Word: fedex
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Furthermore, the USPS has offices in small towns throughout the country, which serve as entrances of disparate government services into more isolated regions. It is impractical to assume that private delivery services such as FedEx and UPS would establish offices everywhere that the USPS currently serves. Even if they did, such offices would be mere retail outlets; they would not contribute to national unity the way USPS offices currently do. Finally, privatization and the likely concomitant rise in prices and fall in locations would hurt those who are already disadvantaged the most, such as people without phone or Internet services...
...real growth engine will probably be its international business, which saw double-digit profit growth last year. Overseas, UPS networks include exclusive ground service throughout Europe. In Asia, it has acquired regional carriers, opened an air hub in Shanghai and broken ground on another in Shenzhen, China. "FedEx and DHL have dominated Asia so far," says David Ross, an analyst for Stifel Nicolaus. "But FedEx isn't as strong in Europe, and DHL doesn't do the U.S. UPS doesn't have those gaps...
This shift presents a logistical puzzle, because there's no way the engineers can make a single Amazon shipment to the far reaches of, say, Alaska economical. The answer might surprise you: UPS and FedEx are now outsourcing delivery to a longtime rival, the U.S. Postal Service. "The postal service is already mandated by Congress to stop at every house," Caldwell says. "So why not outsource that last-mile delivery?" In other words, let USPS handle the money losers...
Volatile energy prices are another worry. When crude-oil prices rise to $100 a barrel, for instance, UPS and FedEx both recover that increase through a fuel surcharge. "They essentially lose money on the way up but make it back on the way down," Ross says. "Longer term, though, higher prices hurt the consumer, and they will downgrade service...
...home, UPS treads a fine line on labor costs. Unlike at FedEx, most of its workers are unionized, meaning salaries are higher. Over the years, however, this has engendered tremendous loyalty to the firm--the average tenure for drivers is 16 years. UPS will try to reward some of that loyalty by restoring raises to about 40,000 managers and unfreezing 401(k) matching. Citing strong free cash flow, it will also up its dividend. "We're not hiring yet, but we hope to be soon," Davis says. In other words, recovery is en route...