Has Bad Economy Been Good For UPS?



As we near the close of 2002' it's time to reflect on the past year in regard to UPS. Some of the bad is the growth of FedEx Ground, the loss of some volume and the need to tighten the belt of the business itself because of lost $$$$$$.

However, IMO the good overshadows the bad.
UPS and the Teamsters concluded a new 6 year labor agreement and did so under the contract deadline. The agreement is a 6 year contract which is also a good thing for all concerned. Another positive I've seen is in the past we've had certain peak runs carried by contract drivers whereas this year they've been moved by Buster Browns. I'm sure UPS is still making money with these loads but I also see an increase in positive moral because of this. That moral could also lead to better indirect profits as employees view these events in a more positive light as it pertains to their future opportunities within the company. The more upbeat employees are about UPS the more positive effect to the bottomline one tends to see. This contract also left some mud on FedEx's face who was crying wolf and I do believe some credibility was lost with some customers over this.

Even with the stock market down UPS did rather well IMO. In fact, one could argue the down stockmarket was just what UPS needed. Could UPS have made inclusion into the S&P had the market stayed bullish and maintained it's lofty valuation levels? Had certain events not taken place to effect the airline business UAL might not have taken it's fall and thus because of stock valuations been removed from the Dow Transports and UPS put in it's place. A year ago I would agree that UPS if they continued to build the business that one day we'd get our shot at the S&P and maybe the Transports but I would not believe we'd be there this soon. I guess now we'll see some of the Big Brown cheerleaders talking Dow 30! Slow down girls!

Lastly, I think the challenges we've faced over the last year to 18 months has forced us to look a little harder at ourselves. The area that really comes to mind is the focus on quality. At our location the focus has been hard on Scanning, Missorts, MisToggles, Time-n-Transit, Package Handling, etc. and I've seen all these areas make nice gains so it's good to see us take what we have and make it the very best it can be. This longterm is a very good thing for sure. We also continue to see major gains in the international arena and the logistics continues to make strides in the right direction. Some of my fellow union breathren object to the Logistics unit and I understand the concern but this part of the business also pumps some packages into our system that without right now would make things even tighter and some of us might not still be here or doing what were doing so it pays sometimes not to look a gift horse in the mouth.

I know this post is way off topic from the normal discussion that takes place here but I hope some will overlook this and allow a little business/stock discussion to take place if only for a short time.

Any thoughts along the lines of what I discussed?


I think you raise some interesting points, however I do see two seperate issues....

Did UPS have a good year? Yes.
- Good teamster contract
- Best service levels ever (approx 99%)
- Great strides in technology development and usage
- Increased market share (1% increase)
- 1 year stock growth (12%)

Did the downturned economy help UPS? No.
- Because of the economy, volume is down in spite of the above

The only interesting point is interest rates. Because of the low rates, many people refinanced. UPS has a large share of the financial marketplace. This gave an unexpected boost in letter volume.

Had the economy been moving, think how much better off UPS would be

I think the bottom line is that UPS did well in the down economy and tried to be poised to take advantage of the return of a good economy.


I agree.

Our stock has held its ground in an economy that has hurt other stocks. We seem to tighten the belt just right in hard times. I know people don't like to perform work that they don't usually perform, but that happens for a reason.

I'm glad the contract was ratified before the deadline. I hope both the union and the company realize that in 2008 we need to start negotiations and reach an agreement long before the expiration date of this contract.

It is my hope that the Teamsters will see the value of UPS and start working with management to make us an even stronger company. I see that as a way for all unions to maintain their position in the business world.

Service is our last name, and any employee that is not providing good service should not be working for UPS. I'm only talking about people who don't perform their jobs on a regular basis - not people who make a one time mistake.

Just my humble opinion.


I think its been a disturbing year.
1) In a year when we had our quickest contract ratification we saw the fruits of our 97 contract/ strike. 87 percent of our customers are no longer single carrier. Volume diverted to Fedex this summer and did not come screaming back as hoped.
2) Fedex successfully timed their expansion to coincide with our contract year and did very well. Future expansion of their capacity is now committed.
Fedex has proven itself to be a much stronger ground competitor than expected.


Good Post. It is nice to hear a ups teamster speak positively about the company. I think most upsers are positive about the company but more times than not choose not to make positive statements. If it weren't for people like you it would be easy to think the small minority of negative ups teamsters spoke for the majority. It is in the company and teamsters best interests to work together so that we can effectively compete with other carriers and especially fedex ground. I keep hearing about fedex ground using a tentative strike to obtain ups volume. I also hear that fedex is good at "spinning" their financial statements. I think that companies who don't operate with integrity fall by the wayside sooner or later.
Thanks for the positive comments.


No doubt FedEx has gained on us. I feel that they will continue to gain. All it takes is one single service failure on our part to open a door for them. Bottom line though, IMO, FedEx will soon face a major decision, will the FedEx ground folks become full time employees or continue to be independent contractors? If FedEx hires the folks and buys the trucks, the gloves are off for a bare knuckle fight with UPS.


UPSdude...there is no business reason for Fedex to take on the responsibility/debt for those contractors. As long as the dual-mode systems works for them it is a winner for Fedex. Taking them on as employees would be a forced move, imho, such as mass contractor defections or dissatisfaction, which I don't see happening.


UPSdude...there is no business reason for Fedex to take on the responsibility/debt for those contractors. As long as the dual-mode systems works for them it is a winner for Fedex

I agree 100%. I'm just hearing more and more complaining from the FDX Ground drivers.


twice in this thread it's been said contract ratified/completed? on time/before deadline?
then what was the retro check effect all about?