UPS, FedEx fire shots at each other from their trenches in New Mexico

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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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