FedEx Ground runs its package delivery service on an independent contractor model - UPS does not. The differences between these two companies and their methods of doing business are stark. FedEx may have initially used contract drivers as a way to cut costs and use the competitive edge to win market share from their rival UPS. Now it is a way of life. The critics to the contractor model question whether it is a long-term success strategy or a short-term cost cutting gimmick that spurs immediate and rapid growth without the possibility of being completely sustainable. Advocates say it is a new and better way of doing business. UPS is a very strong company that stands firmly behind its own business model and has no intention of adopting any of the FedEx contractor strategies. They believe their way of doing business will win out in the long run because of a more valuable package offered to their employees which results in more loyalty and motivation, and ultimately better service to the customer. UPS drivers are employees. 100% of their health insurance premiums are paid, trucks, gas and supplies are all provided by the company. It can take from 4 to 12 years to move up to a driver job after starting at a lower-pay job such as a part-time package handler, and the average job tenure for a UPS driver is more than 16 years. They are rarely hired from outside the company. Unless moving up the "corporate ladder" drivers salaries cap out around $70,000. It is estimated that most FedEx Ground contractors work 10 to 12 hour days, without overtime pay. They are paid on a complicated piece-rate formula based on how many pickups and deliveries they make, with bonuses for good service. Drivers can make $40,000 to $70,000 a year; income can go over $100,000 with multiple contracts or routes. The drivers use trucks bearing FedEx colors and logos, wear FedEx-style uniforms and serve customers of FedEx Ground. However, they must pay for and maintain their own trucks, uniforms, supplies, gas, maintenance, and other costs. They get no company benefits. This boils down to Union employees vs. Independent Contractors Both have pros & cons, but I find the two approaches to essentially the same type of business..really interesting. UPS - Teamsters can lead to a strike and cause work disruption FedEx - No Teamsters contract or collective bargaining UPS - Drivers are employees with security and benefits FedEx - No benefits, no overtime pay, no sick time, no insurance A lot of other companies are looking at UPS and FedEx to determine what path they take in their approach to doing business...
I live in a rural area, a large yard with fencing and gates to keep the dogs in. Getting a delivery from UPS is painful. If we aren't in the yard, they are as likely to leave a "we missed you" sticker on the gate and leave. FedEx will drop the package over the fence (unless signatures are required), or even call to let us know they are here. The latest guy put on a loud set of air horns, so we can hear him from in the house (150 feet from the gate). In my opinion, an employee that gets paid by the hour doesn't have the incentive that a contactor (or employee) paid by the delivered package. Can an employee even be paid by piece part any more? If not, that may be the reason FedEx uses contractors. Using contractors certainly works to FedEx's advantage during Christmas, just a ramp up of the model they use all year. I expect UPS adds seasonal trucks and drivers, then has to manage them differently than their existing fleet. When I want something delivered, I use FedEx.
Hey thanks for the reply, I thought this thread would fall into oblivion. Well I tried to avoid personal bias when explaining the business models...I can say this, I worked for a Part 135 air freight carrier that contracted with UPS on feeder flights. I dealt with a lot of the UPS ground guys and gals and found them to be professional and hard working... However, in my business and personal dealings, I use FedEx, simply because their tracking system is easier to use and follow. The costs are roughly the same, so it becomes a matter of personal choice...and I prefer FedEx for ease of use. It's tough to make it to a driving position at UPS, you have to pay your dues as a part-time (typically lower paying) package handler that offers little benefits outside of the hourly wage. The drivers do pretty well at UPS, but their routes and their protocol is watched closely. FedEx drivers have more freedom as owner-operators as long as they keep FedEx customer's happy, and as you say the greater incentive to work hard as it's rewarded. Both are successful business models that seem to work for each company.
For myself it's pretty much always been UPS. I have seen the same driver once a day on mon & wed, and twice a day tues, thurs & fri, for the last 15 yrs, unless we hang the "No UPS" sign out. She even gets a turkey for thanksgiving. I think we got into this routine mainly because 99% of my customers have standing FOB accounts with UPS. For Fedex I call for a pickup. I have to say of all my vendors I don't recall ever having a negative experience. My driver(it's funny how naturally "MY driver" came out without thinking), will readjust her route if possible to stop by my place later for a late pickup. I'm pretty loyal so UPS would probably have to screw up pretty badly for me to switch without my customers demanding it.
