UPS and Federal Express, competing in the regulated and subsidized world of shipping, find themselves again battling it out in Washington, rather than in the marketplace. The current weapon of choice is labor law.
UPS has pushed through the House a provision that would saddle FedEx with the same labor laws under which UPS struggles. FedEx, with a $9-million-per-year lobbying operation, has responded by unleashing a public relations campaign accusing UPS of seeking a “bailout.”
The issue is which labor law should apply to FedEx. UPS, like most U.S. companies, is subject to the National Labor Relations Act (NLRA), which forces companies to recognize unions in any area of their business–a particular plant, or a particular type of employee–where a majority of workers vote to unionize. The Teamsters Union has used this law to force UPS to sign a costly labor agreement, sapping UPS profits.
FedEx, because it was created as an air carrier (UPS carries most of its cargo by truck) is regulated under the Railway Labor Act (RLA). Congress, back in the 1920s, worked hand-in-hand with the rail companies to ensure profit in a risky enterprise, and so it is harder to unionize under the RLA than under the NLRA. Specifically, it takes a nationwide vote of a company’s employees in order to unionize. Air cargo shippers, such as FedEx, have the same protection.
In mid-2007, UPS hired the lobbying firm Holland & Knight, urging Congress to “change the Railway Labor Act definitions using general legislation and appropriations legislation,” according to federal lobbying filings. Last month, UPS’s lobbyists appear to have succeeded: The bill reauthorizing the Federal Aviation Administration included redefinitions that would place FedEx under the NLRA. FedEx, together with a Washington Times editorial earlier this week reporting on this scuffle, blames House Transportation Committee Chairman James Oberstar, D-Minn.
The Holland & Knight Committee for Effective Government, the lobbying firm’s political action committee, had already given Oberstar $3,000 by the time UPS hired them. Subsequently, the firm’s PAC–or, excuse me, its Committee for Effective Government–gave Oberstar $5,000 more in contributions, making Oberstar the No. 3 House recipient of Effective Government cash in the 2008 election. Including contributions from Holland & Knight attorneys, the firm was Oberstar’s No. 5 donor last election.
FedEx, however, has a much bigger lobby than UPS. While UPS spent around $5 million on lobbying in the past year, FedEx spent nearly twice that much. In recent days, FedEx has responded to UPS’s lobbying jab with a public relations hook, pitching Beltway journalists with stories of UPS’s dirty tricks, and launching a website, BrownBailout.com. The website features a video parodying UPS’s distinctive WhiteBoard ads, with an actor diagramming how to secure bailouts with a well-placed sentence in important legislation.
Both sides are claiming the high ground. FedEx points out that UPS has spent years lobbying for a law just to hurt FedEx. A FedEx spokesman told Business Week, “This effectively bails UPS out because they entered a bad labor agreement.” UPS, for its part, points out that FedEx has spent decades benefiting from the law’s caprice that regulates UPS more than it does FedEx.
Both sides, of course, are engaging in Beltway knife-fighting, which requires campaign cash. On top of their five-figures-per-day lobbying budgets are the companies’ PACs. FedEx PAC spent $3.4 million last cycle, and $231,000 so far this cycle. UPS’s PAC shelled out $4.7 million last election, and an impressive $522,000 so far this time around.
UPS has a key ally: the Teamsters Union, which gave $2.4 million to Democrats in the last cycle. Teamsters want to unionize FedEx, and Oberstar’s provision will make that much easier if it becomes law.
Is it fair for FedEx and UPS to play by different rules? Is it fair to change the rules on FedEx in the middle of the game? Is the NLRA even fair?
Sadly, “fair competition,” doesn’t really play a role in shipping–an industry that has been subsidized and regulated since its birth. Federal law nearly prohibits UPS and FedEx from competing on price. Other regulations–including labor laws–cramp their ingenuity.
So, the only place left to compete is on Capitol Hill. Considering the course of events since last fall’s bailout deluge and Obama’s new New Deal, UPS-vs-FedEx may be just a warmup act for the Capitol Hill battles we’ll soon see in every industry.
Timothy P. Carney is The Washington Examiner’s Lobbying Editor, His K Street column appears on Wednesdays.
