EDITORIAL: Kneecapping FedEx

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FedEx Express is learning what could be the Democrats' economic motto -- "Never Let Success Go Unpunished."

Led by Rep. James L. Oberstar, Minnesota Democrat, the House on May 21 passed legislation that contains an almost hidden provision -- a mere 230 words -- that would hobble FedEx Express. It would do so by completely changing the labor laws under which the company operates. Unless the Senate removes the language from the underlying bill reauthorizing the Federal Aviation Administration, a mere dozen or so workers in just one city could hamstring much of the nation's overnight delivery service.

We Americans take for granted that things can "absolutely, positively ... be there overnight" -- but it took FedEx Express to make that so. FedEx Express is, of course, one of the great corporate success stories of modern times, having grown from a mere idea in a 1965 term paper by Yale University undergraduate Frederick W. Smith into a company essential to the workings of our modern economy.

It is a little-known fact that FedEx contracts with the U.S. Postal Service to carry almost all of its Express Mail and a large proportion of its Priority Mail. FedEx delivers huge amounts of needed supplies for American military forces, too -- and its service is just about the only way to guarantee that some lifesaving medicines reach patients overnight.

Lawmakers have long recognized that certain sorts of transportation companies are the lifeblood of interstate commerce. That's why they wrote the Railway Labor Act to apply special labor-relations rules to railroads and, eventually, airline-based businesses such as FedEx Express. Since 1926, the RLA has provided successfully for means other than strikes to resolve labor disputes fairly and quickly, without favoring either side.

The RLA does not, however, apply to non-rail, mostly ground-transportation companies such as the United Parcel Service. UPS instead is governed by the National Labor Relations Act (NLRA), the terms of which favor unions such as the Teamsters, which represents UPS drivers. Naturally, this means UPS and the Teamsters both have an interest in kneecapping FedEx Express. Together, the ground-delivery company and the union have executed what The Hill newspaper called a lobbying "pincer movement" to transfer authority over FedEx Express from the RLA to the NLRA.

The UPS corporate political action committee has "given more money to federal lawmakers than any other company over two decades," according to Bloomberg News, with $77,900 from UPS employees going to Mr. Oberstar since 1989. The Teamsters, who lean heavily Democratic, have donated $86,500 to Mr. Oberstar during that period.

Mr. Oberstar argues that he is merely trying to treat similar workers similarly. FedEx Express counters that it and UPS are very different companies. FedEx says it ships 85 percent of its goods by air, whereas UPS sends 85 percent of its goods by truck.

UPS trying to squash FedEx Express is like Goliath sitting on David. Again using FedEx Express numbers, UPS has 425,000 employees in a business doing $49.7 billion in annual revenue, compared to FedEx Express' 143,000 employees and $22.7 billion in revenue. With UPS so much bigger than FedEx Express, it doesn't make sense to argue that "Big Brown" somehow suffers a competitive disadvantage. Indeed, the latest earnings estimate for UPS shows growth from $2.37 to $2.90 per share, while FedEx Corp. has shown a decline from $1.26 to $0.31.

With the economy as a whole so shaky, this is the worst time for Congress to change the rules governing such an important facet of interstate commerce. The old wisdom should apply still: If it ain't broke, don't fix it.