Tentative FedEx Express union pilots deal is a positive sign for progress

It seems like union labor negotiations, talks, and tentative agreements, for various high-profile freight transportation and logistics services providers, has received more attention now than it has in quite some time.

That has been made clear in the last year alone, to be sure, given the U.S. freight railroad deal made with various unions, as well as the ongoing talks between the Teamsters and UPS drivers, which will require a watchful eye, especially in the coming weeks, and this week’s tentative agreement reached between Memphis-based global freight transportation services provider FedEx and pilots at the company’s FedEx Express subsidiary represented by the Air Line Pilots Association (ALPA).

Josh Taylor, Senior Director of Professional Services, for San Diego-based Shipware, an audit and parcel consulting services company, told Newsroom Notes that in looking at the FedEx pilots situation, the main risk posed to FedEx by the potential for a pilots’ strike hasn’t been the threat of the pilots walking out, but the dissatisfaction of the pilots and the uncertainty it could have created with investors.

In comparing the FedEx labor situation to the one at UPS, he explained that labor laws for airlines are very different from those that govern UPS drivers, making it harder for pilots to strike and relatively easy for the federal government to step in and force pilots back to work.

“This is part of why the [FedEx] pilots have been flying for two years on an expired contract,” he said. “Conversely, the Teamsters are likely to strike the first day their contract with UPS expires, should that be allowed to happen. A stark contrast is evident when comparing the experience of FedEx pilots to that of their corporate rivals at UPS. FedEx pilots’ contract expired in May 2021. In 2022, while still under contract, UPS signed a two-year contract extension with its pilots that begins September 1, 2023, and runs through September 1, 2025. It’s easy to see why UPS would want to avoid contract strife with its pilots and drivers at the same time.”

What’s more, Taylor observed that without minimizing the individual concerns of FedEx flyers and their families, perhaps the largest risk to FedEx was investor confidence.

“Pilots are highly trained, expensive, and difficult to replace,” he said. “This isn’t a position FedEx can fill by pulling a top performer off the unload wall and giving them on-the-job training. Savvy investors know that while the need for pilots is widely projected to increase in the coming years, the ability to fill those jobs is expected to decrease. In February this year, AP News cited an estimate from consulting firm Oliver Wyman that ‘despite efforts to close the gap, airlines in North America will face a shortage of nearly 30,000 pilots by 2032.’” 

In a tight labor market, unhappy pilots will find it increasingly easy to leave any company they believe is undervaluing them. FedEx Express cannot afford these personnel losses, and investors know it. Without knowing the intimate details of what took them so long, it’s good news for everyone that FedEx appears to have finally agreed to terms its pilots are likely to accept.”

As Taylor said, even though terms of the tentative agreement were not made public, but, even so, the fact that it appears there will not be a strike or labor stoppage can only be viewed as a positive. This puts UPS “on the clock,” in a way, so to speak, to come to terms with the Teamsters on a new contract. While demand levels are not at their pandemic-driven heights, that, by no stretch, does not mean things can change in a hurry—and they may—so it is best for deals to be reached to ensure smooth supply chain and logistics operations over the second half of the year.