Category: Industry News

The best in its business

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.”

Dave Helminski will drop off his last package for United Parcel Service Inc. on Christmas Eve 2022 and retire after four decades as a driver in Chicago. He joined UPS after four years in the Marine Corps and a yearlong stint installing carpet. He put in a few years loading trucks, then became a driver and was set for life. After Helminski drops off that last package, he’ll have pensions that provide almost the same $100,000 a year he makes now. “I came out of the lower middle class, and I’m living the dream,” Helminski says, wearing a face covering with the Marines emblem as he heads home from his shift at a large UPS facility in the northern suburb of Palatine.

Helminski’s dream industry has lately become more of a nightmare scenario at rival FedEx Corp. The massive labor shortage that’s rocked the U.S. since the pandemic and disrupted long-established employment relationships hasn’t had much impact on UPS, which pays its unionized drivers the highest wages in the industry. That’s helped it maintain a stable workforce and rising profits throughout the current disruptions. Meanwhile, lower-paying, nonunionized FedEx racked up $450 million in extra costs because of labor shortages. And while UPS easily beat earnings expectations and predicted a rising profit margin in the U.S. for the fourth quarter, FedEx signaled that its profit margin will fall further. The lack of workers is taking a toll on its reliability, too. FedEx’s recent on-time performance for express and ground packages has sunk to 85%, while UPS has met deadlines on 95% of those packages, according to data collected by ShipMatrix Inc.

Executives with United Parcel Service Inc, Walt Disney Co and other companies are expected to meet with White House officials on Tuesday to discuss President Joe Biden’s plan to require that private-sector workers receive COVID-19 vaccinations, according to public filings.

The mandate would apply to businesses with 100 or more employees, and would affect about 80 million workers nationwide.

Several industry sources, speaking on condition of anonymity, said the rulemaking process was moving with urgency and they expect the mandate to be formally announced as early as this week. It was not clear how much time employers will have to implement it.

Logistics companies like FedEx and UPS are making a major hiring push ahead of the holiday season. It’s designed to make sure your packages get there on time.

“I don’t think any company is indifferent to what is going on right now,” explains Robert Morrow, the UPS Ohio Valley District Human Resources Vice President. “We are looking for a lot of people in the Indianapolis area across all job groups.”

FedEx is looking to hire 90,000 thousand positions nationwide, and that includes 6,000 in the Indy area. UPS is hoping to hire 100,000 holiday positions with roughly 3,000 in Central Indiana.

“We have tuition reimbursement for our employees, and we just offered a referral bonus for employees where they can get $200 for any person they refer,” adds Morrow.

President Joe Biden will host a meeting on Wednesday to hail progress in addressing supply chain problems weighing on the economy and threatening the holiday season, while he challenges business and union leaders to do more to ease shipping backlogs.

The Port of Los Angeles is going to 24/7 operations as a step toward helping ease the shipping snarl there and at the Port of Long Beach, a senior administration official told reporters ahead of the meeting.

In addition, the three largest carriers of goods – Wal-Mart WMT.N, FedEx FDX.N and UPS UPS.N – plan to move toward round-the-clock operations to help speed the shipment of goods across the country, the official said.