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.
Mona
FedEx needs to do better background checks on there drivers they gave my package to someone and they also singed it as if they were one of us
Bob
This is for the general public to ponder. Have you ever had a larger package from UPS arrive and have two trucks show up to handle the shipment professionally. This happened to me and I was pleasantly surprised. Now watch a FedEx Ground truck pull up with a large package. No help, driver struggles, gets upset and rightfully so. When you ask where’s the help the driver looks dumbfounded. As I have learned the driver does not work for FedEx, but for an independent company. From here I started to dig into this and learned that the contractors are being squeezed. FedEx should be ashamed of themselves. For me as I am a small business owner, I will never use FedEx Express, Ground, or Freight ever again. I am calling for all small business owners to send them to the curb.
Fab
The FedEx drivers don’t get paid very well at all..FedEx the company it’s self doesn’t care for the contractor far less for the drivers FedEx is not a very nice company at all…FedEx only care about the volume,number and the money they can make people stay away from FedEx they can’t make that commitment to customers at all…this FedEx company is very bad for customer your package will not be there on time at all stay away from FEDEX.
Biff
I wonder how much longer they are going to run the FedEx car in Nascar? Time to save money, how about that. Take a lesson from UPS and stop making frivolous marketing decisions. Oh, and what about golf. I would love to know what these two expenditures are costing them. UPS customers stay away!!!!!
Travis
I agree with Fred, it’s time for the general public to wake this company up. We have used Express and they never can get it right. How many chances they have had. Use UPS.
Fred
I’m surprised that the pilots have not walked along with the Ground contractors. I guess the general public need to take it into their hands. Boycott this company!!!! They need to learn a lesson……
Istvan Toppler
on one hand one can see an attempt to set up customer to assist. On the other it looks dangerously like an attempt to raid UPS customers ahead of possible strike, or scare tactic.
Tom
I currently work with a logistics company. The gentlemen I work with owns FedEx Ground routes. People stay away from FedEx. If they cannot pay their contractors a livable rate, what type of people would you be dealing with. Sounds like FedEx has become no better than a sweatshop. I have read the story of Fred Smith and I cannot believe he is letting this happen. A former marine, I guess the ego and money has gone to his head.