Parceling Parcels Strike?

Nov 01, 1998 10:30 PM  By

The United Parcel Service-Teamsters strike in August 1997 seems to have convinced many catalogers that they shouldn’t put all their eggs in one parcel carrier’s basket. As a result, a number of mailers claim they are much better prepared for unexpected carrier glitches. And that’s good news, considering the rumblings of a December strike by the FedEx Pilots Association (FPA), which represents more than 94% of Federal Express’s 3,500 pilots.

The FPA in September called for a vote on a work action that would force members to refuse to work overtime during the holiday season. The vote was to be tallied by the end of October. Then, after rejecting a contract offer on Oct. 18, the FPA called for a vote to authorize a strike during the holiday season; the vote was to be tallied by the end of November “to get a little leverage to come to an agreement,” says union vice president Byron Cobb.

“We’re well diversified enough after learning our lesson from the UPS strike,” says Jeff Parnell, vice president of marketing at $50 million Overton’s, a boating supplies cataloger in Greenville, NC. Overton’s now uses a combination of United Parcel Service, the Postal Service, Federal Express, and even large parcels carrier Roadway Package System for package delivery.

The $200 million-plus Omaha Steaks-a frozen meats catalog that relies on expedited shipping-is also playing it safe. In May, Omaha Steaks, which used to ship virtually all its packages via FedEx, shifted a portion of its package volume to United Parcel Service’s expedited ground service, partly for cost reasons but also because last year’s UPS strike taught the mailer a lesson, says director of operations Ron Eike. “Our contingency is to move more volume through UPS.”

High-tech gadgets cataloger/ retailer The Sharper Image, which ships most of its products via FedEx second-day air, now also uses USPS Priority Mail and UPS air services for certain items. But according to a spokesperson, the San Francisco marketer “may have to charge an additional fee” if customers request carriers other than FedEx because FedEx is the cataloger’s primary carrier.

A January Catalog Age survey of mailers (see chart) showed that many are spreading shipping around, with the trend in standard delivery clearly away from Federal Express and toward the USPS.

But fresh flowers mailer Calyx & Corolla is an exception. Since its inception in 1989, it has partnered with FedEx to drop-ship all of its flowers direct from the growers to customers. When contacted in early October regarding the possibility of the overtime work action, Ann Hayes Lee, executive vice president of the $20 million San Francisco-based mailer, reported that she had instructed everyone “to build in extra meetings with FedEx people right away and get them to tell us how they plan to manage our business through this….There really isn’t any carrier that can do for us what FedEx does.”

The FedEx factor The FPA has been negotiating with management since July to forge the pilots’ first-ever union contract. “FedEx pilots’ career compensation falls 36.9% below that of their rivals at UPS,” says FPA spokesman Bob Clement. FedEx offered a 17% increase over five years coinciding with an 8% increase in work hours, but the union is seeking a shorter deal with a considerably larger pay raise. Nonetheless, Cobb says, the union plans to keep negotiating and hopes to get a contract before Christmas.