new reefer business

[davekc]

Got this in my email today. Might want to wait on that $200,000 reefer. These containers come in several sizes so any truck can do reefer loads. Just have to keep the batteries charged. If it requires over 100 hours of service, truck would have to have a charging unit or generator if you couldn't plug it in. I think a lot of west coast stuff will be going down this path.




AKRON, Ohio, Nov. 27, 2007 – FedEx Custom Critical, North America’s largest critical freight-shipment carrier and FedEx Express, a subsidiary of FedEx Corp. (NYSE: FDX) and the world’s largest express transportation company, are now utilizing new air-cargo container technology from AmSafe® for their temperature-controlled shipping services.

The AcuTemp® RKN, brought to the air-cargo market through AmSafe, uses compressor technology instead of dry ice to keep the inside of the container at the desired shipping temperature. The container’s battery can last for more than 100 hours for safe shipping around the globe. The battery can also be plugged in for easy recharging throughout the life of the shipment.

"This new container gives customers more flexibility and choices in their temperature-sensitive shipping, especially in international lanes," said Virginia Albanese, president and CEO of FedEx Custom Critical. "Not only are we using the new containers in our current Temp-Assure® offerings, but we are also working with FedEx Express to develop additional cost-effective services to meet more of our customers’ needs."

Using its suite of Temp-Assure Air services, FedEx Custom Critical offers U.S. and international air solutions to safely ship temperature-sensitive products – from pharmaceuticals and medical supplies to high-end electronics.

Customers requiring temperature-control for their shipments may contact the FedEx Temperature-Control Services Team at 1.888.274.2901. This team can set up shipments for all surface and air solutions from FedEx Custom Critical, as well as provide additional solutions through other FedEx companies and their service providers.

 

[iceroadtrucker]

I feel sorry for those that bought those 200,000.00 reefers
No Chains allowed

 

[davekc]

I still think there will be some curb side business, but not enough to support that kind of investment. And if everyone can do it, rates won't be much different than regular surface expedite rates. They have been talking about this and doing it on a limited scale for the last year but it looks like they are rolling it out nationwide.

As for the ones that bought them, they were warned by many here on EO that it was a scary investment.

 

[greg334]

It is about time.

They used a few of these last year and the only issue I found was when the thing ran out of power and you could not hook it up anywhere, the reefer was the only savior.

But re-reading the statement, I find this even more of an issue and to my point about dilution of CC - "Not only are we using the new containers in our current Temp-Assure offerings, but we are also working with FedEx Express to develop additional cost-effective services to meet more of our customers’ needs."

The death of White Glove? Who knows but..... let's see......

 

[davekc]

You won't need a reefer if the battery runs out, but will need a charging system off the truck or a APU that can charge them if 100 hours or greater is needed. All of that exists now.
I think there will still be WG, but it will consist of security/surveillance loads, art work, and some curb side service.

 

[RichM]

I remember myself and others stating that major changes were coming in Febuary . I agree with Dave is that there will be some curbside freight but most of it will be going in these containers on Fedex National LTL. Just a question of time before Panther and LEA jump onboard for this freight.

 

[tallcal101]

This is also BAD news for those reefer dealers who specialize in expedite. Ofcourse,this is not the death nell for reefer freight in general,but the W/G concept as it used to be is a dead duck.As for FEDEX,"it's about the money stupid ".Seems we may be hearing that famous quote more rather the less in the days ahead.

I think we(the public) know about 1% of whats really going on with the econmy.For all parties to be on board with this 3/4 of a point interest drop scares the h*** out of me.Both sides of the aisle had to be on board,as well as the Fed, banking officials and Bush.They got this done within minutes of the Dow plunging 400 points this morning.
Things are not well for all thse parties to come together and decide fast action was needed to save what? Maybe our collective a###s.I hope I'm wrong.

 

[Jefferson3000]

I think we(the public) know about 1% of whats really going on with the econmy.For all parties to be on board with this 3/4 of a point interest drop scares the h*** out of me.Both sides of the aisle had to be on board,as well as the Fed, banking officials and Bush.They got this done within minutes of the Dow plunging 400 points this morning.
Things are not well for all thse parties to come together and decide fast action was needed to save what? Maybe our collective a###s.I hope I'm wrong.

=========================================

I think you're right. I'm not surprised that it didn't stop the fall this morning. Now investors are afraid. The last thing you want to do in a poker game is reveal what's in your hand by your behavior at the table. The cutting of the rate like that just caused a lot of investors to realize that the powers that be are not so confident in our own economic state.

 

[ATeam]

This is an interesting development to be sure, and one that, I must admit, gives me pause. As a Custom Critical contractor with a reefer-equipped truck, and with a good deal of our revenue coming from reefer freight, this is a development that merits some consideration.

Worse case, this new container kills White Glove. For us, that would mean finding new markets and/or carriers for our truck as it is presently configured; or reconfiguring our truck by perhaps replacing the underbody reefer with a pull out barbeque, and maybe replacing the reefer body with an even more specialized box of some type or maybe a standard dry box.

How likely is the worse case? In my view, maybe 10%. You see, these containers are no stranger to our truck. We have been hauling them for a while now (and long before the compressed air variety was announced in a press release dated November 27, 2007). The difference is compressed-air technology replacing dry ice, but how much of a difference is that really? The high value freight that goes in containers like these still need White Glove attention. And as these containers become more attractive to an increasing number of customers, that's more White Glove business for us, I believe.

I might be wrong about this. Time will tell. But those who are now lacing up their good shoes to dance on White Glove's grave may be wrong too. Since FedEx Custom Critical is already in the business of hauling these containers, I view this as a hopeful development, not a harmful one.

Every time FedEx Custom Critical comes up with something new, there are a predictable few that rise to proclaim it as bad for contractors. And there are the predicticable optimists that rise to proclaim it as good.

As I see it, the "goods" have it. In four years of new Custom Critical developments, Diane and I have, as team drivers of fleet owner trucks and now a truck of our own, been able to embrace the changes and position ourselves to profit from them. I see no reason that will change in the immediate future. We have revenue and net worth increase numbers that show the financial value of our approach.

There is a profitable and unprofitable way for contractors to provide White Glove trucks and services to FedEx Custom Critical, and through them, to the market at large. Not surprisingly, those who have profited from doing so in the recent past are optimistic about the future.

What's new in the story is not the containers (though their innards are different). What's new in the story is not the fact that FedEx is doing more and more work across sister companies to better serve their customers. What's new in the story is not that FedEx Custom Critical is developing new markets for its contractors to service. In fact, if there is anything new in the story, at the ongoing trend and stragegic level, I'm not seeing it.

The more I think about these new containers and FedEx operating company relationships, the better I feel. These changes are being made with the customer in mind. The more new customers FedEx can bring under its roof, the better it is for FedEx Custom Critical contractors, I believe ... at least for the contractors who get it about the world we live in and are willing to adapt.

Again, I may be wrong, and our business plan has alternatives built into it in case I am. Planning to be wrong is just as important as planning to be right.

But I don't think I am wrong. We live in a world where everything is getting smaller, faster and cheaper. THAT is a core concept to embrace. Those of us who are mentally, physically and financially positioned to deliver the goods in such a world are also positioned to prosper. (By the way, it may not be that White Glove is dead, but that profitably providing White Glove services with trucks that are not paid for is.)

A highly-specialized truck configured to haul highly-specialized freight and/or urgently needed freight. It's been working for Diane and me for four years, and in good times and bad. I see no reason why it won't continue to work in the years ahead.

It may require some truck and business plan tweaking from time to time, but in my book, highly-specialized is the phrase that pays.

These new reefer containers? A minor development in the grand scheme of things and just another component in the game.

 

[Tennesseahawk]

I agree, Dave. With these containers, any Schmoe can be White Glove. With the economy turning south in a hurry, why pay for the White Glove name, when FX is saying their drones can do it too; and I'm presuming at a cheaper cost. I'm sure they'll keep the name White Glove; but move it over to Express. See a resemblance to when they started using robots in assembly? I do.

 

[layoutshooter]

The economy will go south and then back north. It ALWAYS has and ALWAYS will. These containers may or may not hurt us reefer owners. FedEx is NOT in the business of pleasing owner/drivers etc. They are in the transportation business. Period. They are in it to make money. Period. I hope my business is not hurt but will move on and do what ever to earn a living if I have too. Who knows, but people, not all is doom and gloom. We are not in a recession yet, that takes two negative growth quarters and we have not had the first one yet. The economy is growing, slooooowly, but still growing. Someday there WILL be a recession and even another depression. That is life. WILL AND CAN hunt for food. I will always eat. Layoutshooter

 

[davekc]

I think some fail to see the bigger picture. Their intent is to provide a cheaper guaranteed service to the customer. Of course the one defending this as a good idea has already spent that 200,000 plus on a truck.
If Express is offering next day service, what would a WG glove truck offer other than what I already mentioned in another post? Essentially nothing.
Talcal looks at a lot of freight as I do, and he see the same picture. There will be reefer loads, but they will move at regular dry van freight rates. That is exactly why Fedex is doing this. This hasn't been a secret, as this was discussed when they bought Watkins. Funny how they didn't share this with their contractors.
I'm not sure ones head in the sand is the most appropriate reaction. Hey, like Rich mentioned, we have brought this up before and warned folks. What happen last year is much different than what you will be seeing in the future. That's not me, that according to the carrier.
I don't have a "dog in the hunt" so it doesn't have any impact on me other than opportunities for reefer freight loads with a dry van.
Again.....better think twice before you buy a reefer truck.
"Watch what they do, not what they say"

 

[x06col]

"Always" is a long, long time. A long time. I'm kinda wonder'in whatca gonna "hunt" in Monroe,MI. Soup might get pretty thin.

I've seen many a schmo that couldn't "git r done" so, the advent of this kinda freight going on Joe's truck is extremely remote. Control comes to mind here. Had a fella typing the other day, bout not going to Philly cause it was too cold. How'd ya like to have a new fangled container on the dock wait'n for that clown?? (i'm still wonder'in how you can turn down work, and still have funds to go shopping with, I need to learn that scam and get on easy street)

It's all progress or change. Like Auto Quick wuz, a few ago. Worked for a while.

 

[davekc]

Interesting thought? Might be another reason they are going down this path. Don't have to worry about someone "turning it down to go shopping". Using their employees kinda takes that problem out of the picture. Weather won't likely be much of a factor if they go that route. Much different than the old Auto-Quik as this is using employees rather than independent contractors.

 

[Tennesseahawk]

Exactly what I meant, Dave. Schmoe = Express driver (ie, employee). Contractors? They don't need no stinkin contractors.

 

[layoutshooter]

If forced to hunt or fish I won't stay in Monroe, or maybe I will let alllllll the bums that I have been supporting with my overly high taxes support me for a change. I could be a bum.
If I work at it. Layoutshooter

 

[DreamTeam44]

WOW! Phil Madsen & Diane Madsen....WOW!
GREAT STUFF!
My wife and I are 30+ years touring musicians, we started trucking 3 years ago, bought a Big Truck 13 months ago and are just now investigating the Expedited Freight side of trucking. We also sold most everything except musical and precious to us, and that is in storage, we also live in our truck and the USA is our stomping ground. We have driven over 600K miles for one of the bigs in the last 27 months and are realizing that we need to slow down, make more per mile, save us & save our truck for a bit. We stay out 8+ weeks then take a break from 10-17 days, we are trying to learn about what carrier will be a good fit for us, one that has decent amount of biz using '53 ft. trailer...anyway enough about us, we wanted to say THANK-YOU for the articles and sharing your lifes experiences, just your words written will help us learn about what success means in expedited freight......Our truck is also our home, maybe someday our homes will cross paths....it would B a pleasure to shake your hand and say howdy.....
Respectfully Yours! ////////////

 

[greg334]

Phil,
Of course in your elegant post you missed a very important point - the shift from CC to a more main stream internal transportation methods are happening, are real and are important to the parent company. No one at CC will admit to it, certainly not Virginia. And the comment I quoted clearly points to what will in effect reduce the income of many within CC. It don't matter what you see, the common contractor at FedEx has been seeing it for a while and there are a few who are special who don't.

You can't tell me that the LG loads are there for filler?

or that the .94 a mile offers I got were because they were trying to keep our trucks moving?

I know that this container thing is not a big deal, as you said, but using the other mainstream means of transportation within the company with FTEs is a big thing for them. One BIG reason for this is to limit the liability with these court cases they keep losing and also to recover up to 20% of the lost revenue that they claim has been happening using contractors. It reduces costs and I can't blame them for the moves they are making.

Don't believe me?

You don't have to.

The container issue is only a selling point to draw more pharmas into the FedEx fold, like Shearing-Plough, GlaxoSmithKline, Novartis, and Merck because Pfizer is hitting hard times with patents ending, a shift in R&D and the closing of plants and facilities - they will be reducing their critical shipments in the near term. The pharma companies that are small don't ship this way, they are not diverse like a Merck or Pfizer.

By the way these are not compressed air units, they are self-contained refrigeration units, just like the envirotainers but without the dry ice. They run on battery power and have vacuum insulation panels which make them really cool ice boxes. I had them on my truck and got the run down on them and how they work. The thing is, I think Dave mentioned this, that there is an issue with plugging them into an APU or generator, I forget what it was but the power supply didn't work right on the model I had to do this, it needed line power to charge - it may have been corrected since.

 

[RLENT]

Well I dunno about "don't need no stinkin' contractors" ....

Word I had (as of a few months ago) was that the growth of the Fedex Ground system had evolved to a point where it was cannabalizing Fedex Express' core business - overnight package deliveries. Word was that Ground had hit Express so bad that Express drivers were having to sit for a number of hours (4 or more) during the day - because they didn't have enough packages to keep them busy 'til they could make their afternoon pick ups at appointed hours later in the day.

One of the last things I heard from a Senior Terminal Manager before I made my "Exit, stage left" was the percentage of packages into the terminal (Ground/Home Delivery) that had a "Same Day" delivery commitment (meaning that the package needed to be delivered the same day it came into the terminal) - it was a very high percentage - I think over 70%.

Think about it - you have "Ground" ..... which is supposed to be the cheaper, slower service ...... becoming so efficient that it delivers essentially the same service as Express - for much less coin to the customer - and at much, much less cost to Fedex - since they use contractors, have no investment in vehicles, fewer Ground employees vs. Express.

Which one would you, as a customer, use ? Hmmm .... lemme think about it for a minute ....

(On the otherhand, with the way the various Ground lawsuits are going, it could be that they ultimately have no contractors - just employees - when it's all said and done. )

So what does any of this have to do with Custom Critical - which admittedly has been a highly specialized service ?

Only this - Fedex management has been ruthless in pursuing operating efficiencies in other divisions - specifically Express, then Ground, and finally Home Delivery - and have been quite successful at it.

You can take it to the bank that they will be equally ruthless in pursuing them in ANY PART of the Fedex family of companies where it justifies the effort to do so - from a competitive and/or economic return basis. It's only a matter of time 'til they get that round tuit thingie .......

davekc has it right - it is TOTALLY ABOUT providing a lower cost service to the customer.

You wanna know what it's in store for FXCC, then take a look at what has occurred in the other divisions - remember - it's the same people at the top for all of them.

 

[Tennesseahawk]

I look at it this way. On refrigerated loads, where care is needed, but time is not necessarily an issue, the containers make Express a viable solution. Paint is a perfect example... as are drugs, as Greg pointed out. And with Californication cracking down on ppl making a living, FX would just send these containers in on Express or LTL trucks. Bringing prices down for the customers IS the name of the game. Why spend $3+/mile to ship something with WG, when you can get basically the same service for a lot less? And use your own trucks to boot...