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FedEx Versus Congress

When members of the Virginia General Assembly stand before a committee of their peers to present a bill, the first question often posed is “what problem is this legislation supposed to correct.” It is too bad lawmakers in Washington do not take the same approach, especially when 1,700 workers in Virginia can be impacted. Let me explain.

While far reaching energy, environment and health care legislation understandably dominate the news, another measure is winding its way through the congressional legislative maze. With little notice, a bill that would change the parameters under which Federal Express operates is quietly waiting for a vote. The individual consumer likely cares little about the outcome, but they should!

Imagine a strike at a key Federal Express hub in Virginia by the Teamsters based on the vote of only a handful of workers. What important medical package or critical document could be stranded in transit? Think life saving medicine, pay checks, replacement parts and critical inventory for all sorts of businesses, not to mention flowers and the Valentine’s Day teddy bear.
How could this be possible? By an act of Congress.
Already the House of Representatives has passed without any public hearings, (so much for the promised new transparency), a change in the Federal Aviation Agency (FAA) reauthorization act. Buried in this bill is a provision that would take Federal Express out from the provisions of the Railroad Labor Act (RLA) and place it under the National Labor Relations Act (NLRA) where UPS – FedEx’s larger but worried competitor — currently operates.
FedEx delivers 85 percent of its packages by air. It is the world’s second largest ‘airline, ‘ and subsequently it is regulated by the RLA as that governs both railroads and airlines. Going back to 1926, the law is designed to keep local strikes in the transportation industry from creating a bottleneck that would in turn cripple the entire nationwide system. Strikes can only be called nationwide and the President has the authority to impose mediation, cooling off periods and the like.
UPS delivers 85 percent of its shipments exclusively by truck. As such it is regulated like every other trucking company and falls under the authority of the NLRA. If regulations on FedEx were changed so that it was government by NLRA a local Teamsters strike in one of their choke points could devastate its nationwide distribution system; and the government could not intervene as it can today.
So if it ain’t broke, why fix it?
Follow the money. The market share of UPS has capped out and may be shrinking. With a different business model – air vs. truck and other innovations – FedEx Express has come on strong and continues to improve its economic position. Much like Brer Rabbit, UPS wants to drag FedEx into its own briar patch of labor relations. And, of course, the Teamsters want its foot in the airplane door.
And what many don’t understand is that FedEx has an especially large footprint in Virginia.  Dulles, Richmond and Norfolk are major FedEx hubs. These facilities employ more than 1,700 people and lease space equivalent to eight of Virginia Tech’s Lane Stadium.
Virginia has been rated the most ‘Business Friendly’ state a number of times, including during both then-governor Mark Warner’s and current governor Tim Kaine’s terms. It will be interesting to see how Sen. Webb and Warner vote if and when a similar provision comes to the Senate. It would be interesting to see if Governor Kaine, with his new national political title, weighs in to support the continuation of the current, and successful, regulatory set up for FedEx Express.
There is something unseemly about taking very successful company and forcing it into a different government oversight situation, especially when the situation does not warrant it. FedEx is successful, so just leave it alone and let Virginia’s 1,700 FedEx employees continue doing what they do in the way they do it. There is no rational reason it seems to me to make a change.

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