The 901: Three changes FedEx and Memphis could see as USPS spirals

The 901 is your morning blend of Memphis news and commentary

Ryan Poe
Memphis Commercial Appeal
Larry Wilson, parcel post distribution clerk, helps packages into the appropriate destination bin at the USPS Jet Cove processing and distribution center.

Good Monday morning from Memphis, where the Shelby County Health Department's "tripwires" are now in effect. Will they trip up COVID? More on that in a sec, but first...

On the heels of quarter with a net loss of $2.2 billion, the U.S. Postal Service last Friday announced a sweeping leadership shakeup, the latest in a series of disruptive changes.

Shipping containers are unloaded from an aircraft at FedEx’s Memphis superhub on Tuesday, November 20, 2018.

Memphis and the rest of the country have mostly felt those disruptions in the form of delays in mail deliveries, which have backed up as online shopping has increased in the pandemic and as USPS moves to cut overtime and end late or additional deliveries. But Memphis' largest employer could also suffer from the changes, our Max Garland reports.

Here are three ways FedEx could be affected by USPS changes, as detailed by Max:

1. Will FedEx keep its USPS airlift contract? The USPS is the largest customer of FedEx Express, bringing the company more than $2 billion in fiscal year 2019. But what happens if USPS decides its contract with FedEx isn't worth the price? Dean Maciuba, a consultant, told Max that such a decision could be devastating:

The air lift contract is a major expense for the Postal Service and a major boost for FedEx’s finances and operations. The company’s airport-to-airport network would be forced to undergo big changes if the Postal Service lands an air lift contract with a competitor like UPS, Maciuba said, as the contract likely “subsidizes” that current operational model.

“I believe it is very important to (FedEx) in that it allows them to offset the costs of running their hub-and-spoke system,” Maciuba said. “Losing that, I think, would be a crushing blow for them.”

2. More delays for FedEx? The problem of delivery delays isn't limited to the USPS, though. Every shipper is seeing delays, as Max points out in his story:

“Service levels are being challenged,” said John Haber, CEO of transportation spend consultancy Spend Management Experts. “The Post Office is running way behind, we’re seeing Amazon’s time in transit running behind, UPS and FedEx are behind, everybody is running behind. There are no service guarantees on anything these days.”

But if USPS doesn't resolve its backlog, more customers could begin looking to more reliable — but nearly overwhelmed — alternative shippers like FedEx. That exodus would be even more likely if USPS heeds President Donald Trump's calls to raise its package delivery prices.

3. Will FedEx raise its shipping prices? If USPS raises its prices, that could mean more business — and possibly delays — for FedEx, as noted above. Here's John Haber, CEO of transportation spend consultancy Spend Management Experts:

“As they raise prices, they bring the cost of things closer to more premium products by UPS, FedEx and DHL, especially on the international side,” Haber said, adding that he's heard internal concerns at the Postal Service that more of its volume could shift to those companies because of that.

But if USPS increases its prices, that could have a domino affect on the prices of other shippers, who may need to increase their own prices to keep volumes manageable. And we're already seeing that, to some extent, in the form of surcharges

Shelby County begins using 'tripwires'

Starting today, the Shelby County Health Department will decide when to relax or tighten public health restrictions based on pre-determined COVID-19 metrics — aka "tripwires."

If you're looking for a description of the tripwires and the responses they'll trigger, check out our Katherine Burgess and Sam Hardiman's story on the announcement Friday. Basically, the latest Health Department directive is a sharpening and expansion of the criteria laid out in the county's initial, now obsolete "Back to Business" reopening plan.

Why it took three weeks to come up with these tripwires — and why they're coming nearly five months after local stay-at-home orders went into effect — isn't clear. They seem fairly simple and straightforward, although we could quibble over whether the criteria is too lax. A genuine concern is whether the county's responses could come too late to stop hospitals from being overrun by COVID-19 patients. The county would need to see 450 new cases in a week, based on date of testing, before it starts taking action.

Quibbling aside, these tripwires can be seen as a step toward a more targeted and less arbitrary approach to business closures — but I won't repeat what I wrote last month

Activists protest Collierville markers

A small crowd of 30 or so activists yesterday called on Collierville leaders to remove all traces of Confederate mementos from its Town Square Park, our Ted Evanoff reports.

The protest was led by a Memphis activist, LJ Abraham, who also participated in demonstrations against Memphis restaurants Flight Restaurant and Wine Bar and Porch & Parlor after allegations of sexism and racism at four local restaurants surfaced.

As Ted points out, the park has long been associated with the Confederacy, even going by "Confederate Park" unofficially for years. The Board of Aldermen named the park Town Square Park in 2017, in the wake of the unrest in Ferguson, Missouri.

What else is happening in the 901

The Fadeout: Black Bettie's latest

Joshua Cosby, frontman of Memphis band Star & Micey, just uploaded an achingly beautiful new song, "Goodbye Tennessee," to YouTube under the name of his latest project, "Black Bettie." The song fades us out here...

Like The Fadeout? Check out The 901's Spotify playlist. Want to submit a recommendation of your own? Reach me by email, address below.

Columnist Ryan Poe writes The 901, a running commentary on all things Memphis. Reach him at poe@commercialappeal.com and on Twitter @ryanpoe.

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