FedEx Foray Into LTL Prompts Talk of UPS Counter Move

With FedEx Corp.’s flag now planted squarely in the less-than-truckload sector, industry speculation has turned toward arch-competitor United Parcel Service for the next likely move.

FedEx, the second deepest pockets in trucking to UPS, announced in November a $1.2 billion deal to buy American Freightways Corp., the seventh largest LTL carrier in the nation and No. 15 on the Transport Topics 100 list (11-20, p.1). FedEx is not quite two-thirds the size of UPS in terms of annual revenue.

When the merger is complete, FedEx’s nationwide LTL fleet of American Freightways and Viking Freight, a Western regional LTL carrier and a FedEx subsidiary since 1997, will be able to hurdle 1,000-pound loads of palletized freight throughout the country and gener-ate $1.6 billion a year in revenue and more than $70 million a year in profits.

Daniel Moore of Stephens Inc. in Little Rock, Ark., already has a match lined up for UPS — ABF Freight System, the flagship carrier of Arkansas Best Corp. The smallest of the Big Four long-haul, national LTL carriers, ABF — like UPS — employs Teamster labor and is strongly profitable.

“Everyone talks about one-stop shopping. If you’re going to be the global transportation and logistics provider to the world, this is the opportunity,” Moore said. “It’s a perfect time.”

UPS spokeswoman Susan Rosenberg says the Atlanta-based company is under no obliga-tion to react to the FedEx deal. Customers desiring LTL service can get it through UPS Hundredweight Service or the company’s logistics division, she said.

For the full story, see the Jan. 8 print edition of Transport Topics. Subscribe today.

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