FedEx Goes Postal
Posted on Friday, July 09 @ 15:24:56 EDT

NEW YORK, January 11, 2004 - What's next--Cast Away II starring Newman of Seinfeld fame?
The U.S. Postal Service and longtime rival FedEx NYSE:FDX has announced an agreement in which the post office will pay FedEx to haul Express Mail and Priority Mail, as well as some first-class mail.

The Postal Service will pay FedEx $6.3 billion over seven years in the deal. While the services will retain distinct identities, the deal can only accentuate FedEx's can-do image, already bolstered by its association with Tom Hanks, America's heroic everyman.

Postal officials say the arrangement will speed up the mail by combining the post office's Main Street presence with FedEx's flying savvy. Both organizations say the public-private alliance will provide greater choice, reliability and convenience for American consumers.

In addition, by a separate agreement FedEx will pay the post office between $126 million and $232 million for the right to place its drop boxes at post offices, which will expand FedEx's retail presence nationwide. The drop-box deal is nonexclusive, and other courier services will have the right to make pickups from the nation's 38,000 postal outlets.

In the carry deal, FedEx will provide air capacity for the transportation of postal packages. Memphis, Tenn.-based FedEx has roughly 665 aircraft that operate a worldwide overnight delivery system. The company says it would have to expand its fleet slightly to handle the contract. The company adds it intends to hire 500 new pilots and about 1,000 support personnel.

The post office uses leased planes and ships mail on commercial airlines. The post office will phase out the leases and says doing so will save it $1 billion over the life of the contract.

"These agreements will leverage two great networks: the extensive reliability of FedEx planes and the coast-to-coast retail presence of the Postal Service," Postmaster General William J. Henderson says.

According to Henderson, the new contract will put all Express and Priority mail in FedEx planes, providing fast, dependable service. He says the post office will phase out its current leases and close its hub in Indianapolis. "Overall, service to Americans should improve dramatically in Priority and Express mail and somewhat in first-class," Henderson adds.

While FedEx will carry the mail, it will continue to compete with the post office, the company says. The Postal Service will not pick up or deliver any FedEx packages, and FedEx employees will not accept or deliver U.S. mail. The two services will not offer a common brand.

FedEx will continue to specialize in overnight business parcels, in which it is the dominant player, delivering about 4.8 million packages each business day. The post office will emphasize its Priority Mail service, in which packages are delivered in two to three days. The post office delivers about 4 million such packages daily, and just 188,000 pieces of Express Mail.

Competitors like UPS (nyse: UPS - news - people) and Emery Worldwide, a subsidiary of CNF (nyse: CNF - news - people ), may oppose the deal on antitrust grounds. Emery, which operates some air transport for the post office, unsuccessfully sought a court order to block it.

While postal officials say the deal with FedEx is not a first step to privatization, it acknowledges the efficiencies of the private service. The deal could incur suggestions that the entire operation might be better off in private hands.

Americans might get the idea that they'd rather have all their letters and packages hauled by Hanks rather than mail carriers, who, fairly or not, are too often seen as so many Newmans.

Source: Forbes News, Dan Ackman

25 FedEx Employees Charged
Posted on Friday, July 09 @ 15:01:04 EDT 

NEW YORK, April 13, 2000 - U.S. Department of Justice Drug Enforcement Administration (DEA) Press Release: OVER 100 ARRESTED IN MULTI-MILLION DOLLAR MARIJUANA SMUGGLING OPERATION.

Culminating an 18-month nationwide investigation by federal, state, and local law enforcement, in cooperation with the FedEx Corporation, over 100 individuals were arrested on federal criminal complaints and indictments, charging importation and distribution of more than 100 tons of marijuana. Members of the criminal organization are charged with working with a small number of FedEx employees in the distribution of this marijuana throughout the United States.

"Today we have taken another major step in our fight against drug trafficking," said Attorney General Janet Reno. "Law enforcement's overnight delivery to the American people is safer streets for our children."

The investigation, known as Operation Green Air, was conducted by the Drug Enforcement Administration, in cooperation with the U.S. Customs Service, U.S. Attorney's Offices and the Criminal Division of the Justice Department, and state and local law enforcement. To date, Operation Green Air has resulted in the seizure of 34,000 pounds of marijuana and $4.2 million in U.S. currency and assets.

Dwight Anthony Mark Morant, charged by complaint in federal court in Los Angeles, and members of the criminal organization are charged with using FedEx Corporation planes, trucks, and facilities across the country to ship marijuana with an estimated wholesale value of $140 million. Those charged include 25 employees of FedEx Corporation, including a FedEx security official in New York City, customer service representatives and drivers.

The leadership of the FedEx Corporation worked closely with law enforcement so that the group could be investigated and prosecuted.

"We appreciate the cooperative spirit we received form FedEx Corporation," said Acting Administrator of the Drug Enforcement Administration Donnie Marshall. "We look forward to continuing to work together to make it more difficult for anyone to compromise the movement of legitimate packages throughout the United States."

U.S. Customs Commissioner Raymond W. Kelly underscored that, "The cooperation between FedEx and law enforcement in this case is an excellent example of the kind of government-industry partnership we need to combat drug smugglers."

"From the moment our offices first detected these shipments in July of 1998, FedEx worked side-by-side with DEA to expose the full scope of this operation," said Robert A. Bryden, Vice President, FedEx Corporation. "FedEx, like DEA, is concerned about prevalent illegal drug use in our society. We believe continued proactive cooperation with law enforcement sends a clear and strong message to those who would misuse our network."

Operation Green Air targeted Morant, the head of the Los Angeles-based trafficking organization and a Jamaican national who is estimated to have made $30 million from his illegal activities in the past two years. The investigation also focused on corrupt FedEx employees in Los Angeles, Fort Lauderdale, Atlanta, New York and New Jersey. Morant recruited the FedEx employees who ensured that the marijuana was loaded onto FedEx aircraft for transportation from California to various FedEx distribution centers including Atlanta, New York, Boston, Connecticut, Fort Lauderdale, Orlando, Philadelphia, and Newark. The FedEx employees also provided security for the marijuana shipments while in FedEx Corporation facilities and delivered the marijuana to organization members for distribution in the destination cities. Other corrupted FedEx employees manipulated corporate billing and accounting records to permit free shipping and to make tracing of the shipments more difficult.

The investigation was coordinated by the Special Operations Division, a joint Department of Justice, DEA, FBI, U.S. Customs, and IRS program, staffed by attorneys from the Justice Department's Criminal Division and agents and analysts from the participating investigative agencies. The effort has culminated in criminal complaints and indictments being brought by the United States Attorneys' Offices in Los Angeles; San Diego; Brooklyn, NY; Fort Lauderdale, FL; and the Districts of New Jersey; Connecticut, and Massachusetts.

Marshall said the investigation is ongoing.

Source: DEA Press Release. For more information visit the DEA Website www.usdoj.gov/dea

DHL Sparks Price War?
Posted on Tuesday, July 06 @ 15:22:05 EDT

MIAMI, June 25, 2004 - Deutsche Post AG's DHL express courier unit will spend $1.2 billion to bolster its business in the United States, a huge market in which DHL runs a distant third, the German post and logistics company said on Friday.

DHL, which recently launched a $150 million U.S. marketing program, said it will invest the money over three years in sorting centers and information technology to battle domestic leaders United Parcel Service Inc. and FedEx Corp.

"There is an absolute pent-up demand for a new competitor," John Fellows, chief executive of DHL Express Americas, said in a conference call with reporters. "We will be a strong, reliable alternative to UPS and FedEx."

DHL last year paid $1.05 billion for the U.S. ground operations of Airborne Inc., then the No. 3 U.S. express and packages-delivery group, and is aiming to significantly increase its U.S. market share of 6 percent to 7 percent.

That deal stirred investor worries about a price war that could hurt profits at UPS and FedEx, which together dominate the $48 billion-a-year market for U.S. parcel deliveries with an estimated 70 percent market share.

"We are not going to launch a price war. We are not going to buy market share," Fellows said. "If (a deliveries contract) is not profitable, we don't want it."

Fellows said DHL planned to exploit customer frustrations with the two big U.S. groups and would be more flexible and nimble than UPS and FedEx in competing for business.

The U.S. deliveries market had clearly recovered from recession and was likely to grow along with the U.S. economy, with ground deliveries increasing more rapidly that higher-priced express transport, Fellows said.

The DHL moves in the United States come as Chief Executive Klaus Zumwinkel of parent Deutsche Post (DPWGn.DE: Quote, Profile, Research ) campaigns to turn Deutsche Post into the world's biggest logistics business, partly using money raised from the sale of shares and bonds in its Postbank unit.

Zumwinkel plans to accelerate expansion in the United States and Asia to reduce his company's dependence on its German postal service monopoly.

Deutsche Post on Wednesday said it will merge DHL with its Danzas and Euro Express units in Germany, which may reduce the work force at the businesses by 4,000 jobs.

Source - Reuters by Michael Connor with additional reporting by Matthias Inverardi

FedEx Gets HUD Technology?
Posted on Tuesday, July 06 @ 15:10:09 EDT 

TEL AVIV, July 6, 2004 - Israeli defence electronics maker Elbit Systems Ltd. and Honeywell International Inc. will supply technology that allows commercial pilots to view flight information while looking directly out the windshield, Elbit said on Tuesday.

The first programme under this agreement to supply head-up display (HUD) systems will be to equip a major cargo carrier's fleet of wide-body aircraft, Elbit said in a statement.

Elbit declined to disclose the name of the cargo carrier but a market source told Reuters it was FedEx Corp.
The HUD system will be used mainly during take-off and landing. In the deal, the U.S. electronics manufacturer will team up with the Israeli company's U.S. subsidiary.

Elbit will supply electro-optical projection units, which will be integrated into Honeywell's new HUD system for its commercial air transport customers.

Elbit said it has recently received orders, valued at more than $50 million, for the commercial air transport market, a significant part of which is a result of this agreement.

By 0745 GMT, Elbit shares were up 0.4 percent at 91.50 shekels in Tel Aviv.
Source - Reuters

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