Tags: US | Rural | Delivery

As Fedex, UPS Slug It Out, Rural Service at Stake

Sunday, 04 Jul 2010 01:42 PM

 

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In the multibillion dollar world of overnight package deliveries, Mike Overstreet knows his Billings-based company, Corporate Air, is at the "tail end of the dog" as a small FedEx contractor serving rural areas of the Rockies and Midwest.

Yet with FedEx engaged in a fierce Washington, D.C., lobbying battle with the industry's other private sector titan — United Parcel Service — Overstreet worries his business and customers in 10 states could go down as collateral damage.

At issue is whether FedEx Express, the company's delivery division, should be reclassified as a trucking company, like UPS, or retain its federally granted status as an airline.

If FedEx loses its special status under a measure now before Congress, its employees could more easily unionize. That in turn could drive up costs for the Memphis, Tenn.-based company, forcing it to trim services in rural areas where costs are highest and profit margins thinnest, said shipping industry expert Satish Jindel.

UPS, which says it merely wants a level playing field, dismisses warnings of potential service cuts as fearmongering meant to bolster FedEx's bid for special treatment.

But Overstreet's loyalties are clear. He says Corporate Air "bleeds purple" — FedEx's brand color — as a contractor delivering FedEx packages to 23 cities on 290 flights a week.

If Congress sides with UPS, Overstreet warns he could get pinched out of business. He said the result would be rural medical clinics, farmers and others in remote areas losing a key provider of the goods they need to operate.

"They (FedEx) will have to reconsider going by air," Overstreet said. "The farmer or rancher who needs that part to fix his tractor is not going to get it. They will be delayed by another day."

FedEx spokesman Maury Lane said the impact could be widespread. He said rural contractors are heavily relied on by the company in all or part of at least 19 states — North Dakota, South Dakota, Montana, Idaho, Colorado, New Mexico, Arizona, Texas, Mississippi, Louisiana, Georgia, South Carolina, Florida, North Carolina, Virginia, Arkansas, Maine, New Hampshire and Vermont

Workers at UPS are organized by the Teamsters, and company and union have united behind the anti-FedEx provision. It was introduced by Minnesota Democrat Rep. James Oberstar, chair of the House Transportation and Infrastructure Committee.

"There's no difference between a FedEx driver and a UPS driver," said UPS spokesman Norman Black. "We believe it is a fundamental issue of fairness."

Some divisions of FedEx already are allowed to unionize without the hurdles faced by FedEx Express. Teamsters Vice President Ken Hall said that underscores that more access to unions wouldn't break FedEx.

Hall dismissed warnings of rural service cuts as an intimidation tactic.

In April, the Teamsters launched an Internet campaign — FedExDriversAren'tPilots.com — meant to ridicule UPS's rival. It includes video clips of what appears to be an airline stewardess instructing truck drivers on how to buckle their seat belts.

FedEx has shot back with claims that UPS is seeking a "Brown bailout" — a reference to the company's signature brown uniforms that attempts to capitalize on anti-corporate sentiment following the Wall Street and auto industry bailouts.

Combined, FedEx and UPS move almost 23 million packages a year, said Jindel, whose company, SJ Consulting, has done work for both companies. Their rivalry dates to at least 1996, when FedEx briefly lost its airline status before getting it restored by Congress.

UPS briefly attempted to follow FedEx's lead, unsuccessfully appealing to the government in 1996 to get its status changed to an airline.

That would have put both shippers under the Railway Labor Act, which places sharp restrictions on attempts to unionize.

The 1926 law was meant to protect critical transportation networks from disruptions caused by strikes.

Jindel said both UPS and FedEx rightly belong in that category, since they have nationwide networks that move goods equivalent to 12 percent of the country's annual gross domestic product. However, the debate in Congress is stuck on the question of unions.

No end is in sight for the shipping squabble. Oberstar's provision was in the House version of a Federal Aviation Administration funding bill that has yet to pass in the Senate.

Jim Berard, a spokesman for Oberstar's committee, said lawmakers from FedEx's home state of Tennessee are holding up a conference that could break the deadlock on the bill.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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