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UPS and FedEx Two Ways to Drive Business

A chart comparing and contrasting the two firms.

May 29, 2004

Two ways to drive business

FedEx, which dominates air package delivery, is trying to grab a bigger share of the ground business, which is controlled by UPS. The key difference: FedEx drivers are independent contractors, while UPS drivers are company employees. Here’s how the two companies stack up:

FedEx Ground
(A division of FedEx Corp.)
Headquarters: Pittsburgh
United Parcel Service Headquarters: Atlanta
Drivers: 17,000
U.S. drivers: 74,000 (60,000 drive package delivery trucks)
Driver annual pay: $40,000 to $70,000 Driver annual pay: $50,000 (up to $70,000 with overtime)
Workday: 10 to 12 hours Workday: Eight hours plus up to two hours overtime
Advancement: Contractors can own up to four routes, which can boost their annual income to $130,000 or more. Are not FedEx employees. Not eligible for promotions. Advancement: UPS policy stresses promoting from within. It draws management candidates from the driver ranks.
Benefits: None. Contract drivers have the option of buying into a FedEx-run retirement plan. Benefits: Health insurance (company pays 100 percent of premiums for drivers), pension, company-match 401(k), stock-purchase discount, holiday and vacation pay, overtime pay
Other employee costs to company: None Other employee costs to company: Workers’ compensation insurance, unemployment insurance
Cost of truck leasing/purchase, fuel, maintenance, uniforms,
equipment:
Paid by contract drivers
Cost of trucks, fuel, maintenance, uniforms, equipment: Paid by UPS
Contracting process: Apply to company for a contract on a new or open route or buy an existing contract from another contractor. Existing routes can cost a few thousand dollars to more than $30,000. Company must approve contract transfers. Hiring process: Employees typically start in part-time or package sorting jobs and apply for full-time driving jobs. The waiting list for a driving job is four to 12 years.
Initial training: Two-week course run by FedEx Ground includes safe driving, logistics, package handling, customer service and maintenance. Drivers paid to attend the course. Most contractors also ride along on a route with a veteran contractor before starting. Initial training: Drivers undergo a month of instruction that
includes 20 hours of computer-based and on-road training, simulated deliveries in a mock city, tests and evaluations by instructors. Drivers also face three safety-ride evaluations during the first 22 days on the job.
Ongoing training: Monthly Saturday-morning forums at FedEx
Ground hubs to update contractors on safety, company operations and other developments. Attendance is optional. Billboard postings on safety at FedEx Ground hubs and newsletters also update contractors.
Ongoing training: Drivers are part of an extensive UPS safety training program that spends $38 million annually giving employees 1.3 million hours of safety training each year. There are 350 employees assigned to safety and training activities as well as 2,400 safety committees.
Sources: FedEx and UPS