Will strike ground e-commerce?

Convenient as online shopping may be, a looming strike at FedEx shows that it all comes down to getting goods delivered.

3 min read
E-commerce companies are girding for the possibility that Federal Express pilots may go on strike just in time for the Christmas season.

A FedEx strike could hit e-commerce harder than the United Parcel Service strike in the summer of 1997, not only because of the season, but also because e-commerce has grown dramatically since then.

"Everybody's looking for this to be an e-commerce Christmas," said Randy Whiting, president and CEO of the trade group CommerceNet. "During the UPS strike, e-commerce was still ramping up. If that strike occurred today, it would have been much worse."

The FedEx Pilots Association has rejected the company's latest offer, and FedEx left the bargaining table on October 30. A strike vote is set for December 3.

Both FedEx and UPS, which could be swamped in the event of a FedEx strike, say they're prepared for the Christmas season, strike or no. "We absolutely will continue to provide service," said FedEx spokesperson Sally Davenport.

FedEx is making contingency plans, however. Today it announced a contract with Atlas Air to use three of that carrier's 747s for deliveries. In case of a protracted strike, the company may cut back on next-day deliveries but plans to continue two- and three-day service with a money-back guarantee for late deliveries.

"You have to remember that even if there is a strike, 140,000 of our 143,000 people will still be working," Davenport said.

UPS is making hay of the situation. "We're telling customers, if you come to us now, we can plan to work you in and welcome you as a new customer," said spokesman Norman Black. "But you can't call us on December 23 and say you have a bunch of overnight packages you need us to deliver."

The FedEx pilots seem to be using the Christmas season as leverage, Black noted. "Any other time of year, this would be a non-issue."

E-commerce will likely feel a pinch, Black continued. "We're already seeing a small surge. Volume is already up more than it otherwise would be."

UPS won't say how much of its business comes from online companies. One indicator is growing usage of UPS's online package-tracking service. Web users accessed the service an average of 225,000 times per day in June. Now, it's used 400,000 times daily, and UPS expects that to grow to between 800,000 to 1 million next year.

A strike might not hurt bigger businesses, CommerceNet's Whiting said. "The big players have experience in this sort of thing--especially from the UPS strike."

Dell Computer, which does most of its business through delivery services, says it is well-prepared.

"This is the kind of thing we plan for in general," said spokeswoman Neisha Frank. "FedEx is only one of a number of carriers we use. If there's a strike we have many options."

The UPS strike had "very little effect" on Dell's operations, she said.

Even some smaller businesses will be insulated. Darryl Peck, CEO of Cyberian Outpost, says he wouldn't be phased by a strike--his online computer store uses Airborne Express and UPS domestically, and DHL Worldwide for overseas shipments.

But, he said, "A FedEx strike would be bad for a lot of people." Many large companies rely on FedEx not just to move packages but as an outsourcer for many logistics functions--activities a pilot's strike could disrupt, he noted.

"It's easy to move to UPS for shipping, but FedEx is such a part of American corporate life," he said.

However dazzling e-commerce technology may be, the business still depends on old-world logistics and old-fashioned heavy lifting. "FedEx is positioned right in the middle of the e-commerce space," Whiting said. "The weak point of e-commerce may be the traditional logistics and distribution channels."