One reason the quality of service at UPS has traditionally been stronger than at FedEx is that most UPS drivers are full-time employees rather than contractors or temporary staff. Many UPS drivers are able to earn a good living, often better than their peers at other companies including FedEx [0][1]. By contrast, some logistics companies pursue cost savings by classifying drivers as self-employed contractors, thereby avoiding social security contributions and other employee benefits. UPS’s approach reflects the vision of its founders, who believed a company cannot thrive unless it takes care of its employees.

However, the financial markets, which tend to reward short-term returns and a “winner-takes-all” mindset, have often penalized UPS for this philosophy. In recent years, to satisfy investor demands, UPS management has also turned toward cost-cutting measures. This shift coincided with leadership changes, as the current CEO came from outside the company. External leaders often emphasize sales and marketing over operations, and UPS has followed this trend. As a result, UPS, FedEx, and Amazon are now competing in a cost-reduction race, prioritizing sales growth while reducing operational staff—changes that inevitably affect service quality.

One critical element still missing from the broader logistics landscape is a truly integrated, multi-modal framework that seamlessly combines air, road, rail, and water transport to meet diverse customer needs. While rail may be less applicable in the U.S., it plays a vital role in Europe, China, Japan, and India and could be leveraged more effectively. Perhaps modern logistics theory should evolve to reflect this more holistic, global perspective.

[0] https://www.cnbc.com/2023/08/18/ups-drivers-can-earn-as-much...

[1] https://www.cbsnews.com/news/ups-drivers-170000-pay-benefits...