UPS human resources manager Jeff Bloedorn said Denver’s suburbs of Aurora and Englewood are areas needing more workers. “We’re seeing some areas around the country with tight labor markets, and we reacted accordingly. Some of the things we’re looking to do is increase our wages, and we’ve done that in Colorado Springs as well.”
In a statement to KKTV, FedEx expressed similar issues, saying in part, “acquiring top talent is a top focus, yet the industry-wide labor shortage is putting on added pressure as there are less people to fill more available roles. FedEx has experienced a dramatic increase in demand for our residential delivery services as online shopping and e-commerce surge”
President Joe Biden spoke on Tuesday with the chief executives at Walmart Inc, United Parcel Service Inc, FedEx Corp and Target Corp to discuss speeding up deliveries and lowering prices for consumers, according to a White House official.
“During the conversations, President Biden received updates from these private-sector leaders on the efforts they’re taking to speed up throughput in our entire goods movement supply chain and discussed how shelves will be well-stocked this holiday season,” the official said, without providing extensive detail.
Biden, facing political pressure over rising U.S. prices, has been organizing an effort to clear transportation bottlenecks, ease semiconductor shortages and pass a spending bill that officials hope will ease long-term inflation.
The United Parcel Service is taking a win in delivery services this year. It’s raking in higher profits and maintaining a stable workforce through the pandemic with the help of its unionized workers. Meanwhile, rival Federal Express is seeing a labor shortage eat profits, racking up $450 million in extra costs.
FedEx and UPS have different approaches to last-mile package deliveries. UPS drivers are usually unionized employees while FedEx Ground drivers are generally nonunion independent contractors. The UPS model provides the truck, maintenance, and benefits packages while the FedEx model puts that on the contractor, which operates as their own business. As Bloomberg reports, FedEx’s model allowed it to expand quickly following UPS’ 1997 15-day union strike. But that same model is hurting it now.
Daniel Foelber (UPS): In September, FedEx (NYSE:FDX) missed big on earnings and lowered its fiscal year (FY) 2022 guidance due to labor market uncertainty and supply chain issues. In late October, UPS reported its best Q3 in company history and raised its full-year 2021 guidance and operating margin. Even more impressive, UPS is generating strong results and expects to finish the year spending just $4.2 billion in capital expenditures, which is significantly lower than in years past.
Given the similarities between FedEx and UPS, it may seem odd that one company is struggling while the other is thriving. However, a closer look shows that UPS was better prepared than FedEx in making sure it could deliver this holiday season.
For example, FedEx said it will struggle to hire 90,000 additional workers needed to satisfy peak demand but UPS thinks it will deliver record-high consolidated operating profit and expand margins in the fourth quarter. “On the labor front, we’ve digitized and simplified our job application process, enabling qualified applicants to receive a job offer within 30 minutes of applying. In parts of the country, labor costs are higher than they were last year, but we are effectively managing through that cost pressure,” said UPS CEO Carol Tomé on the company’s Q3 2021 earnings call.
UPS didn’t shy away from supply chain challenges, saying there are “capacity, congestion, and cost concerns.”