FedEx is advising customers to shift their volumes away from UPS to avoid disruptions from a possible strike this summer, according to company messages to shippers obtained by Supply Chain Dive.
Customer volumes onboarded by March 31 will be included in the carrier's capacity planning ahead of the potential strike date, according to an email sent to FedEx customers. Three separate industry sources said the email mirrors messages FedEx has sent to other shippers.
"Switch your UPS shipments to FedEx before March 31, 2023 to ensure your volume is prioritized," the email said. "Don't wait until it's too late!"
A labor contract between UPS and the Teamsters is set to expire on July 31, and the union has threatened to strike if a deal isn't reached by then. FedEx told shippers that if a strike occurs, no single carrier has the capacity to absorb all of UPS' package volume.
"I recognize the possibility of a disruption can be unsettling, so I wanted to reassure you that FedEx is committed to prioritizing volume from our current and actively shipping customers to maintain operations and service levels," the email said.
A presentation accompanying the email said after March 31, "capacity will be prioritized on a first come, first serve basis."
In an emailed statement, FedEx said it will prioritize volume from its currently and actively shipping customers in the event of any demand surge.
“We are committed to providing reliable service to our customers and that will continue to be our focus,” the company said.
Gaining volume from shippers that otherwise would have gone to its chief rival would help ease FedEx's recent business challenges. The delivery giant and its operating companies have grappled with volume declines as demand cools from its surge early in the COVID-19 pandemic. FedEx has enacted layoffs, service reductions and flight cuts to limit its operating costs in a period of soft demand.
"The volume is running away from FedEx, especially on the Express side," said Dean Maciuba, managing partner USA for Crossroads Parcel Consulting.
By imposing a March 31 cutoff, FedEx can staff up and prepare for any increase in parcels, said Maciuba, who previously worked in various sales and marketing positions with FedEx. As operations stand currently, the company could struggle to deliver an unexpected surge in volume.
"They're saying, 'We're going to take your volume, but we got to do it by March 31 so we can step up and manage it properly,'" Maciuba said.
Better Trucks co-founder and CEO Andy Whiting said a potential customer shared the same FedEx message obtained by Supply Chain Dive with him, adding that a potential UPS strike is further evidence that shippers should consider a multi-carrier strategy instead of relying on just one major company. Better Trucks is one of several smaller parcel carriers pushing to gain market share in a space dominated by the two delivery giants.
"The answer is not just going to FedEx," Whiting said.
National contract negotiations between UPS and the Teamsters kick off in April. CEO Carol Tomé has expressed optimism that a “win-win-win” contract for the carrier, its employees and its customers is achievable by the July 31 contract expiration. UPS reaffirmed that belief in an emailed statement Thursday.
“While some have focused on a handful of issues that may seem to divide us, we know that we are aligned with the Teamsters on many issues,” UPS said. “It is normal and expected that our competitors make exaggerated claims to try to scare our customers, especially during our contract negotiation years. And we know our customers have options, so we focus on maintaining their trust by delivering on our commitments every day.”