July 5, 2010 in City

Rural delivery’s future up in the air

FedEx-UPS battle could be end for small servers
Matthew Brown Associated Press
 
Associated Press photo

Michael Overstreet is vice president for Corporate Air, a small delivery contractor serving rural areas.
(Full-size photo)

BILLINGS – In the multibillion-dollar world of overnight package deliveries, Mike Overstreet knows his Billings-based company, Corporate Air, is at the “tail end of the dog” as a small FedEx contractor serving rural areas of the Rockies and Midwest.

Yet with FedEx engaged in a fierce Washington, D.C., lobbying battle with the industry’s other private-sector titan – United Parcel Service – Overstreet worries his business and customers in 10 states could go down as collateral damage.

At issue is whether FedEx Express, the company’s delivery division, should be reclassified as a trucking company, like UPS, or retain its federally granted status as an airline.

If FedEx loses its special status under a measure now before Congress, its employees could more easily unionize. That in turn could drive up costs for the Memphis, Tenn.-based company, forcing it to trim services in rural areas where costs are highest and profit margins thinnest, said shipping industry expert Satish Jindel.

UPS, which says it merely wants a level playing field, dismisses warnings of potential service cuts as fear mongering meant to bolster FedEx’s bid for special treatment.

But Overstreet’s loyalties are clear. He says Corporate Air “bleeds purple” – FedEx’s brand color – as a contractor delivering FedEx packages to 23 cities on 290 flights a week.

If Congress sides with UPS, Overstreet warns he could get pinched out of business. He said the result would be rural medical clinics, farmers and others in remote areas losing a key provider of the goods they need to operate.

“They (FedEx) will have to reconsider going by air,” Overstreet said. “The farmer or rancher who needs that part to fix his tractor is not going to get it. They will be delayed by another day.”

FedEx spokesman Maury Lane said the impact could be widespread. He said rural contractors are heavily relied on by the company in all or part of at least 19 states – North Dakota, South Dakota, Montana, Idaho, Colorado, New Mexico, Arizona, Texas, Mississippi, Louisiana, Georgia, South Carolina, Florida, North Carolina, Virginia, Arkansas, Maine, New Hampshire and Vermont.

Workers at UPS are organized by the Teamsters, and company and union have united behind the anti-FedEx provision.

“There’s no difference between a FedEx driver and a UPS driver,” said UPS spokesman Norman Black. “We believe it is a fundamental issue of fairness.”

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