A package deal: FedEx vs. UPS gets ugly
Filed under: Transportation, Recession
The battle between UPS and FedEx has reached Capitol Hill. It's an ugly fight full of back and forth lobbying and straight out lies.
I noticed an online ad, sponsored by FedEx, blasting UPS for allegedly asking Congress for a "bailout." At first glance, I thought it was "just another bailout," but an hour later on another website, the ad returned. To be so blunt in a campaign directly targeted at competition is very suspicious. That was when I decided to look into this matter.
To my surprise, I discovered that people were being fooled by these FedEx ads. The employees of both companies are at the heart of this battle. Here's the scoop:
We all know that UPS and FedEx have similar business models; however, these two companies have very different labor structures. Since FedEx began as an airline, nearly all of its 100,000 hourly workers comply with the Railway Labor Act (RLA). This law is designed to keep US skies and railroads functioning safely at all times despite labor disputes. This means that if FedEx employees get upset with the company, they cannot organize a strike that will shut down the operations that are crucial to global delivery via air and ground. Instead, employees are allowed to sue in federal court, undergo negotiations etc.
On the other hand, UPS employees are protected under the National Labor Relations Act (NLRA). This law is more liberal because it allows employees to easily organize a union.
Due to the recession, more companies are cutting costs and employees are often the first to feel the pinch. Taking into account both labor laws, if UPS decided to cut labor costs by decreasing pay, employees can fight back with a strike.
Imagine no big brown trucks, or backed-up mail. If this were to happen, UPS would take a serious financial hit and lose customer trust and plenty of big corporate accounts. FedEx employees don't have this option, and operations would continue as normal. Sound unfair to you?
UPS has lobbied Congress to reauthorize the RLA since the 1980's, when it launched its air service. This will ensure fairness and perhaps allow both companies to adhere to the much favored RLA (which FedEx employees comply with).
FedEx jumped back with a forceful campaign to stop UPS from its heavy lobbying. It states that the "wording" used in UPS' proposal is similar to a "bailout." UPS fired back with a PR release which states that they are in no way asking for a bailout. They are instead lobbying for fairness in the law.
UPS may face some difficulty, because unlike FedEx, it began as a ground delivery company, and remained this way during NLR's enactment in 1935. Being that it then expanded into air delivery, should it still adhere to NLR? Keep in mind that FedEx operates both air and ground, which is the same as UPS, but the law remains unchanged.
This will be an interesting battle, with much importance. Employees should be closely involved, and FedEx needs to properly inform the public.
I noticed an online ad, sponsored by FedEx, blasting UPS for allegedly asking Congress for a "bailout." At first glance, I thought it was "just another bailout," but an hour later on another website, the ad returned. To be so blunt in a campaign directly targeted at competition is very suspicious. That was when I decided to look into this matter.
To my surprise, I discovered that people were being fooled by these FedEx ads. The employees of both companies are at the heart of this battle. Here's the scoop:
We all know that UPS and FedEx have similar business models; however, these two companies have very different labor structures. Since FedEx began as an airline, nearly all of its 100,000 hourly workers comply with the Railway Labor Act (RLA). This law is designed to keep US skies and railroads functioning safely at all times despite labor disputes. This means that if FedEx employees get upset with the company, they cannot organize a strike that will shut down the operations that are crucial to global delivery via air and ground. Instead, employees are allowed to sue in federal court, undergo negotiations etc.
On the other hand, UPS employees are protected under the National Labor Relations Act (NLRA). This law is more liberal because it allows employees to easily organize a union.
Due to the recession, more companies are cutting costs and employees are often the first to feel the pinch. Taking into account both labor laws, if UPS decided to cut labor costs by decreasing pay, employees can fight back with a strike.
Imagine no big brown trucks, or backed-up mail. If this were to happen, UPS would take a serious financial hit and lose customer trust and plenty of big corporate accounts. FedEx employees don't have this option, and operations would continue as normal. Sound unfair to you?
UPS has lobbied Congress to reauthorize the RLA since the 1980's, when it launched its air service. This will ensure fairness and perhaps allow both companies to adhere to the much favored RLA (which FedEx employees comply with).
FedEx jumped back with a forceful campaign to stop UPS from its heavy lobbying. It states that the "wording" used in UPS' proposal is similar to a "bailout." UPS fired back with a PR release which states that they are in no way asking for a bailout. They are instead lobbying for fairness in the law.
UPS may face some difficulty, because unlike FedEx, it began as a ground delivery company, and remained this way during NLR's enactment in 1935. Being that it then expanded into air delivery, should it still adhere to NLR? Keep in mind that FedEx operates both air and ground, which is the same as UPS, but the law remains unchanged.
This will be an interesting battle, with much importance. Employees should be closely involved, and FedEx needs to properly inform the public.
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Reader Comments (Page 1 of 1)
7-22-2009 @ 12:08PM
lou said...
Mr. Dantes needs to do more research. It boils down to UPS wanting to change the rules so they can compete more effectively and they spend the $$$ in Washington lobbying to get this done. I wonder if they might be better served to structure their air delivery business like FedEx and petition for coverage under RLA. I would think the Teamsters would not like that idea very much though. If UPS is successful, and the Teamsters do get a foothold at FedEx Express, they could effectively shut down commerce in the US with a general or local wildcat strike. Ask any business how much fun that was in 1997.
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7-22-2009 @ 2:06PM
Alicia Myers said...
My spouse works for FEDEx. I know for a fact that FEDEx has an open door policy for unions...it is up to the employees to enter a union. They choose not to. During these hard economic times, instead of FEDEx laying off and cutting hours, their managers took an across the board pay cut and some had to relocate. The couriers, sorters, etc. have only had to deal with no 401k contribution this year from the co. and no annual raise this year. Their Health Insurance rates did not go up and their pension is still safe. Of course FEDEx is going to attack UPS, UPS is trying to force their employees into a union - which would mean dues to pay and someone else making their decisions. The turn around of FEDEx employees is extremely low...wonder why?!Perhaps you should look a little deeper for your info.
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7-22-2009 @ 8:53PM
Lex said...
"My spouse works for FEDEx. I know for a fact that FEDEx has an open door policy for unions...it is up to the employees to enter a union. "
This is completlely untrue. FEDEX has a long history of fighting to keep unions out. In 1987, Fred Smith told the Wal Street Journal he would never recognize a Union at FEDEX.
They are trying to retain employees under a false classification so that they cannot vote for a Union on a local level. This wouldn't force FEDEX to Unionize, the employees would still have to vote it in. FEDEX is the only pickup/delivery company that is classified as an airline. Perhaps the two previous posters should do some research before posting. FEDEX should stop crying about this, if it's so great their they wouldn't have to worry about any employees voting a Union in, but they are scared to death by this change because they know employees would vote it in!
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8-14-2009 @ 12:33AM
Joel said...
You are incorrect. Companies under the Railway Labor Act are absolutely allowed to organize. Most airlines have unions for many of their labor groups. The difference is that the union must be organized under a national structure. In other words, mechanics at a single base for a company may not organize a local union. This prevents a local union from paralyzing vital interstate commerce. However, if the mechanics throughout the company organize and vote to bring a union in, they may do so. Furthermore they may work with the National Mediation Board to resolve disputes. If those efforts fail, following a process, they may even strike.
FedEx sorts all of their Express freight at completely separate location from their ground freight--their airline, express business is separate from their trucking business. The same cannot be said for UPS. UPS sorts all freight at the same locations. For this reason their bid to be included in the Railway labor Act failed repeatedly. After which, UPS and the Teamsters reverted to removing FedEx from the RLA.
Do you think express freight service is vital to the national commerce? If so, you would want FedEx to remain in the RLA. It allows workers to organize, but prevents a single local union from paralyzing a national route structure.
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8-19-2009 @ 10:24PM
Clay S said...
this is an easy argument to make. UPS pays better, has better benefits, and is fully unionized- this in turn makes there prices higher. when you don't pay your employees fairly of offer good benefit packages to all employees(FEDEX) this allows you to heavily undercut pricing against a competitor(UPS), which is exactly what is happening all over the world. UPS is far superior in every aspect of the delivery industry and if this legislation isn't passed then customers will continue to settle for cheaper but vastly inferior service from companies like DHL and yep FEDEX. just take a week to observe the two companies from your job or even in your neighborhood- its no contest.
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9-20-2009 @ 11:37PM
marty said...
I work for FedEx and I can personally say the benefits are better; far better then those over at UPS. From work experience I will say that anywhere there is a union, the hard workers loose and the lazy workers have all the gain. What a union used stand for is long gone in today's times. The union concept has been over taken with same political propaganda that drives politics so the few rich ones get all the money and the workers get the bill.
8-19-2009 @ 11:57AM
Linda said...
I work for FedEx and we are completely taken advantage of, forced to take routes we dont want and shuffled until we finally quit. FedEx is completely overstaffed in some stations and is forcing employees to quit so they dont have to pay unemployment. I have worked there 16 years and they now have employee against emloyee. We are fighting for our jobs and it is getting cut throat. People with seniority are being shoved aside for the younger and the women are being discriminated against.
WE NEED HELP. PLEASE!!!
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8-19-2009 @ 12:28PM
E.L. B. said...
Yeah, he needs to learn accuracy in journalism. He conveniently jumps from one paragraph stating a half-truth, also deceptively omits the entire truth and mistates a fact. He then goes to another paragraph making it sound like 20 years ago suddenly rolled into current events. Huh? What'd he say?
I'll tell you. He's blurring his storyline as well as the facts and creating a deliberate converse perception.
He Says:
UPS has lobbied Congress to reauthorize the RLA since the 1980's when it launched its air service. This will ensure fairness and perhaps allow both companies to adhere to the much favored RLA (which FedEx employees comply with).
This is True EXCEPT he fails to note that UPS was lobbying Congress since the 1980's FOR THEMSELVES! - on their OWN BEHALF! - to try to get OUT of the NLA and under the RLA themselves AND FedEx supported their position in this. UPS didn't lobby Congress to 'Reauthorize the RLA' but to "reauthorize under the RLA". They wanted to be under the RLA which was created so that strikes in small localities could not cripple an industry nationally (like the railroads or airlines) when any individual locality decided to strike and therefore halt, freeze or disrupt the whole national system. Instead the RLA allows for national strikes and agreements. of Course, this makes it more difficult to unionize which is troublesome to UPS and it's Teamsters controlled system.
Then He jumps to this next paragraph falsely making it sound like Fed Ex was forcefully trying to stop UPS since way back then on such a fair issue. He then rolls right in to this:
FedEx jumped back with a forceful campaign to stop UPS from its heavy lobbying. It states that the "wording" used in UPS' proposal is similar to a "bailout." UPS fired back with a PR release which states that they are in no way asking for a bailout. They are instead lobbying for fairness in the law.
This paragraph is true in only some part but so false in it's implications. Yes, Fed Ex is trying to stop UPS and the Teamsters from lobbying heavily TODAY - NOW - NOT BACK IN THE 1980s or 90's!, and what UPS and the Teamsters are lobbying on NOW is the Opposite Issue. Instead of UPS trying to get itself classified under the RLA as they tried back in the 1980's and 1990's with their position being supported by FedEx, since that didn't work and they are now burdened and controlled by the Unions, they now want to get more payback from Congress to force FedEx to be under the same Wagner Act so they can be hindered with the same Union costs that UPS is. Hence, fair competition - as in hinder your competitor. UPS is lobbying to get FedEx's labor act changed, not their own labor rule re-classified anymore.
FedEx has been under the RLA since it's inception and 85% or more of it's packages are air transported. UPS is the opposite with over 85% of it's packages by ground transportation so they were classified (rightly or not) under the NLA-Wagner. Funny UPS argued in court in the 1990's that it was fair to cassify them under the RLA. Now they and the Unions and the Democratic have quietly passed legislation to slowly chip away at FedEx divisions and get them out of the RLA and into the NLA where it's so much easier to strike and unionize.
You get the picture. Teamsters, Union Control, Democratic favoritism, hinder the competitor, and grow the base of the Unions and therefore, they believe, the party.
Who does this guy think he's kidding?
Oh yeah, the Kool-aid drinkers, they always line up.
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