FedEx Corp. has told rival UPS Inc.’s customers that any business from UPS that FedEx onboards by March 31 will receive priority treatment from FedEx regardless of whether the Teamsters union strikes UPS or not.
In a letter to various UPS shippers, FedEx (NYSE: FDX) said parcels tendered by the end of the month can be assured of receiving high-priority service levels. FedEx urged UPS (NYSE: UPS) customers to take advantage of the near 30-day window to ensure they have committed capacity in the event of a labor disruption.
“Don’t wait until it’s too late,” the letter said.
The message from the email is that FedEx cannot guarantee it can prioritize volumes for UPS shippers unless the business is received by March 31. In a presentation accompanying the email, FedEx said shipments from UPS customers received after March 31 will be handled on a first-come, first-served basis.
This is not FedEx’s typical engagement style. Generally, the company treats issues like this in a low-key manner. However, according to Nate Skiver, head of consultancy LPF Spend Management LLC, FedEx’s pitch isn’t shocking.
FedEx needs volume and revenue, Skiver said in a LinkedIn post Friday. In addition, it’s a rare chance for the company to publicly exploit a UPS weakness, namely concerns about 350,000 UPS Teamsters members walking off their jobs by Aug. 1, the day after the current five-year contract expires, according to Skiver.
As of Friday, few UPS shippers are in anything but “watch-and-wait” mode, Skiver said. However, should the spring and early summer pass without a deal, he believes that shippers will start to panic.
Not every regional parcel carrier has space available, though the largest, LaserShip/OnTrac, is expected to have capacity to sell. The U.S. Postal Service is also expected to marshal large amounts of alternative capacity as the agency begins to ramp up for a possible tilt in volumes.
Regional carrier executives have said they have no plans to be stopgaps for UPS shippers. They will be loath to accept new business if it isn’t part of a long-term deal to keep the business there if and when a strike ends or if one is averted.
Much has been made of the upcoming negotiations, which are expected to start later than usual and be loaded with vitriol. UPS executives are confident a deal can be reached long before the end of July. Just in case, however, UPS managers will not be allowed to take paid time off in July and August in case they are needed to move packages.
UPS shippers are generally very loyal, and most would be unwilling to break away large volumes as a contingency. If nothing else, the FedEx ploy may convince some “low hanging fruit” to make a change, according to industry experts.
In a statement, UPS said it is “normal and expected that our competitors try to scare our customers, especially during our contract negotiation years.” UPS remains aligned with the Teamsters on many contract issues, the company said.
Joe French
Fedex has done this everytime the UPS contract comes up to scare the shippers. FedEx is extremely greedy they will pick up everything just make the independent contractors work harder and not pay anymore. Was a contractor for 20+ years, the company doesn’t care for there contractors anymore.
MJ Marshall
Sadly Fedex couldn’t compare to UPS and I am a customer. To ship in to someone in my own state you actually take my products out of state and then it comes back to be delivered. It takes two days longer for no apparent reason and they charge me more and say it’s a late pick up fee. They also just don’t deliver products and give you no reason when tracking. We actually make bets as to whether the product will be deliver the day it says it’s out for delivery. You’r The drivers are all 1099 drivers who have to maintain their own trucks. Oh, the stories those drivers tell. Oh I’m a 20 year business owner.
K
Fedex one last attempt to try to save the company from laying off. UPS will make a deal and continue shipping as usual. Nice try Fedex.
Anita
I have been in the logistics industry for years. I have the opportunity to use FedEx for different modes of transportation over the years. I have found them to be only liars. Do not trust a thing they say. They treat people as if they are the almighty high priest. Do not use them it is not worth the aggervation.
Charles Upchurch
I would rather have a pigeon deliver our envelopes then Fedex. Ups is a little bit more expensive, but the reliability is what I appreciate.
John
FedEx has some Teamsters in their system but they’re mostly nonunion and owner operators and they have the worst history of accidents in the trucking industry… their insurance premiums must be sky high…. in the last 10 years they’ve had over 700 doubles accidents…. So if you wanna trust your shipment to FedEx go ahead
Logan
It would seem that FedEx has dug a hole. When will the current senior management learn that lies, intimidation, and greed will not accomplish a brand that workers, contractors, and customers respect. I’m not sure who is behind the current attitude but if it is hedge fund that currently has 2 seats on the board or the new CEO of FedEx Corp. there needs to be some civility brought back.
Tim
The first point and the most important is that FedEx Ground and Freight are in such disarray that this will cause many especially FedEx Ground contractors to go out of business. It is quite obvious that Ground is fragile based on the contractor model. The contractors have not been treated fairly for years and they continue to neglect and threaten their contracts. Many have filed bankruptcy and are in jeopardy of losing everything. I wish someone would tell this story.