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The ground war between FedEx and UPS

Photo: AP/Paul Sakuma

Last month, Congress passed a funding extension to the Federal Aviation Administration and imposed stricter training mandates on pilots, and required passengers to be notified when a flight was being operated by a smaller commuter carrier on behalf of another airline. These changes were designed to address safety issues that led to the crash of a Colgan Air flight near Buffalo, N.Y., in February 2009 that killed 50 people.

However, the bill that passed was significantly pared down from a larger overhaul that had been stalemated in part by a controversial 250-word provision which has erupted into a confusing public spat between shipping giants UPS and FedEx. The simmering conflict will now be postponed until after the August congressional recess.

The struggle centers on several sentences that would amend the arcanely named Railway Labor Act (RLA), which governs labor relations for airlines. The language essentially forces non-airline employees of FedEx Express, like truck drivers, to be governed by the National Labor Relations Board (NLRB). This would allow them to organize locally instead of nationally, as they can under the RLA. In other words, it would make it easier for employees of FedEx to unionize. (UPS is already heavily unionized and governed by the NLRB).

Not surprisingly, FedEx is not pleased with this section of the legislation, while UPS is supportive. After all, having a more heavily unionized workforce could add to FedEx’s labor costs, which, the company claims, could add a 10 percent surcharge on packages.

At the heart of FedEx’s argument is the claim that FedEx Express and UPS are very different companies. UPS is a 100-year-old parcel delivery company, while FedEx was founded in 1971. FedEx claims that 85 percent of FedEx Express packages are delivered via air, whereas 85 percent of UPS packages are transported via ground (a figure that UPS disputes). UPS counters that its  operations are similar to those at FedEx: Both transport packages by air, but final deliveries are handled by a truck driver. UPS also points out that FedEx is the only express delivery company whose drivers, loaders and sorters are governed under the RLA.

But instead of having a civil and constructive debate in Congress (when was the last time that happened?), FedEx has taken its case directly to the public and gone extremely negative in the process.

In June 2009, FedEx launched Brown Bailout, a website portraying the rule change as a “bailout” for UPS. The site includes testimonials from business that rely on overnight shipping, a blog and videos attempting to explain the issue with a poor man’s doppelganger of the UPS whiteboard guy (and The Postal Service soundtrack).

Not to be outdone in the court of Internet opinion, UPS has launched its own information page, attempting to refute the FedEx talking points while also taking shots at FedEx’s “multimillion dollar campaign to distort reality.”

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  • Will

    FexEx needs a union. Having worked there 10 years I know the advantages UPS employees have over FedEx and the abuses FedEx management perpetrate on their “valued”employees. Service would improve and justice would be done to UPS if FedEx unionizes.

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  • korrectamundo

    So, “having a more heavily unionized workforce could add to FedEx’s labor costs, which, the company claims, could add a 10 percent surcharge on packages.”

    That is strange. Something is going wrong at FedEx. Disregarding the mention of air vs road, there are some facts that are worth mentioning at this point.

    I just researched a couple of packages.
    One: 13 lbs, from a small town in S.Carolina to another small town in Montana. The two places are almost two days of non-stop driving apart.
    Two: 1.5 lb, from Newark NJ to Albany NY. They are about 3 hrs apart.

    The first package prices ranged from:
    Fedex priority overnight $128.52 against UPS Next day Air $124.22
    FedEx $26.27 against UPS $25.10 for 5 business days.
    Transit times were the same for both FedEx and UPS.

    The second package prices for quickest delivery were identical for FedEx and UPS at $59.88 and for other options too.
    The only differences were for delivery end of working day next day, where FedEx were $9.20 against UPS $9.97.
    But UPS didn’t have any options that took more than one day.
    FedEx had two services that came in 2 and 3 days, but they were more expensive than their end of next working day prices. Go figure.

    So, overall, UPS scored on price except for the one where FedEx came ahead (short distance small packages cheapest rate). Transit times didn’t differ much at all.

    I expect that if FedEx go union, and prices go up, they will still be more expensive than UPS, a union organization.

    Am I wrong to suspect that the only Union-related reason why FedEx are falling behind UPS is because UPS have unions?

  • ted

    A goodly number of fedex employees are former union members and any time a union tries to get something started by handing out literature ect..the organizers get spit on….there is no sympathy for unions at fedex. All a union is good for is saving the jobs of horrible employees who don’t derseve a job in the first place..