economics

April 30, 2010

UPS and FedEx Should Compete on Same Labor Field

Filed under: Uncategorized — ktetaichinh @ 4:21 am
Tags: , , ,

With your editorial “The Big Brown Union Bailout” (April 26), the Journal has bought into a fundamentally distorted view of efforts by Congress to level the competitive playing field in the express delivery business.

Your premise is that legislation now before Congress somehow will force FedEx Corp. to unionize and thereby destroy its business model. This ignores a basic fact: FedEx has had more than 100,000 employees governed for years by the very labor law that now is portrayed as a union-friendly dagger to the heart of its business model. Yet not one of those FedEx employees has ever joined a union, and there is no reason to expect otherwise.

To meet the needs of the modern economy, package delivery businesses such as UPS and FedEx have evolved to operate networks that utilize both air and ground transportation. Pilots and airline mechanics in the air operations of UPS and FedEx are governed by the Railway Labor Act.

The proposed legislation does not affect employees involved in airline-specific duties such as flying planes; it affects people driving trucks.

Drivers at UPS, FedEx and the nation’s other delivery companies do the same work, drive the same kinds of trucks, follow similar schedules, and deliver to the same customers. There is absolutely no reason they should be governed by different labor laws.

For years, FedEx has used its unique position under the law to try to lure customers from other delivery companies by claiming that its service somehow is more reliable. FedEx has leveraged its special treatment under the law to avoid fair and open competition.

FedEx argues that because it was originally organized as an airline it is somehow different from its competitors, and its drivers ought to be governed under laws relating to airlines. The facts and common sense tell a different tale.

FedEx says, and your editorial repeats, that 85% of its packages are delivered by air, and somehow that makes the company different than its competitors. Such statements by FedEx are intentionally misleading.

The reality is that all FedEx and UPS packages are delivered by drivers in trucks. UPS and FedEx both operate airlines, and drivers for each company deliver approximately two million express packages each day.

Congress has a clear and easy choice. It’s long past time that drivers doing the same business should be under the same laws.

Scott Davis

Chairman and CEO

UPS Inc.

Atlanta

FedEx has developed a significant ground operation to compete with UPS. FedEx even uses ground transportation to transport its “air” packages where feasible. UPS simply wants a level playing field to compete with FedEx.

Your comment that UPS is at a disadvantage because its workforce consists of union members is an insult to every Teamster who helped build UPS into one of the most efficient, well-respected companies in the world. That system is labor intensive and requires thousands of dedicated employees to sort and deliver those packages.

You say that union employee equals “labor woes.” I would hardly consider one 15-day work stoppage in my 32 years as a Teamster at UPS the kind of labor strife that has impeded UPS’s ability to expand and be profitable. Last time I checked, UPS was still making billions of dollars in profits a year. And that, despite the fact that UPS was saddled with union employees.

Vincent J. Kloss

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