UPS Plane Grounding: Shipping Impact Minimal
- * UPS Plane Crash & Grounding: A deadly UPS plane crash in Kentucky on November 8th led the FAA to prohibit flights of MD-11 planes.
- In essence, the article discusses how a tragic event is creating some potential disruption in the air cargo market, but both major players (UPS and FedEx) are working...
Here’s a summary of the key information from the provided text:
* UPS Plane Crash & Grounding: A deadly UPS plane crash in Kentucky on November 8th led the FAA to prohibit flights of MD-11 planes. Both UPS and FedEx have grounded their MD-11 fleets (9% of UPS fleet, 5% of FedEx fleet).
* Potential Impact on Air Cargo Rates: the grounding of these planes could boost air cargo rates during the peak holiday shipping season due to reduced capacity. However, analysts don’t anticipate a major impact. The Baltic Air Freight Index already showed gains (over 4% in the week ending nov.17, and 2.4% compared to last year).
* Company Responses:
* UPS: Has contingency plans, secured additional aircraft (leased planes), and consolidated flight routes. They haven’t instituted additional peak season surcharges. They’ve also reconfigured their ground network to add capacity.
* FedEx: Is working with the FAA to ensure its MD-11s meet standards and is utilizing its network efficiently, including spare aircraft, ground service, and charter opportunities.
* Earnings Call Context: Before the crash, UPS CEO Carol Tomé had indicated early forecasts from top customers where… (the text ends mid-sentence here).
In essence, the article discusses how a tragic event is creating some potential disruption in the air cargo market, but both major players (UPS and FedEx) are working to mitigate the impact and maintain service during the crucial holiday season.