FAA reauthorization bill could be ready this week

By: Vicki Needham, The Hill

Commentary:

UPS and FedEx and have been rivals for decades – and frankly they understand how each other competes. Given that the two combined have such a dominate control over the US express letter and parcel industry, they have modified, tweaked, and calibrated their labor strategies and network operations to operate at peak performance levels. Every ounce of efficiency has been baked into their operations.

Labor costs and the impact of labor rules drive a majority of the decisions made in the trucking and parcel sector. As the single largest cost for the carrier, changes in labor cost or operating regulations can have a drastic change in the operating performance of the company. That is why FedEx is pushing so hard to keep its labor structure unchanged – and UPS would be interested in seeing it change.

At the end of the day, FedEx would have to ultimately adjust its cost basis, operating approach, and perhaps its network structure to accommodate a significant change in labor cost or job models. UPS made those adjustments over years and years of working with unions, and fully understand the areas where efficiencies can be captured. If this law changes FedEx labor structure, it will adapt as well. The drama surrounding this decision by Congress will be front and center in the transportation sector because of the massive implications.

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