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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.
35 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.
14 Roger // Feb 12, 2010 at 5:57 pm
I find UPS charges way too much in reference to their brokerage fees. FEDX charges only $10 while UPS charged me $53 on a $250 item. Absolutely price gouging , don’t use UPS way too expensive, FEDX , cheaper and faster.
15 Ko // Mar 13, 2010 at 11:38 pm
In response to Dan, Nov 15th 2009
Dan, you have no idea which end is up. I have been with FX as a part-timer for 15 years. No complaint whatsoever, none, zilch. I’ll stay with FX as long as Fx will let me. FYI. There are thousands of my peer workers think like I do.
16 James // Mar 31, 2010 at 12:24 am
in response to Bill, Oct 19th comment. what in the heck are you talking about? i have been a Fedex employee for the past 22yrs..i haven’t lost my pension! Fedex suspended the ‘company match’ to our 401k plans for a year (which is being reinstated this month actually) as a cost saving response to the recession. The company never stopped funding the 401k plan…just the match amount to what employees contribute. get your facts straight b4 you misinform folks. and as far a union is concerned…i say Hell No! i see no benefit to a union. higher wages..maybe by a few bucks…but at what cost? there truly would go my retirement when they decide to pilfer it for their own purposes. no thanks!
17 Chris Knight // Apr 3, 2010 at 5:30 pm
I have a small retail business in Oregon shipping about 500 domestic shipments a year since 2001. In 2001 when we started we had a UPS account. In our first three months of operation out of 68 shipments 18 were problem shipments either delayed delivery (more than three weeks) lost or damaged. 3 shipments were total losses returned by consigneess and looking like they’d fallen off a truck at highway speed or been run over by a forklift and for one UPS refused a claim even though that shipment had been crated by their partner (at the time) Office Depot. That’s when we switched to Fedex. And since? To date well over 3000 domestic shipments including Fedex Home Fedex Ground and Express. And the loss rate? 1 in 3000 Yeah, one lost item. The result of our claim? Processed in less than 5 business days with a complete refund of our loss and shipping cost. How’s that compare with a UPS claim? Well, I’m glad you asked that. In my experience, UPS will argue about values, require proof and IF they decide after weeks of dialogue to make good on the insurance YOU PURCHASED they will still keep the money you paid for shipping, even though they FAILED to deliver the shpment! Point is (in my opinion) Fedex does it better consistently and UPS sucks! Great example of how a UNION F*#K UPS a company (mispelling intentional)
18 zack // Apr 12, 2010 at 2:38 am
As a low-volume shipper like the previous commenter, I can wholeheartedly support his observations regarding FedEx.
FedEx is faster than UPS in ground service and their tracking system is better. FedEx packages make progress heading to their destinations over the weekend, while UPS packages are ‘frozen in time’ from friday night to monday morning. In today’s world of internet commerce, that is simply unacceptable.
I have not had an experience with an insurance claim with UPS, but my one claim ever with FedEx was handled reasonably. FedEx is the reason that the Post Office and UPS have had to step up their game… and even still they can hardly compare. FedEx has earned its praises through excellence.
19 Randy Kitchens // Jun 17, 2010 at 1:48 am
Sure UPS pays more than FedEx. Have you seen the work load of the average employee at both companies? I have.
Two different companies with 2 different operations at FedEx vs 1 operating company at UPS means FedEx employs more people to do the same jobs. 2 different pickup and delivery drivers at FedEx vs 1 at UPS.
If you want FedEx unionized, do you want 1/2 have of the employees of Fedex to join th soup lines because labor costs will force FedEx to combine operations?
This country does not do well with Monopolies. If the Teamsters succeed in Unionizing FedEx, that’s what you’ll have… Labor monopoly. Look what a Labor Monopoly did to the American Automotive Industry? They lose money when they match sales figures with Toyota and Honda.
I like Free Market. I know people at FedEx that make a decent living and are quite pleased with the work conditions. Some have worked at UPS and realize the grass sometimes is Greener at a NonUnion company.
20 FrED EX // Jul 8, 2010 at 1:54 pm
Brown bailout? LOL spin, spin, spin away FedEx. FedEx is deathly afraid of having to compete on level terms with UPS … with good reason.
21 Paul // Aug 25, 2010 at 9:34 pm
Joshua: You can check the rates of both companies online. Both offer about equivalent levels of service, but FedEx is invariably the better price bargain. The reason, of course, is that UPS has to pay inflated union wages and FedEx does not. UPS knows this and therefore wishes to force unionization upon FedEx.
If UPS wants a “level playing field”, it should adopt the same business model as FedEx.
22 teri // Sep 4, 2010 at 8:37 pm
i am a fedex driver for fxg and a multi route owner. Going union would be a disaster, first of all the union would make alot of money, not me. and with my experience with 101 operators you can lose money as i did because i did not have 10 years vested, they pulled $5000.00 out of my pay for retirement and matched it when i ended my heavy equipment career all i wanted is what they had deducted not the match but, i could not have it because i was not vested!! to me that is stealing, i paid $25.00 a week on that 6 month job for the union card so i could work , you know that if some of their sissy member would have been on the job there would not have been a position for me, where the job was paid less than kansas city prev. wage so they would not go. union sucks. and if ups is crying unfair they should suck it up and do more to compete.
23 UPSer // Sep 8, 2010 at 11:28 pm
I wish it was as simple as “UPS asked their employees to write to congress”. As a UPS employee we were asked to attend a mandatory meeting where we were given examples of what to write. We had to write in our own handriting and address the envelopes. Of course if we refused we new it would reflect negatively with management as they led the meeting. We were told to leave the envelopes unsealed for scrutinization before mailing (in case we decided to write what we felt instead of what UPS decided we should feel on the subject). For me that was an embarrasing day to say I worked for UPS. Something clearly wrong with the way that was handled.
24 Bezique // Sep 22, 2010 at 4:39 am
UPS & Fedex have done well in the market place. If you force Fedex to accept the same rules the only one to benefit is the Union. Look at our goverment-federal, state and the larger cities operate under Union rules.
How about teachers across the country.
They keep their jobs even thought our students continue to fail in the system. As most of us have had to tighten our belts due to the economic downturn…the Unions fight to give us anything-even thought most of the private industry suffers.
Cities like Chicago struggle to make a balanced budget as the Unions fight to keep all that they got in the good times
Perhaps Mayor Daley sees the writing on the wall.
25 make money online // Dec 15, 2010 at 12:07 am
In it something is. Thanks for an explanation, the easier, the better ?
26 Anthony // Dec 25, 2010 at 6:46 pm
I think a lot of people are overlooking an important point… the unions were initiated to protect the workers, but now they have become out of control. The unions serve a purpose though, but they themselves need to be regulated. I have worked for both companies in Australia, and luckily we have that independant regulating body for unions. An independant body should be there to decree whether a strike is legal or not legal. If it is not legal, then the union should have to pay massive fines or worse. Having said that, each induvidual employee should be encouraged to be “pro-choice”, no matter what company they work for. Joining a union should be if you see a need to join one, not forced upon you or discouraged as a company sees fit.
27 » Part 2 InterestCurve // May 25, 2011 at 1:52 pm
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28 Roger Sikes // Jun 17, 2011 at 1:45 pm
The only reason FedEx workers have half way decent wages and benefits is because their brothers and sisters over at UPS and USPS have a union and fought for those gains. If there were no unionized parcel companies, wages and benefits for the FedEx workers would be far poorer. FedEx needs to be organized for the workers at FedEx and to support all of the other workers in the US parcel industry.
29 Gregory Orr // Aug 7, 2011 at 5:43 am
Thank You Rachel and Commentors
Thank you Rachel for a great article, and thanks to everyone who posted comments. The dialog was generally civil, and very informative from many points of view, which is really the best of what the internet has to offer. I really have no position either way UPS/FX, but I am very interested in finding ways for labor and management to work cooperatively and prosperously, and believe that the animosity between the two is a waste of money for all parties. Would be great to have all of you revisit the discussion and share your vision for the ideal L/M relationship. I wound up immersed in the SalvaVides water delivery drivers strike in Guatemala. where guys drive long hours lugging 5 gallon water jugs, carry cash, get robbed at knife and gunpoint…Kinda makes the US parcel industry look cushy, but still guys can be overworked, get injured, and not have decent retirement income at the end of the day. How do we design an industry that’s fair to workers, profitable for management and investors, and provides quality service at at a reasonable price to customers?
30 houstongal // Aug 17, 2011 at 9:36 am
Thanks for this union info, it’s the deciding factor for me. From now on, my company will use FedEx as often as possible (avg 4x/week) instead of UPS (4x/year max, due to a prior commitment), as unions have outlived their usefulness and are now getting in the way of voluntary (”free”) commerce (”market”). FedEx is easier to use, besides, and the rates between the two companies is comparable. No more bailouts for anybody.
31 Scott // Aug 20, 2011 at 2:49 am
People that complain about service like damages don’t pack and/or address properly. One previous poster talk about how better FEDEX was after they used UPS but fail to say what lessons they learned. No doubt when they 1st “started” they did a poor job of packing and addressing and blamed UPS.
Having tow sets of rules for doing the same work is a nothing more than regulatory protection of FEDEX which is socialist. FEDEX employees still can unionize but like there company ride the coattails of UPS. UPS workers and company set the industry wage and shipping rates. NOT FEDEX. FEDEX and its employees are nothing more than parasites on UPS and its workers. If Fedex employees want to earn lower wages so Fred Smith can take in more for doing nothing but shadowing UPS then they should live with it.
Customers get more value for there money and better service with UPS or they wouldn’t still be the largest transportation company in the world. Market share has remained constant and even during theses bad times.
Want to see a grubby bearded dirty old man deliver your product in a beat up truck then you go right on ahead and ship Fedex Ground. First impressions right! LOL!
32 ScottH // Sep 1, 2011 at 6:39 am
Sorry. I just won’t use UPS unless pickup is at the center or with a signature required. At least in my area UPS has simply ‘lost’ too many firearm related packages. Always when a ’substitute’ is driving. Packages supposedly ‘left on porch’ when i was at home. (Stockton, CA). Even a date/time stamped video from an inside camera focused on my front porch, I’m not believed by the call center.
FedEx has never lost a package of mine. Didn’t know they were non union and now I hope they stay that way.
33 Average Joe // Oct 4, 2011 at 11:42 am
FedEx has so many lawsuits and has been found to have broken labor laws many times in the US and in Canada….Google it for yourself.
They bring in temporary staffing company personnel to keep from giving hours to their “hired” employees - so they don’t have to provide them with benefits. Many of those temps are latinos that don’t even speak english.
That company has been the poster child for questionable business practices for far too long…..change their special status and level the playing field…..BTW they pay really low wages…..just sayin’…
34 Brandon // Nov 1, 2011 at 2:13 pm
I say F**K the Union! I work as a manager at UPS and the Union always and I mean always has to go to bat for the $hittiest workers! The Union (I thought) was there to fight for the average worker, but the only time they have to get involved is when we’re discipling an employee that comes in late everyday, calls in once a week, works slow, etc. Do you know how hard it is to fire one of these pieces of shit at UPS?? It could take years! The Union will keep getting them their job back. In some cases, I think its better to just cut your losses and hope that the next person will want to do better. Last I checked, the economy’s not doing the greatest so why do we keep protecting such worthless employees that do such shoddy work??
35 UPSer // Nov 10, 2011 at 7:01 am
I think y’all are all dumb and are only thinking about yourselves! Im a UPS driver and am proud of the company I work for! I work hard for my money and most likely get paid more than everybody that posted something on here. (And I only have a high school diploma.)
How many of you are in debt from those degrees you paid for? Not me!
UPS is a strong company with a great business plan that pays their employees very well. If y’all were smart, y’all would find a way to get the company you work for to pay that well and still be that strong!!!
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