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UPS and FedEx are currently in a head to head battle, but this time it’s not over freight prices or market share. The argument is around the labor laws that govern each company (which provide a great example of complicated, legacy government oversight regulations) and make unionization of FedEx employees far more difficult than for UPS workers. If pending legislation makes it through Congress and past President Obama, the playing field may soon be leveled. However parcel shippers have to wonder, what impact will this have on prices and the potential for work stoppages?
FedEx currently falls under the Railway Labor Act (RLA) which makes labor organization more difficult. FedEx cannot be unionized on a location by location basis; it must be done through a company wide vote. Unlike FedEx, UPS is governed by the National Labor Relations Act, which allows for unionization at the local level. Provisions to change Fedex’s status were included in the FAA Reauthorization Act, which was recently passed by the House of Representative and is expected to taken up by the Senate in September.
Obviously, two competitors should play by the same rules. But when the stakes are this high, it should come as no surprise that both companies, their employees and the unions are actively trying to push legislation in their favor. Last week, UPS asked their employees to write to Congress in support of FedEx being covered by the FAA act. Last month, FedEx launched a website accusing UPS of lobbying for a “Brown Bailout”:
So, needless to say … the gloves are off. But what does that mean for parcel shippers?
Unfortunately, the answer is that you should be concerned or, at the very least, aware. Since the US small parcel market is currently structured as a duopoly, the fear exists that the union could easily affect price and service in the form of coordinated work interruptions. If FedEx and UPS employees instituted a work stoppage at the same time, shippers in the US would be left with USPS for all parcels, and they simply don’t have the breadth and depth of services UPS and Fedex have.
That’s certainly not to say that the union would take this approach, since the US public has little love for work stoppages. But with DHL’s pullout of domestic US service last year, a powerful union may indeed be tempted to hold management feet to the fire … at the expense of continuity for parcel shippers.
Rachel Rutkoski is a Senior Indirect Services Category Manager for North America in Ariba’s Global Services Organization. Rachel is recognized by the Institute for Supply Management as a Certified Professional in Supply Management (C.P.S.M.) and has several years experience as a supply chain and transportation analyst in Fortune 500 companies.
13 responses so far ↓
1 Gloria Rubaine // Aug 19, 2009 at 6:26 am
I’ve always considered the duopoly of UPS and Fedex an important topic. These two companies have branded themselves extremely well and have fought DHL tooth and nail to prevent the latter from having a serious 3rd presence in the north american market. Logistics managers and operations VP’s are not paying enough attention to what these two companies are doing and how disruption in just one of them could impact the north american, even global market. Thanks for writing on this subject.
2 Debbie Curtis-Magley // Aug 19, 2009 at 11:13 am
While UPS and FedEx both play a critical role with commerce, it’s not accurate to portray the companies as a duopoly. There are hundreds of small and medium-sized companies that provide delivery and logistics services within the U.S. and across the globe and these companies regularly compete against UPS and FedEx for business.
It’s also important to keep in mind that RLA status does not equal unionization. Out of the hundreds of (union and non-union) companies in the delivery industry, FedEx Express is the only one covered by a different labor law. In fact, other business units of FedEx already have more than 100,000 employees currently covered under the RLA and these employees are not unionized. Even if the law is changed, FedEx employees will always get to choose whether they want to have a union.
We offer more details on this topic at the UPS Pressroom http://bit.ly/kv2UX.
Debbie Curtis-Magley
UPS Public Relations
3 Its a Duopoly // Aug 20, 2009 at 11:21 am
Debbie,
There are only 2 companies that provide this level of small parcel services. To say that this is not a duopoly is crazy.
4 Greg // Aug 20, 2009 at 10:22 pm
Great story!!
The only important fact that I would like to add is based on your comment “If FedEx and UPS employees instituted a work stoppage at the same time, shippers in the US would be left with USPS for all parcels.”
FedEx Express moves a huge portion of priority mail for the USPS with FedEx planes.
What lurch will the shippers be in when FedEx,UPS, AND USPS cannot get your package there within a few days? What about diagnostic specimens? Perishables? Seafood? Flowers? Chocolate? This list of important shipments is endless in our hurry up rush society!
FedEx Express is an airline company. The trucks are just the means to get the package the last mile to the customer. The planes cannot and should not deliver packages door to door.
I personally believe it is better for the American consumer that this duopoly continue to fight for market share. Once they are both in bed with the union, the fight will be over, shipping prices will rise, and the public will have no further recourse.
But that’s just my 2 cents!
5 Ed West // Aug 23, 2009 at 12:00 pm
I hope that FEDex and UPS unionize. America must wake up to the real costs of shipping services, that involve fair compensation for workers. Why should workers pay, so that companies can cushion consumers from the real costs of building a middle class?
6 John // Aug 25, 2009 at 4:18 pm
Ed West - The best thing in America is our right to choose. If you do not like your wages you can always leave and go to work for another company. If companies do not offer competitive wages and benefits they will not retain quality employees. The unions only add red tape and inflated wages.
I’ve got a better idea: Go to school and get an education. You will be amazed about how many career choices with all kinds of different compensation levels you will have.
That’s just my opinion
PS: When you blame you give up your right to change.
7 John M // Aug 31, 2009 at 8:08 am
Ed West - Huh? That drivel didn’t even make sense. And where exactly in our constitution does it allow for a middle class? Or an upper class? Classes and divisions are going to destroy us as a country. How about go to college, learn, make money, or dont… freedom of choice, freedom to succeed, freedom to be content at 10 bucks an hour.
oh, and DHL didnt get run out, they SUCKED! They lost our payroll MANY TIMES. I’m glad they’re gone cuz my company finally had to use someone dependable.
8 Stelian C // Oct 15, 2009 at 6:13 am
I’m from Romania, and I can say that in my country, FedEx does not “exist” on local market. Since last year, UPS have been in the same position.
9 Bill // Oct 19, 2009 at 10:27 am
The issue here is that Fedex doesn’t want to allow their employees to decide on unionization. Over the past 2 years Fedex Express employees have lost their pensions as well as matching 401K contributions. Maybe the union would succeed, maybe not but Fred Smith will not be the one to decide.
10 Adrian // Nov 3, 2009 at 5:43 pm
John, –The best thing in America is our right to choose— you have made the argument for unions - ” the right to choose” - includes employees choice to be in a union or not.
11 Joshua // Nov 10, 2009 at 9:28 am
I have used both FED EX and UPS, and I have always been impressed with both. I dont know which one is better except I do know these to companies are 100 times better than the United States Postal Service. I have had more mail lost with the USPS than any other company. They suck big time. and as for the other two companies they should be able to choose to be union or non union. I know that union workers usually get better wages!!!!!!!!!!!!!!
12 Dan // Nov 15, 2009 at 8:33 am
FedEX doesn’t even consider many of their workers actual employees. They have been evading billions of dollars in FICA, state and federal taxes through their method of independant contractors. This classification goes against any congressional definition of the word ‘employee’, both in the Railway Labor Act and the National Labor Relations Act. It is time FedEx face the music and abide by the law, whichever they are currently governed by. They have also violated the Railway Labor Act by impeding their “workers” from organizing and seeking representation from a labor union. It shows what kind of scum they really are attaching the word ‘bailout’ to any effort by UPS to even the playing field or by threatening to not purchase nearly $7 billion in planes from Boeing. Most of what FedEx is doing is hurting the United States as a whole.
13 Benny // Nov 18, 2009 at 11:00 pm
No one ever talks about Fedex: Ground/Home’s 2nd van drivers.
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