FedEx vs UPS Profit margins

fedx

Extra Large Package
I'm try to figure out why FedEx isn't blowing UPS out of the water in profit margins since 1. FedEx Express starting pay is way less than UPS (like $5/hr less to start). 2. FedEx Express takes anywhere from 10 to 20 years to top out their drivers, while UPS does it in less than 4 yrs. Salaries are usually the biggest expense for a company. 3. FedEx Ground uses a subcontractor model where FedEx doesn't pay any benefits or retirement. FedEx should be making way more money. I understand FDX has a fleet of aircraft, but so does UPS. What am I not taking into consideration? I just don't get it.
 

vantexan

Well-Known Member
I'm try to figure out why FedEx isn't blowing UPS out of the water in profit margins since 1. FedEx Express starting pay is way less than UPS (like $5/hr less to start). 2. FedEx Express takes anywhere from 10 to 20 years to top out their drivers, while UPS does it in less than 4 yrs. Salaries are usually the biggest expense for a company. 3. FedEx Ground uses a subcontractor model where FedEx doesn't pay any benefits or retirement. FedEx should be making way more money. I understand FDX has a fleet of aircraft, but so does UPS. What am I not taking into consideration? I just don't get it.
FedEx couriers now take 9 years to top out, assuming they stick to the annual step program. Most Express freight is flown, most UPS freight is trucked. Just costs a lot more to fly than truck. Which is why Ground has made FedEx more profitable with the low pay and the trucking. Because Express packages cost a lot more than typical UPS packages UPS handles a lot more freight. Ground is cutting into that a bit, but between lower overall costs and much higher volume UPS is able to pay better. What FedEx makes in profit is small in comparison to what it pays in payroll. The money isn't there to pay UPS comparable pay. They could have been paying better all along and topping out faster but they wanted to grow Ground. Robbed Peter(employees) to pay Paul. Now that Ground is on solid footing they're paying Express better. Only time and inflation will improve pay, but that's a wash.
 

fedx

Extra Large Package
FedEx couriers now take 9 years to top out, assuming they stick to the annual step program. Most Express freight is flown, most UPS freight is trucked. Just costs a lot more to fly than truck. Which is why Ground has made FedEx more profitable with the low pay and the trucking. Because Express packages cost a lot more than typical UPS packages UPS handles a lot more freight. Ground is cutting into that a bit, but between lower overall costs and much higher volume UPS is able to pay better. What FedEx makes in profit is small in comparison to what it pays in payroll. The money isn't there to pay UPS comparable pay. They could have been paying better all along and topping out faster but they wanted to grow Ground. Robbed Peter(employees) to pay Paul. Now that Ground is on solid footing they're paying Express better. Only time and inflation will improve pay, but that's a wash.
Those are good reasons and that's a good analysis. I see tons of FedEx Ground trucks on the highways-more than I see UPS trucks. So with FedEx Ground being so huge and the fact that they are not even actual true FedEx employees (they're subcontractors) shouldn't FedEx be making close to what UPS is making in revenue?
 

vantexan

Well-Known Member
Those are good reasons and that's a good analysis. I see tons of FedEx Ground trucks on the highways-more than I see UPS trucks. So with FedEx Ground being so huge and the fact that they are not even actual true FedEx employees (they're subcontractors) shouldn't FedEx be making close to what UPS is making in revenue?
If you Google UPS vs Fedex revenue 2017 the first article from an outfit called Capterra does a very good job comparing the companies.
 

Star B

White Lightening
Those are good reasons and that's a good analysis. I see tons of FedEx Ground trucks on the highways-more than I see UPS trucks. So with FedEx Ground being so huge and the fact that they are not even actual true FedEx employees (they're subcontractors) shouldn't FedEx be making close to what UPS is making in revenue?
Around here it's the opposite. I see more UPS trucks than ground, but that's because the UPS trucking lanes are where I drive, while the FDX ground trucking lanes use the interstate about 100 miles east.
 

bacha29

Well-Known Member
FedEx couriers now take 9 years to top out, assuming they stick to the annual step program. Most Express freight is flown, most UPS freight is trucked. Just costs a lot more to fly than truck. Which is why Ground has made FedEx more profitable with the low pay and the trucking. Because Express packages cost a lot more than typical UPS packages UPS handles a lot more freight. Ground is cutting into that a bit, but between lower overall costs and much higher volume UPS is able to pay better. What FedEx makes in profit is small in comparison to what it pays in payroll. The money isn't there to pay UPS comparable pay. They could have been paying better all along and topping out faster but they wanted to grow Ground. Robbed Peter(employees) to pay Paul. Now that Ground is on solid footing they're paying Express better. Only time and inflation will improve pay, but that's a wash.
If FX is as hard up as you imply why don't we take up a collection to try to help them out? Seriously Ground is knocking it out big time with a profit margin that's second to none. While it cannot be done without a complete transformation of the entire industry through ground breaking new legislation rest assured if Fat Freddy had the chance to convert Express to the same format Ground has he would do it in a heartbeat .
 

MAKAVELI

Well-Known Member
If FX is as hard up as you imply why don't we take up a collection to try to help them out? Seriously Ground is knocking it out big time with a profit margin that's second to none. While it cannot be done without a complete transformation of the entire industry through ground breaking new legislation rest assured if Fat Freddy had the chance to convert Express to the same format Ground has he would do it in a heartbeat .
Of course he would. But he also knows it wouldn't work.
 

vantexan

Well-Known Member
If FX is as hard up as you imply why don't we take up a collection to try to help them out? Seriously Ground is knocking it out big time with a profit margin that's second to none. While it cannot be done without a complete transformation of the entire industry through ground breaking new legislation rest assured if Fat Freddy had the chance to convert Express to the same format Ground has he would do it in a heartbeat .
Sometimes you really don't think. FedEx spends a little over half of it's $50+ Billion revenue on payroll. The rest is accounted for by fuel, equipment, etc. Leaves it a couple billion in profit. Even if it spent all of the profit on the employees, which it won't, it wouldn't be nearly enough to equal UPS pay and certainly wouldn't top them out at UPS speed. That's the reality and all the railing against them in the world won't change it. And Express will have to accept the recent pay changes as Ground is becoming ever more important to the company and to keep it growing FedEx will have to compensate better. I don't know if Ground drivers will ever make as much as Express, but if they aren't satisfied they should look to get on at Express or UPS to improve themselves. Or look elsewhere.
 

bacha29

Well-Known Member
Sometimes you really don't think. FedEx spends a little over half of it's $50+ Billion revenue on payroll. The rest is accounted for by fuel, equipment, etc. Leaves it a couple billion in profit. Even if it spent all of the profit on the employees, which it won't, it wouldn't be nearly enough to equal UPS pay and certainly wouldn't top them out at UPS speed. That's the reality and all the railing against them in the world won't change it. And Express will have to accept the recent pay changes as Ground is becoming ever more important to the company and to keep it growing FedEx will have to compensate better. I don't know if Ground drivers will ever make as much as Express, but if they aren't satisfied they should look to get on at Express or UPS to improve themselves. Or look elsewhere.
Being the corporate apologist you are the question then becomes if Express is as economically challenged as you say it is then why would a person be better off leaving Ground to go to Express? Then too you're saying that for Ground to continue to grow it will have to pay better. Well in case you haven't heard Ground doesn't pay the driver, the contractor pays the driver from the limited pool of revenue he receives .To you credit however you seem to realize that pay growth is controlled by Ground by means of it's complete control over that revenue pool.
 

vantexan

Well-Known Member
Being the corporate apologist you are the question then becomes if Express is as economically challenged as you say it is then why would a person be better off leaving Ground to go to Express? Then too you're saying that for Ground to continue to grow it will have to pay better. Well in case you haven't heard Ground doesn't pay the driver, the contractor pays the driver from the limited pool of revenue he receives .To you credit however you seem to realize that pay growth is controlled by Ground by means of it's complete control over that revenue pool.
You have to get your view right before you can attack others. I didn't say EXPRESS is challenged. I said FedEx, which is the umbrella corporation over Express, Ground, and others, has only so much profit left after paying all of it's expenses and taxes. It's not enough to do what you think it should be doing. FedEx can't print money. That's reality, and all the bellyaching in the world won't change it.
 

59 Dano

I just want to make friends!
I'm try to figure out why FedEx isn't blowing UPS out of the water in profit margins since 1. FedEx Express starting pay is way less than UPS (like $5/hr less to start). 2. FedEx Express takes anywhere from 10 to 20 years to top out their drivers, while UPS does it in less than 4 yrs. Salaries are usually the biggest expense for a company. 3. FedEx Ground uses a subcontractor model where FedEx doesn't pay any benefits or retirement. FedEx should be making way more money. I understand FDX has a fleet of aircraft, but so does UPS. What am I not taking into consideration? I just don't get it.

A big part is the expense of the larger air operation, along with the ratio of ground packages to air packages. The ratio at FX is something like 4:3. At UPS, it's 13:3 or something crazy like that.
 

Oldfart

Well-Known Member
Being the corporate apologist you are the question then becomes if Express is as economically challenged as you say it is then why would a person be better off leaving Ground to go to Express? Then too you're saying that for Ground to continue to grow it will have to pay better. Well in case you haven't heard Ground doesn't pay the driver, the contractor pays the driver from the limited pool of revenue he receives .To you credit however you seem to realize that pay growth is controlled by Ground by means of it's complete control over that revenue pool.
Bacha is like the old E F Hutton commercial.

When Bacha speaks, NOBODY listens.
 

bbsam

Moderator
Staff member
I think if you dive deeper into the numbers, a lot of what doesn’t show as the company’s profit is money put back into the company. If you can build a $5 billion company, and a it better to show all that money as profit or to reinvest it
To build a $6 billion dollar company?
 

vantexan

Well-Known Member
I think if you dive deeper into the numbers, a lot of what doesn’t show as the company’s profit is money put back into the company. If you can build a $5 billion company, and a it better to show all that money as profit or to reinvest it
To build a $6 billion dollar company?
Which was exactly what they were doing building Ground. As well as acquisitions of companies overseas. It's not hidden, they have to account for every penny.
 

bbsam

Moderator
Staff member
Which was exactly what they were doing building Ground. As well as acquisitions of companies overseas. It's not hidden, they have to account for every penny.
I’m not saying it’s hidden, just that you won’t see it in the profit margin.
 

zeev

Well-Known Member
Fdx has more worthless overhead than most. Lots of vps ,regional directors who do nothing. UPS has always run a tighter ship.
 
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