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Technology Stocks : Dell Technologies Inc.

DELL 133.78

-0.1%

Nov 14 9:30 AM EST

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To: TCBinAugusta who wrote (89674)	1/18/1999 1:39:00 PM
From: Lizzie Tudor	Read Replies (1) of 176387

re: FDX - I personally have bought a few things on E-Bay. Practically every item has been delivered by - guess who - U.S. Post Office (Express Mail). I think the perception of FDX benefiting from the internet "boom" is way overstated. I completely agree. I happen to have done some work on transportation for another computer company in Austin and the current situation with shipping is this - Fedex and others bid on the entire business once with a weight based shipping schedule which represents some % off their standard rates. Once they win the business, they install a machine at pick release (tail of order cycle) which is a scanner-based system to communicate with the local fedex office. This model is great for the shippers because they essentially lock the client in, and start creeping up the order cycle with bundling options etc. (which are presented as benes to the customer but in fact cost huge $$ and create an anti-competitive reliance on that shipper). The computer maker I was working with had Airborne, and was experiencing shipping costs as a top 10 item on the bill of materials! And, to add insult to injury, Airborne decided to renegotiate their rates midstream with this company because the initial estimates were off - so Airborne wasnt making any money. There was nothing the customer could do, changing shippers is a huge amt of work. My take is that the internet will cause a shake out in this model because it enables online bidding for shipping charges as well as superior communication with shippers as far as whats coming down the line. The "one shipper" arrangements are already declining due to customer dissatisfaction.... and with the USPS and UPS in the mix now, rates have to come down. One caviat is the hub and spoke distribution model will be enabled, which is a substantial opportunity for FedEx only (they are the only one with an extensive network now)... and, logistics is flattening so the growth here might offset the competitive concerns, but its a tough call.

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