(wall street journal 12/07)
Maybe in Wall Street's view UPS didn't have a tremendous 2007 but the recent announcements regarding FDX's legal issues may finally level the playing field. According to information already announced, FDX faces a $319 million improper classification of independent contractor fine/penalty obligation for just 2002. The Teamsters suggest that the total exposure may exceed $1B. That along with the higher future cost of doing business (like UPS has been facing all along) and the internal legal expenses must be part of the larger picture as well. Certainly this major issue is part of the reason FDX's shares are sliding to near $90.
The 2nd legal issue regarding FDX just got hairier. The DOJ has issued a Grand Jury subpoena for further information/testimony regarding the on-going charge of anti-competitive behavior regarding their international air freight business. Granted, UPS was also mentioned early on regarding this issue but has not received a similar subpoena (or it has not been announced yet if they have).
So, it would be interesting if UPS is able to continue to outperform FDX operationally while FDX is also subject to heavy financial setbacks related to these 2 issues. I for one would liken this situation to the hair and tortoise comparison as UPS has been around for quite some time and has worked well (mostly) with the Teamsters and have provided outstanding benefits for their employees. (end)
Brazenblown said this:"After giving it more thought does UPS really need the union?
Look at FedEx, sure they don't make as much but they don't work as hard and they don't make 50% less that we do..FedEx didn't have to bail out a screwed up Central States plan either. Maybe UPSers would be making more money than they do now if UPS didn't have to put up billions to rescue that debacle.
So much for those UPSer's who swear FEDEX is eating our lunch. Looks like FEDEX is having their lunch money taken!!