 2% of revenue to capital expenditures, on average.

The mention of heavy supply-chain investments could be triggering to investors familiar with Amazon's overbuilt fulfillment network, but Walmart's plans seem focused more on improving how it uses its existing assets. Walmart's built-in advantage is that it already has a vast network of stores that are within 10 miles of 90% of American households. It is cheaper to set aside floor space for e-commerce fulfillment than to build a completely new fulfillment center. In such stores, Walmart has already seen faster picking speeds on online orders and higher weekend store traffic because the sales floor is less crowded with employees.

Eventually, though, Walmart plans to automate most of that picking. It has set a goal of servicing 65% of its stores through automation in three years and moving 55% of fulfillment-center volume through automated facilities. Unit-cost averages could improve by about 20% as a result, the company figures. Because these are improvements behind the scenes, Walmart might need to provide more data going forward such as regular updates on average delivery times and picking speed to help investors appreciate its progress.

Ultimately, Walmart will have to prove that it can lift its returns back to what they were before it began investing heavily in e-commerce. In the past five-years, its return on invested capital was 9.1% on average -- a far cry from the 13% to 15% that Walmart experienced before e-commerce became a significant part of its business.

Walmart's future is looking more tech-driven than ever. Its numbers will have to live up to expectations that come with that word." [1]

1. Walmart Pushes Supply-Chain Strategy
Lee, Jinjoo.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 06 Apr 2023: B.12.

Kodėl NATO narė Turkija tai gali, o NATO narė Lietuva negali: Turkija supirkinėja į ES nebetiekiamą rusišką dyzeliną

Juk ES gali įvesti sankcijas tik vienbalsiai. Reiškia, Lietuva irgi nubalsavo už sankcijas. Kodėl?

 

"Turkija importuoja iš Rusijos milijonus barelių dyzelino, kurio Europos Sąjungos šalys nebegali pirkti dėl įvestų sankcijų, rašo „Bloomberg“.

 

Agentūros duomenimis, praėjusį mėnesį rusiško dyzelino tiekimas į Turkiją pasiekė pastarųjų septynerių metų rekordines apimtis, po to, kai ES vasario pradžioje paskelbė embargą Rusijos naftos produktams. Nors buvo tikimasi, kad įsigaliojus ribojimams Turkija padidins jų importą, tiekimo mastas atrodo įspūdingai.

 

Per mėnesį (kovą, palyginti su vasariu) rusiškų degalų importą Turkija padidino beveik 1,5 karto, iki daugiau kaip 10 mln. barelių, o toks kiekis leidžia patenkinti mažiausiai dviejų savaičių jų poreikį šalyje. Turkijai tai naudinga dar ir todėl, kad degalai tiekiami patraukliomis kainomis, pažymi agentūra.

 

„Turkija žeriasi didžiulę naudą, gaudama prieigą prie probleminio Rusijos gazolio ar dyzelino“, – sakė „Facts Global Energy“ analitikas Eugene'as Lindellas, pabrėždamas, kad tai taip pat reiškia, jog Rusija randa pirkėją savo prekėms.

 

Be to, anot analitiko, tai, kad Turkija gali legaliai importuoti pigius rusiškus naftos produktus, stiprina jos gamintojų konkurencingumą ES rinkoje."