FedEx Corp. said that it has held on to the 400,000 daily packages that it has estimated were diverted from rival UPS Inc. during contract negotiations between UPS and the Teamsters union.
Brie Carere, FedEx’s (NYSE: FDX) executive vice president and chief customer officer, told analysts Tuesday that the company has not lost any of the accounts that it believes it won from UPS in the weeks and months leading up to UPS and the Teamsters agreeing at the end of July to a five-year contract.
FedEx in September had told analysts that it had captured 400,000 former UPS daily packages. On Tuesday’s call, Carere said that it is a slightly conservative number. She did not elaborate.
UPS (NYSE: UPS) told analysts in late October that it had recaptured about 600,000 of the 1.5 million daily packages that were diverted in the period leading up to the contract. Of the 600,000 that were won back as of that time, about half came from FedEx, UPS executives said.
Satish Jindel, president of Ship Matrix Inc., a transport consultancy, said that he sides with FedEx’s view of the matter. Jindel said that he’s been told by various shippers that switched to FedEx that they have not gone back to UPS. FedEx, like UPS, has maintained high delivery reliability levels, thus mitigating any concerns about uneven performance.
Jindel said that most of the recaptured business has come from regional parcel delivery carriers and the U.S. Postal Service. UPS will have a difficult time recovering business from FedEx unless the latter carrier falls down in service or UPS can reduce prices below what FedEx charges.
Lowering prices will prove to be a challenge because UPS needs to maintain certain levels of profitability to offset the higher costs of the new Teamsters contract, he said.
Roberto Martinez
Kudos to FedEx, an exceptional marketing ploy with national and international sponsorship of events like golf’s FedEx cup. What many people are unaware of is this is done at the expense of truly hard working 1099 contract delivery drivers who in most cases earn a $1 per delivery. Insurance benefits are nonexistent as well as retirement; yet FedEx continues to market itself a great “American company”.
Niamul Anan
The article reports that FedEx is now claiming to have retained the additional volume it gained during the UPS contract negotiations. They reportedly estimate this gain to be around 400,000 daily packages.
Steve Disser
The FedEx drivers are definitely less professional and run through their routes moreso like maniacs, trying to get done early in order to raise their lower daily pay. I witnessed this on multiple occasions while working as a seasonal helper with UPS this month. Two of the UPS drivers I rode with were fairly recent converts from FedEx and both said they were much happier working for UPS. Better working conditions, better wages, better benefits, and a more professionally run company with higher expected standards of behavior and safety for their drivers.
Chuckster
Ups executives need to take a hit on their pockets for a change and should’ve kept shipping the same for once. Would’ve brought on new customers and you take a small hit now for a bigger reward for later but ups has proved its management team is not rhe brightest and far from it.
Karl Brown
All I have to say on the matter is that FedEx service is horrible!!!!
Ka
This is what happens when big brown tries to stay just 6 inches ahead and then focuses on cutting costs instead of blasting service to the moon.
Jindel is usually pretty solid in his analysis.
Timothy Blatnicky
What isn’t mentioned is the fact that FedEx, while using fear mongering tactics to gain accounts made them commit to a minimum time period for signing on. So, in my opinion any sustainment of volume by FedEx is squid. Plus, how many videos are out there of FedEx delivery drivers dumping packages on the roadside or even recently relieving themselves in a neighborhood cul-de-sac. These are just my opinions.