UPS, FedEx fire shots at each other from their trenches in New Mexico
Filed under: Company News, Technology, Economy, People, Media, UPS
Over much of the last two years, United Parcel Service (UPS) and FedEx Corp. (FDX) have been sniping at each other in the halls of Congress and in the papers. The battle has been conducted through surrogates: as high-priced lobbyists dispensing largesse, and by lower-octane (but no less eloquent) columnists and media pundits.On Tuesday, the two opponents finally met face-to-face at a meeting of the Albuquerque Chamber of Commerce. While it lacked the energy and drama of the Rumble in the Jungle, everyone agrees that the Altercation in Albuquerque was deeply important. But the two fighters don't see eye-to-eye about what it all meant.
UPS thinks it was a battle in a war to protect the rights of America's workers; FedEx thinks it was a battle over its right to conduct business without unfair government intervention. In truth, it's about money, although it hinges on a fairly obscure legal classification that dates back to 1926.
The rules of the Railway Labor Act, which cover most of FedEx's employees, make it very hard for workers to unionize and strike. Meanwhile, the National Labor Relations Act, which covers UPS drivers, makes it fairly easy for workers to unionize and strike. Taken together, they mean FedEx can operate with less overhead and can offer customers a higher level of security than UPS can.
In March, FedEx threatened to cancel a $3.75 billion order with Boeing -- endangering the plane manufacturer's business -- if Congress reclassified it under the NLRA. Congress responded in May with the FAA Reauthorization Act, which contained a provision that would remove FedEx's railway exception. It would be simplistic to claim that the House of Representatives was exacting revenge, but it's hard to imagine that legislators weren't annoyed by FedEx's attempt at blackmail.
Undaunted, FedEx launched a two-front war, taking its fight to the Senate and running an ad campaign characterizing the battle as a government bailout for UPS. The idea was to instill a wave of populist rage against Big Brown by linking it to Wall Street. (The campaign didn't really work out -- although it certainly made George Will hopping mad.) Still, the Senate version of the FAA Reauthorization act didn't contain a provision that would change FedEx's status.
For all its drama, the UPS v. FedEx skirmish in New Mexico was largely meaningless. Until the Senate version of the act is rewritten, this issue is stalled -- the bill is bogged down in committee, and it's unclear when it will find its way off the floor of the Senate. So for now, FedEx retains its financial advantage, with employees who have fewer rights to strike.
In the end, this war could be reduced to an issue of necessity. When the Railway Labor Act was passed, America's rail lines were vital for the country's economic health. The inclusion of America's airlines in 1936 suggested that their status was equally vital. The question, then, is whether American commerce could survive a FedEx strike, or if rivals now have the ability to "absolutely, positively" get a package across the country overnight.
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Reader Comments (Page 1 of 1)
10-29-2009 @ 11:20PM
jeff said...
These two companies sound like they are very similar. If this is the case then why should they not both follow the same rules?
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11-01-2009 @ 4:20PM
Jim said...
All FDX & UPS both have components of their companies that both operate under the RLA and NLRA. UPS's airline employees work under the RLA... same as FedEx Express. FedEx's non-airline employees (FedEx Ground, FedEx Freight, FedEx Custom Critical, FedEx Services, FedEx Offices, etc) ALL operate under the NLRA, just like UPS's non-airline employees. UPS is trying to get FedEx Express to operate under the NLRA. Make no mistake... Any company's employees can organize under either laws.
10-30-2009 @ 7:12AM
Andy said...
I think that is the point UPS is trying to make. Remember UPS started as a trucking company moving packages around while FedEx started as an airfreight company. I assume that is why they have different status. Now UPS moved into airfreight while FedEx moved into trucking so they are now both the same.
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10-30-2009 @ 10:21AM
Bruce said...
Being in a business that requires weekly shipping of fragile goods I can only speak from my experience. Fedex can be relied on and UPS can not. If anyone is unsure just google UPS insurance fraud and you will find a landslide of consumer rip off by their insurance policies. They { UPS } rarely pay legitimate insurance claims.UPS is a slippery company that I would never use.If you think I am just sour grapes then refer to the channel 5 Fox news expose on their insurance scam several months ago.Maybe UPS can strike but how about if the American public strikes against them ?
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11-01-2009 @ 5:56PM
Jimbo said...
What a Joke UPS is way better then FEDX!!!
10-30-2009 @ 2:02PM
Jay"Bird" said...
To much is being made of the"right to unionize and strike" catch phrase.The only issue that should be talked about is that UPS and FedEx Ground are really doing the same job with different advantages and or disadvantages
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10-30-2009 @ 6:04PM
wondering said...
I am curious as to how many UPS or former UPS managements sit on the government committees that make decisions for the industry as a whole. Google there CEO and you will find that MR Davis was involved was CEO of Overseas Partners who was sued and lost in a scam to send insurance money off shore. Shame on them. Looks like Scotty went from UPS to OverSeas Partners and then Promoted up the ladder to CEO of UPS. Does this instill confidence in this company????? UPS just wants lay more expense on FEDEX so they can grap more market share. The funny thing is if they would clean up in their own house they could be more competitive. LIKE TRY TO NOT DAMAGE PACKAGES. TRY TO MEASURE YOUR PACKAGES ACCURATELY SO THAT YOU DO NOT OVER CHARGE YOUR CUSTOMERS ON DIMMENSIONAL WEIGHTS. Speaking of unfair advantage try letting Weights and Measures in to test your lasers that you use for scanning dimensions. I guess some companys voluntarily allow them in Not UPS. They have no trouble accepting the perks of FAAAA rules to exclude them for having to account for the accuracy of their scales. Kind of like the butcher putting his thumb on the scale isn't it.
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10-30-2009 @ 10:07PM
Justin said...
The truth is that FedEx operates very differently from UPS and unionization may be crippling long term. UPS operates a single network with integrated air and ground. FedEx operates two independent networks for air and ground. UPS has higher labor costs, higher operating efficiency. FedEx has lower labor costs, lower operating efficiency. Take away FedEx's labor advantage, and they lose pricing power and must undertake a major restructuring to remain competitive.
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10-31-2009 @ 9:33AM
Jimmy said...
How are they different? Both FedEx and UPS packages arrive at my house in a truck. Seems the same to me.
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11-01-2009 @ 4:53PM
Sadie said...
This article did not explain what actually took place in Albuquerque. It consisted of the backstory to the headline, and nothing else!
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