Kneecap­ping FedEx

The Washington Times Weekly - - Ed­i­to­ri­als -

FedEx Ex­press is learn­ing what could be the Democrats’ eco­nomic motto — “Never Let Suc­cess Go Un­pun­ished.” Led by Rep. James L. Ober­star, Min­nesota Demo­crat, the House on May 21 passed leg­is­la­tion that con­tains an al­most hid­den pro­vi­sion — a mere 230 words — that would hob­ble FedEx Ex­press. It would do so by com­pletely chang­ing the la­bor laws un­der which the com­pany op­er­ates. Un­less the Sen­ate re­moves the lan­guage from the un­der­ly­ing bill reau­tho­riz­ing the Fed­eral Avi­a­tion Ad­min­is­tra­tion, a mere dozen or so work­ers in just one city could ham­string much of the na­tion’s overnight de­liv­ery ser­vice.

We Amer­i­cans take for granted that things can “ab­so­lutely, pos­i­tively . . . be there overnight” — but it took FedEx Ex­press to make that so. FedEx Ex­press is, of course, one of the great cor­po­rate suc­cess sto­ries of mod­ern times, hav­ing grown from a mere idea in a 1965 term pa­per by Yale Univer­sity un­der­grad­u­ate Fred­er­ick W. Smith into a com­pany es­sen­tial to the work­ings of our mod­ern econ­omy.

It is a lit­tle-known fact that FedEx con­tracts with the U.S. Postal Ser­vice to carry al­most all of its Ex­press Mail and a large pro­por­tion of its Pri­or­ity Mail. FedEx de­liv­ers huge amounts of needed sup­plies for Amer­i­can mil­i­tary forces, too — and its ser­vice is just about the only way to guar­an­tee that some life­sav­ing medicines reach pa­tients overnight.

Law­mak­ers have long rec­og­nized that cer­tain sorts of trans­porta­tion com­pa­nies are the lifeblood of in­ter­state com­merce. That’s why they wrote the Rail­way La­bor Act to ap­ply spe­cial la­bor-re­la­tions rules to rail­roads and, even­tu­ally, air­line-based busi­nesses such as FedEx Ex­press. Since 1926, the RLA has pro­vided suc­cess­fully for means other than strikes to re­solve la­bor dis­putes fairly and quickly, with­out fa­vor­ing ei­ther side.

The RLA does not, how­ever, ap­ply to non-rail, mostly ground-trans­porta­tion com­pa­nies such as the United Par­cel Ser­vice. UPS in­stead is gov­erned by the Na­tional La­bor Re­la­tions Act (NLRA), the terms of which fa­vor unions such as the Team­sters, which rep­re­sents UPS driv­ers. Nat­u­rally, this means UPS and the Team­sters both have an in­ter­est in kneecap­ping FedEx Ex­press. To­gether, the ground-de­liv­ery com­pany and the union have ex­e­cuted what The Hill news­pa­per called a lob­by­ing “pin­cer move­ment” to trans­fer au­thor­ity over FedEx Ex­press from the RLA to the NLRA.

The UPS cor­po­rate po­lit­i­cal ac­tion com­mit­tee has “given more money to fed­eral law­mak­ers than any other com­pany over two decades,” ac­cord­ing to Bloomberg News, with $77,900 from UPS em­ploy­ees go­ing to Mr. Ober­star since 1989. The Team­sters, who lean heav­ily Demo­cratic, have do­nated $86,500 to Mr. Ober­star dur­ing that pe­riod.

Mr. Ober­star ar­gues that he is merely try­ing to treat sim­i­lar work­ers sim­i­larly. FedEx Ex­press coun­ters that it and UPS are very dif­fer­ent com­pa­nies. FedEx says it ships 85 per­cent of its goods by air, whereas UPS sends 85 per­cent of its goods by truck.

UPS try­ing to squash FedEx Ex­press is like Go­liath sit­ting on David. Again using FedEx Ex­press num­bers, UPS has 425,000 em­ploy­ees in a busi­ness do­ing $49.7 bil­lion in an­nual rev­enue, com­pared to FedEx Ex­press’ 143,000 em­ploy­ees and $22.7 bil­lion in rev­enue. With UPS so much big­ger than FedEx Ex­press, it doesn’t make sense to ar­gue that “Big Brown” some­how suf­fers a com­pet­i­tive dis­ad­van­tage. In­deed, the lat­est earn­ings es­ti­mate for UPS shows growth from $2.37 to $2.90 per share, while FedEx Corp. has shown a de­cline from $1.26 to $0.31.

With the econ­omy as a whole so shaky, this is the worst time for Congress to change the rules gov­ern­ing such an im­por­tant facet of in­ter­state com­merce. The old wis­dom should ap­ply still: If it ain’t broke, don’t fix it.

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