FEDEX, U.S. POSTAL SERVICE REPORTEDLY TALK ALLIANCE
Package-delivery competitors FedEx Corp. and the U.S. Postal Service are reportedly discussing a wide-ranging alliance, the Wall Street Journal reported Thursday.
The plan would include FedEx handling anywhere from some postal Express Mail shipments to all Priority Mail and Express Mail shipments in the United States, the Journal reported. In addition, USPS would deliver ground parcels for FedEx in rural places where the Memphis-based company's ground-delivery network doesn't reach.
Another proposal, which would strike a blow against FedEx competitors, such as United Parcel Service, would place FedEx drop-off boxes in about 38,000 retail postal outlets nationwide.
UPS in as statement late Thursday came out strongly against the reported proposals, likening a FedEx-USPS deal to “having the Department of Agriculture partner with Burger King to the exclusion of McDonald's. A federal government agency should not be allowed to favor one competitor over another, particularly when this agency has a $40-billion government-granted monopoly on First Class mail that it can use to compete unfairly in the marketplace.”
UPS recognized that it has “distinct advantages” over FedEx's ability to provide express air and ground delivery service throughout the United States. But, “while we recognize this is an attempt by FedEx to cure a serious shortcoming, its solution puts its service standards at great risk. The Post Service has recognized deficiencies in delivery service, time in transit, package tracking and guarantees, all of which today's customers demand and expect. In short, why would anyone pay FedEx prices for postal service?”
The Journal said that Postmaster General William Henderson voiced caution that there were many hurdles in reaching an agreement but that postal officials are “very optimistic about reaching some sort of strategic alliance.”
One hurdle would be waiving a government rule that prevents FedEx from delivery packages to post offices and post office boxes. The USPS would also have to differentiate Express Mail from FedEx's similar overnight service if FedEx ended up delivering Express Mail packages.
“Congress and the Postal Rate Commission will have much to say about this proposal,” UPS said in its statement. “This is far from a done deal, considering the public policy and antitrust implications.”
If an alliance is reached, FedEx would join integrated carriers Airborne Freight Corp., DHL Worldwide Express Inc. and CNF Transportation Inc., a unit of Emery Worldwide, which have all struck limited delivery alliances with the USPS.
Henderson said alliance talks were initiated in conversations with Frederick W. Smith, FedEx's founders and that negotiations “got more serious two months ago,” the Journal reported.