FedEx vs. UPS: Round 1,354

May 25, 2010

Analysis by: John Schulz

Analysis of: Cargo Carriers Pose Conundrum for Air Safety Bill

Published at: www.buffalonews.com

Summary

The nation's two small parcel giants--UPS and FedEx--are locked into a high-stakes lobbying war in Washington that could spell the end of FedEx's non-union status for its tens of thousands of truck drivers. UPS wants FedEx's parcel ground drivers to fall under the National Labor Relations Act,  the same law that governs most of its 250,000 or so Teamsters. FedEx is arguing it deserves to stay under the Railway Labor Act, which has governed FedEx since its founding in 1971.

Analysis

  This Buffalo News story is an excellent analytical piece by a veteran Washington-based corresponded, Jerry Zremski, who knows his way around the corridors of power.

  The story details the ongoing million-dollar lobbying battle between UPS and FedEx, which have the lion's share of the $32 billion air express freight market. At issue is whether FedEx will regain the advantages it currently has regarding its non-union labor workforce if it should remain under the Railway Labor Act.

  Rival UPS, saying a "truck driver is a driver is a driver," currently falls under the older National Labor Relations Act. Founded in 1907, UPS is the Teamsters' union's largest employer--with more than 250,000 card-carrying union members.

  UPS says it is unfair that FedEx and UPS drivers, who essentially perform the same functions, fall under two sets of federal labor law.

  That's the essence of the fight. There are other side arguments, detailed excellently by reporter Zremski, on how these billion-dollar behemoths are using their clout to actually hold up a bill that would reauthorize funding for the Federal Aviation Act.

  Renewal of that bill is considered must-pass legislation. For one thing, it  would implement something called NextGen, a reinvention of the current antiquated air traffic control system. It also has other safety measures meant to protect the flying public.

  But until UPS and FedEx setttle their food fight over unionization, the U.S. flying public will not be the beneficiary of any of this.

  It's getting nasty, even by UPS-FedEx standards.

  In a recent letter to the Wall Street Journal--which, surprise, surprise--has taken non-union FedEx's position in an editorial on its hard-right editorial page--UPS CEO Scott Davis correctly argued that FedEx is using a ruse to somehow imply that its drivers should fall under a different set of labor laws.

  "FedEx has leveraged its special treatment under the law to avoid fair and open competition," Davis wrote.

  The UPS-FedEx battle has been going on behind the scenes in Washington for decades. Lobbyists for both companies have been able to put their children--and perhaps their grandchildren--through private schools for generations on the extra fees they are charging to get their side favored.

  One sidelight of this Buffalo News story is a financial scorecard of the lobbying costs at both companies. So far this year, FedEx has spent $16.4 million on federal lobbying, according to the independent Center for Responsive Politics. That's more than double what it spent last year, and triple what it spent in 2007. UPS has responded with $8.4 million in lobbying spending, more than triple what it spent in 2007.

  All this gets reflected in freight costs. Both companies have instituted rate increases of nearly 6 percent this year, at a time when nominal inflation is practically zero. Gee, I wonder where all that extra revenue is going?