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ELIZABETH FARNSWORTH: Since the UPS strike began the company has only been able to handle about 10 percent of the 12 million packages it usually moves every day. That means business is booming for UPS competitors. Tom Bearden reports.
TOM BEARDEN: At 11 o’clock every night after the last passenger plane has landed at Memphis International Airport, the purple and orange planes of Federal Express begin descending. Every 90 seconds they touch down and taxi to a gate not at the passenger terminal but to one at the much larger Fed Ex sorting center.
A team of about 20 workers then quickly and methodically empties the plane, hauling out large containers of boxes for transfer inside. Workers here are accustomed to dealing with a large number of boxes, but over the last 11 days the volume has increased sharply. Under normal conditions Federal Express handles 2.8 million packages a night. But since the UPS strike began, that shot up to nearly 4 million. Fed Ex is working hard to keep up.
Behind the scenes the global operations control center employees track weather conditions and other variables that could affect operations. At the start of each shift there’s a briefing in the war room. On this night all systems seem to be operating smoothly, but Fed Ex has been forced to abandon its overnight guarantee. By 2:07 AM the package sorting is completed, and the boxes headed back to the planes are onto trucks. Laurie Tucker is vice president of logistics for Fed Ex.
She says coping with the increased volume is the biggest challenge the company has had to deal with in its 25-year history. She says they’ve been able to manage the flow because of their sophisticated system of moving goods.
LAURIE TUCKER, Federal Express: We can see the volume builds in the field. We can understand where certain airplanes are going to be needed before the sort actually begins. We can begin to prepare for the inbound. We certainly have visibility into the weather, airport curfews, and such. So the information technology has helped us manage through this, but it all comes down to the people. And the people are working their hearts out right now.
TOM BEARDEN: So far, Fed Ex has hired only a small number of temporary workers. Instead, officer workers have volunteered their time after hours and on weekends to help sort the boxes. But Fed Ex is not an option for some companies who normally ship via UPS because Fed Ex charges dramatically higher prices. Many are turning, instead, to the U.S. Postal Service. In fact, so many customers have flocked to the Postal Service that over 2700 temporary employees have been brought on board. David Medina is the operations manager at the bulk mail facility in Denver. He says more people is just one of many adjustments.
DAVID MEDINA, U.S. Postal Service: We’re re-aligning our forces. We have the equipment that we use to transport mail that we bring out of storage in order to help all the mail, and we’d normally put on extra trips, going to the different locations in order to haul the additional volumes of mail.
TOM BEARDEN: Any danger of being overwhelmed?
DAVID MEDINA: At this point, no. We’ve been handling the capacity very well.
TOM BEARDEN: Like Fed Ex, the Postal Service has a highly mechanized system for sorting and delivering packages. Since the strike, the number of Express Mail parcels has increased 70 percent. And, unlike Fed Ex, the post office is still guaranteeing delivery. The number of priority parcels–those slated for second or third day delivery–has increased 50 percent.
Although Fed Ex and the U.S. Postal Service are two of the largest alternative to shipping by UPS, many other companies are taking advantage of the strike to make their presence in the delivery business known. United Airlines took out newspaper ads reminding the public they ship packages for same-day delivery. United says their package delivery business is up 30 percent.
Private trucking companies are also getting a lot more business, as are bus companies. In Greyhound’s western region parcel shipments have tripled. Regional director Mike Timlin says the strike has made the public aware of the service they’ve offered for over 80 years, rapid delivery service to small cities and towns.
MIKE TIMLIN, Greyhound Lines: I think it’s an absolute great opportunity for us because that, quite frankly, is our niche. You know, we don’t have a fleet of airplanes that can go across country but our niche is that we can deliver a package faster, cheaper, better than anybody else within a 500-mile radius of a distribution center.
TOM BEARDEN: The existence of so many different kinds of on-time delivery companies reflects just how dependent the nation has become on fast, guaranteed service over the last 15 years. Steven Medema chairs the economics department at the University of Colorado at Denver.
STEVEN MEDEMA, Economist: The on-time delivery thing is an offshoot of the general training business for just-in-time delivery of inputs to production, things that used to be stored in inventories and so on. It has a lot to do with the increasing globalization of the marketplace, the competitiveness that’s involved, and the costliness of storing up inventories just doesn’t make sense in this business world.
TOM BEARDEN: Medema says that although shipping companies have been able to keep up with demand so far, they won’t be able to do it for long. Both Fed Ex and the Postal Service have put restrictions on how many packages they’ll accept from individual shippers. And Medema thinks bottlenecks will emerge within the next week or so.
STEVEN MEDEMA: There’s some windfall element there. There’s also substantial cost there because their capacity is being strained as well. And they probably are doing some things to buy the capability to move some more packages. And doing that short-term is a very costly process. You don’t have time to shop around for the best deal. You rent another plane from somebody and pay whatever price they want.
TOM BEARDEN: Nevertheless, most shippers say they don’t mind because they think they’ll keep some of the new business after the strike is over.
DAVID MEDINA: We’re in a competitive business, and we want all the business we can get.
TOM BEARDEN: What’s the reaction of your work force to this increased volume and the extra hours they’re having work?
DAVID MEDINA: For the most part they see it as an opportunity to convince the public that, hey, we can deliver and to continue our tradition of excellent service to the public. The additional volume just represents additional opportunities.
LAURIE TUCKER: I think there’s no question that the strike is going to cause some of those people to immediately see the value. And I think, yes, there will be some customers who will stay with Federal Express now as a result of the strike.
TOM BEARDEN: If the UPS strike continues, the acid test for the other shippers is expected to come after Labor Day when catalogue companies gear up for the traditional Christmas rush. UPS normally handles 80 percent of the parcel delivery business, but experts say there isn’t enough excess capacity in the whole system to meet the demand.