FedEx expects an increase in labor rates following the UPS-Teamster contract
FedEx Corp. executives expect to keep most of the shipping business the company picked up after rival United Parcel Service Inc.’s labor negotiations and Yellow’s bankruptcy earlier this year. But in the wake of the UPS deal, they also expect “an increase in labor rates,” according to BofA analysts.
FedEx FDX, -1.78% has said it gained around 400,000 packages a day out of the 1.2 million that UPS UPS, -2.14% lost, and it expects to hold on to most of those shipments, the analysts said. However, Hoexter noted: “This is in contrast to UPS’s commentary that it expects to win back a majority of its business, and is willing to pay customer penalties.”
FedEx, when reached for comment, referred back to its quarterly earnings call in September. As shipping demand remains soft, FedEx is trying to cut billions of dollars in costs by cutting flights and executive roles, closing offices and bumping prices higher. UPS reached an agreement with the Teamsters union in July, following the threat of a strike. FedEx in September said it had gained “upside” from the often contentious negotiations between UPS and the union, as well as from Yellow’s troubles.
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FedEx expects to keep most of the business it gained from UPS amid union negotiations: analystFedEx also expects an increase in labor rates following the UPS-Teamster contract
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