It appears that FedEx might have won this battle, as the Senate version of the FAA reauthorization bill is stalled in the Senate Finance Committee, where it's likely to remain at least until after Christmas. However, the measure doesn't contain the FedEx labor provision, indicating FedEx’s lobbying efforts have been largely successful. If the legislation gets out of committee and is passed by the full chamber, it is possible that the provision could be added again as part of the reconciliation process with the House bill, but that is not likely.
If FedEx dodges the bullet in this go-round, you can expect attempts to change FedEx’s status to emerge again in coming years, especially if Democrats maintain Congressional control.
Parcel Carriers Remain in Harmony on Rate Increase Though
While battling in Congress over labor status, UPS and Fed are in perfect sync when it comes to rate changes for 2010.
This week, FedEx announced it will raise shipping rates for ground and home-delivery by 4.9%, matching UPS’ announced increases in its main ground and air rates.
The increases come after FedEx Express's 5.9% increases on U.S. domestic and U.S. export rates, though those increases were partially offset by a 2% drop in fuel surcharges in the face of lower oil prices. FedEx said it will adjust other segments' fuel surcharges as well.
While the increases individual shippers will pay will vary based on negotiations with the carriers, it is interesting that the published rates are climbing 5% when most other transportation charges have dropped dramatically and parcel volumes are down substantially overall.
YRC Worldwide Fate Still in the Balance
LTL carrier YRC Worldwide extended the deadline for a financial ploy that may shore up its finances and avoid possible bankruptcy.
Under a pressing level of debt as a result of numerous acquisitions and a terrible freight market, YRC has been in dubious financial condition for months, with some predicting that it will, ultimately, need to file some form of bankruptcy. Last month, the company announced a plan where various debt and bond holders would swap their debt for equity in the company – the thought being the bond holders would fare better in this deal than they would in a bankruptcy filing. YRC has already given large stakes in its equity to labor unions for agreeing to a series of painful wage concessions.
The deadline for debt holders to agree to the equity swap was last night, but, by then, YRC had received only 72% acceptance. 95% was required for the plan to move forward. As a result, the company has said it will extend the offer for an indefinite time period.
Chief Executive Bill Zollars, in October, called the swap the final hurdle in the company's effort to reconfigure its financial structure and shore up its balance sheet. Zollars had described the debt-for-stock swap as "the final step" for YRC, but he stopped short of calling it essential to avoid bankruptcy.
With all its struggles and a stock price that had fallen below $1.00 per share, YRC was also dropped last week in the companies comprising the Dow Jones transportation index.
President Obama Says More Logistics Infrastructure Spend Planned
As part of a new set of initiatives designed to spur job growth in a slowly recovering economy, President Obama this week pledged to expand spending on US logistics infrastructure.
While details are still sketchy, the president said that additional and accelerated infrastructure spending would be a key part of a revamped approach to job creation; White House officials later put the number as something like an additional $50 billion, though not all of that would likely go to roads, bridges and other transportation-related projects. “Infrastructure” generically also refers to water projects, school buildings, and even internet and wireless communications.
Last week, House Transportation and Infrastructure Committee Chairman James Oberstar said that $69 billion would serve as a nice "down payment" for upgrading the nation's transportation system.
Just where and how the money should be spent on transportation infrastructure is still a question. (See Logistics Infrastructure: How Much, at What Cost?)
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