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.