How UPS drivers are trained to deliver 21 million packages a day

  • UPS spends $200 million a year on safety training for its drivers.
  • We went inside the UPS driving school in West Boylston, Massachusetts, to see how drivers learn to walk on ice, handle aggressive dogs, and drive safely.
  • UPS drivers collectively drive more than 3.5 billion miles a year, with each worker averaging 100 to 150 delivery stops per day.
  • Visit the Business section of Insider for more stories.

EDITOR’S NOTE: This video was originally published in December 2020.

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FedEx slumps as the carrier beats earnings estimates but says costs tied to increased shipping demand and labor are soaring

FedEx
Boxes containing the Moderna COVID-19 vaccine are loaded into a truck for shipping at the McKesson distribution center in Olive Branch, Miss., Sunday, Dec. 20, 2020.

FedEx fell on Friday by as much as 5.6% after its latest earnings report revealed labor and logistical pressures eating away at margins, even as the company slightly beat analyst earnings expectations.

The stock slid as the market opened on Friday, immediately falling by over 3%. It continued to fall to an intraday low of $286.52 before paring some losses.

The US labor shortage has cost the courier on wages and shipping efficiency, pushing up labor costs and depressing on-time shipping rates. In response, FedEx said it would boost capex by 20% and open 16 new facilities by the end of the year. In spite of the reopening pressures, the company’s sales rose 30% in the fourth quarter of 2020, as delivery demand remained sturdy.

Thursday’s reported earnings came in just cents above expectations, leading some analysts – who had become accustomed to consistent overperformance – to describe the results as a disappointment.

FedEx CEO Fred Smith expressed optimism for future quarters, saying that continued strong sales in conjunction with ongoing investments in the firm’s delivery network would soon result in better margins.

Shares of FedEx were trading at $291.46 at 2:08 p.m. ET, down 3.79%.

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FedEx to ‘reevaluate’ its policy requiring employees to lock up phones during shifts following Thursday’s shooting at a FedEx facility in Indianapolis

FedEx
Boxes containing the Moderna COVID-19 vaccine being loaded into a truck for shipping at the McKesson distribution center in Olive Branch, Mississippi, in December.

  • Officials said eight people were killed in a shooting Thursday at an Indianapolis FedEx facility.
  • A policy barring use of cellphones while on the clock made it harder for family to contact workers.
  • FedEx says it’s reevaluating the policy in light of the shooting.
  • See more stories on Insider’s business page.

A FedEx representative told Insider the company was reevaluating its policy of not allowing employees to have phones with them during work hours following a deadly shooting at one of its Indianapolis facilities Thursday night.

Details continued to emerge about the shooting early Friday, but the Indianapolis Metropolitan Police Department said at least eight people were killed. Officer Genae Cook said during a press conference Thursday night that the gunman was believed to have died by suicide.

As news of the shooting spread, FedEx employees and their family members complained on Twitter that the company’s policy of not allowing employees to keep cellphones on them during work hours had left family members questioning whether their loved ones were safe.

Because most employees didn’t have cellphones on them at the time of the shooting, authorities told the workers’ relatives to gather at a nearby Holiday Inn to wait for further instruction.

Family members gathering there told the IndyStar reporter Sarah Nelson that employees were not allowed to keep phones on them while working.

Heather Wilson, a communications advisor with FedEx, told Insider: “Our focus at this time is on the safety and well-being of our team members and cooperating with investigators.”

The shooting took place at FedEx’s ground facility at 8951 Mirabel Road, near Indianapolis International Airport. The facility is more than 328,000 square feet, according to RealityTrac.

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Nike, FedEx, and 24 other companies with $77 billion of combined income have avoided paying taxes for years, a new report found

Nike Beijing
Customers lined up outside the Nike flagship store on the opening day at Wangfujing Street on January 20, 2021 in Beijing, China.

  • 55 publicly traded companies paid $0 in federal taxes last year, a study by ITEP found.
  • Nike and FedEx are among 26 companies that have not paid federal taxes in three years.
  • In 2020, the 55 companies avoided paying about $12 billion in federal taxes.
  • See more stories on Insider’s business page.

55 of America’s biggest companies paid $0 in federal taxes last year, a new study from the Institute on Taxation and Economic Policy (ITEP) found.

The 55 publicly traded companies would have paid an estimated $12 billion in federal taxes if not for corporate tax breaks in 2020, including $8.5 billion in tax avoidance and $3.5 billion in tax rebates, the report found using regulatory filings and other information.

Nearly half of the companies have avoided paying federal taxes for the last three years, according to the report. Nike, FedEx, and DTE Energy were among 26 companies that recorded $77 billion in combined pre-tax income in the past three years, but did not pay any federal income taxes.

The news comes at the same time President Joe Biden looks to raise taxes on corporations. The White House announced this week that it plans to limit the number of companies that do not pay federal taxes, as well as increase the corporate tax rate to 28% – raising an estimated $2 trillion over the course of 15 years.

How do multi-billion dollar companies avoid federal taxes?

ITEP’s data found some of the nation’s biggest companies have been avoiding federal taxes for decades, dating back to the Reagan administration. The companies, which encompass a wide variety of industries, use a range of tactics, including tax exemptions and deductions.

While company tax returns are private, publicly traded companies must file financial reports that include information on federal income taxes. Using the financial reports as well as data on each companies’ pre-tax income, ITEP was able to analyze some of the major resources the companies used to avoid paying federal taxes.

In 2017, the Trump administration’s Tax Cuts and Jobs Act of 2017 amended the Internal Revenue Code of 1986, the Washington-based research group said the act failed to address major loopholes in the tax code.

“When President Trump signaled his intention to cut corporate taxes in 2017, he and Congress had an opportunity to pare back the many loopholes that have allowed companies to avoid tax on much of their income since the 1980s,” the report said. “Now, with three years of data published on the effective tax rates paid by publicly traded companies, it is clear that the Trump law has not meaningfully curtailed corporate tax avoidance and may even be encouraging it.”

Read more: When businesses should file taxes this year and how to get an extension if you need more time

The 2017 tax bill dropped the top corporate income tax rate from 35% to 21% – a corporate tax rate that is below average for most countries represented in the Organisation for Economic Co-operation and Development, a group that represents 37 developed countries. The act also allows companies to immediately write off the cost of new equipment and machinery.

Some of the loopholes ITEP found many companies used include tax breaks for executive stock options which allowed the companies to write off stock-option expenses.

Multiple companies, including Nike and Hewlett Packard, used federal research and experimentation tax credits to reduce their incomes, while companies like DTE Energy and Duke Energy used tax breaks for renewable energy to avoid paying federal taxes.

The CARES Act made it even easier for companies to avoid taxes

The $2.2 trillion CARES Act which was passed last year to help alleviate the economic distress of the pandemic and help businesses survive, provided the 55 companies with over $500 million in tax breaks, according to ITEP.

Dozens of publicly traded companies used provision from the CARES Act that temporarily allowed businesses to use losses in 2020 to offset profits earned in previous years, according to the research group.

FedEx was one of the companies that used the CARES Act to reduce tax bills from prior years when the tax rate was higher.

The company told Insider the CARES Act “helped companies like FedEx navigate a rapidly changing economy and marketplace while continuing to invest in capital, hire team members, and fund employee pension plans.”

Nike, HP, Salesforce, Duke Energy, and DTE Energy did not respond to a request from Insider for a comment.

In its report, the left-leaning research group pointed to several tax code amendments that could cut down on the number of companies that do not pay federal taxes, including a “minimum tax” for profitable companies, as well as cutting back on tax breaks for public companies.

Biden has repeatedly expressed interest in increasing taxes for major corporations as a way to fund his $2 trillion infrastructure plan.

On Wednesday, Biden called out Amazon for avoiding federal taxes. After paying $0 in federal taxes for two years, Amazon started paying federal income taxes in 2019.

Biden said he was aware the company was one of many Fortune 500 companies that use loopholes to avoid taxes, while middle class families are not afforded the same opportunities and pay over 20% tax rates.

“I don’t want to punish them, but that’s just wrong,” Biden said.

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FedEx is limiting the number of items small businesses can ship during the pandemic-fueled holiday and retailers are calling it a ‘shipageddon’

fedex amazon
FedEx’s small business customers are facing daily shipping limits as low as 75 packages per day.

  • FedEx is placing daily package limits on some businesses as its shipping network faces capacity issues during the pandemic-fueled surge in online holiday shopping.
  • Carriers have taken similar steps before, but small business owners told Business Insider that FedEx hasn’t been transparent about the current wave of quotas, which have been as low as 75 packages per day and hit them right before Black Friday and Cyber Monday.
  • Shipping experts told Business Insider that smaller businesses are likely getting hit the hardest because of worse access to customer support, fewer resources to make alternative shipping arrangements, and less bargaining power with FedEx.
  • The pandemic has also forced UPS, Amazon, and other major carriers to impose restrictions on businesses and scramble to add capacity during what experts have called “shipageddon.”
  • Visit Business Insider’s homepage for more stories.

Like many e-commerce businesses, Letterfolk held its annual holiday sale early this year – the week before Black Friday – in an attempt to get customers’ orders to their doorsteps before the pandemic-fueled surge in online shopping overwhelmed mail carriers.

Letterfolk, which makes bespoke letter boards and other home decor and is based in Salt Lake City, Utah, has four full-time employees and five to 10 part-timers during peak season. But on the Saturday after its sale, co-founder Johnny Galbraith had gathered all hands on deck, even rounding up family and friends to help fulfill the flurry of orders.

“We were feeling great because we had done our holiday sale early, we had about 3,000 orders in the queue, and that was after already having shipped out a decent volume,” Galbraith said.

But when he got home Saturday night, Galbraith got a call from his FedEx representative, who told him Letterfolk would be capped at its September shipping levels plus an additional 10%.

“The math on that worked out to be 110 packages a day,” Galbraith said. That equaled out to less than 4% of the orders his company was waiting to ship that Saturday.

“We had been pretty loyal to FedEx, probably 75% of our shipping business has gone through them, the [remaining] balance going through USPS, and so we didn’t really have any contingency plans,” Galbraith said. He attempted to find a workaround, even offering to personally drive the packages more than 400 miles to larger FedEx hubs in Denver or Las Vegas, but was unsuccessful.

“I felt like this could really compromise our entire small business operation. We’ll lose the trust of our customers,” he said. “And then to apply it the week before Black Friday with no warning, it was just unbelievable. It was just crazy to have to adapt to that among all the other challenges that a year with COVID is presenting.”

‘Unprecedented surge’

Galbraith isn’t alone, either in being capped by FedEx this holiday season or in facing challenges getting clear answers from the company about the quotas.

Business owners from Portland, Oregon, to Toronto, Canada, told Business Insider they’ve faced daily limits of just a fraction of their expected shipping volume – in one case as low as 75 packages per day – and in some instances weren’t told about the limits by FedEx ahead of time.

“FedEx expected an unprecedented surge in packages during this season, and we implemented various measures proactively to prepare. This included hiring more than 70,000 seasonal workers, moving to seven-day operations and accelerating Sunday delivery capabilities, improving the efficiency of our delivery routes, and, as always, proactively working with our customers to understand their expected volume and identify opportunities to ensure the best possible service throughout the season,” FedEx spokesperson Janna Hughes told Business Insider in a statement.

“In some cases, volume has significantly exceeded customer projections. We know how important it is to our customers that their packages are delivered on time, and we remain committed to working with them on ways to leverage our network flexibility,” she added.

FedEx and other carriers have been forced to take extreme steps to prepare for the unprecedented holiday rush expected this year as COVID-19 exposure risks drive more shoppers online and more packages into carriers’ shipping networks.

Scott Wingo, co-founder of e-commerce software company ChannelAdvisor and the host of an e-commerce podcast, coined it “shipageddon.

According to analysis from eMarketer, online shopping is expected to grow 35.8% this year, and logistics data company ShipMatrix recently told the Wall Street Journal that, between Thanksgiving and Christmas, it expects there to be an excess of about 7 million packages per day that the shipping industry won’t have the capacity to ship.

Earlier this month, The Wall Street Journal reported that UPS imposed limits on major retailers, including Nike, Gap, L.L. Bean, Hot Topic, Newegg, and Macy’s. Last week, CNBC reported that Amazon had capped the number of products third-party sellers can ship to its warehouses, causing them to lose out on some holiday sales.

Jason Goldberg, chief strategist for RetailGeek and co-host of the podcast with Wingo, told Business Insider that, while carriers have rolled out package limits and higher rates in past years in response to increased shipping volumes, rarely did they actually refuse to pick up packages.

Another key difference with companies like Letterfolk, he said, is that while FedEx has conversations with larger retailers months in advance in order to estimate how much they’ll need to ship, many smaller businesses don’t have that level of access to FedEx or the leverage to negotiate better prices and quotas.

“Nike or Gap were not surprised in the slightest that they hit their caps… they knew what their cap was, they were informed well in advance,” he said. “It’s more likely to be a surprise for the smaller shipper.”

While it’s possible a particular business owner may have missed communication from FedEx about the caps, Goldberg said that multiple businesses in an e-commerce group he belongs to reported being blindsided by FedEx’s limits.

‘Caught us off guard’

That was the case for Second Closet, a Canada-based self-storage company that began using its warehouse space to help businesses fulfill their e-commerce orders during the pandemic.

“We found out one day, about a week before Black Friday Cyber Monday, that FedEx was going to cap us at 80 shipments a day,” Jarrett Stewart, senior operations manager at Second Closet, told Business Insider.

But Second Closet didn’t find out about its own quota directly from FedEx – it only learned about the new caps from one of its own merchants. That business had received an email from a FedEx representative with instructions not to send more than 80 packages per day on Cyber Monday and the day after.

“Basically, if you have 100 packages on Monday, please have the warehouse hold back 20 packages until the following day. The volumes in the network are extremely high at the moment and will get even more crazy over the next week, so we just need to manage capacity,” the FedEx rep said in the email, which was seen by Business Insider.

“Moving forward, I now have to submit and get approval when you are shipping 30 packages or more, which can take some time,” they added.

That email implied the caps might only apply during Black Friday and Cyber Monday, Stewart said. But that Thursday, the merchant received another email from FedEx asking the merchant to remind Second Closet about its daily limits after they shipped 135 packages on Wednesday, suggesting the caps had been extended.

“Caught us off guard, and it wasn’t for the lack of asking for a heads up,” Stewart said, adding that while FedEx had warned Second Closet about possible delays this holiday season, it provided nothing beyond “generic statements” when he asked about the caps.

As a result, Stewart said, Second Closet couldn’t “set expectations with merchants on a proactive basis,” and has had to issue refunds in some cases.

‘Highly chaotic and disorganized’

Multiple small business owners said they were similarly frustrated at the lack of clarity from FedEx around who would face shipping limits, how the limits were determined, how long they would be in place for, and whether they could help reduce some of the bottleneck by dropping off shipments at FedEx’s hubs.

“The little guys are complaining that it’s highly chaotic and disorganized and that no one’s taking their calls and they’re getting bad information… the communication is very spotty and ad hoc,” RetailGeek’s Goldberg said.

Read more: CEO of logistics startup that works with Sephora, Home Depot, and Levi’s explains why shipping updates are essential ‘even if it’s not good news’

Stewart said FedEx has not been as responsive as other carriers in answering his questions about peak season challenges, adding: “They will always point you towards their different phone numbers, to different emails for customer support, so it’s hard to have that one-to-one relationship with an account rep.”

“It’s really been inconsistent,” another business owner in Portland, Oregon, told Business Insider. “The day after Cyber Monday, they called and said we were capped at 150 units. We brought everything else to our FedEx hub, and they were okay with that. Then the word from our account manager was we’re capped at 150 unless there is more room in the truck.”

Several business owners said they also tried to bypass their shipping limits by dropping packages at FedEx’s distribution hubs, to varying degrees of success – but that also introduces other issues.

“There is a big loophole in this whole system… FedEx and UPS are not in the business of turning away packages,” Goldberg said, “so they don’t actually have a robust infrastructure to enforce those caps.”

“If you drive those packages to a distribution center or a FedEx store and drop them off, they’re highly unlikely to get refused because they don’t even get scanned when you drop them off… they’re going to get processed later,” he said. “A lot of small sellers have bypassed their caps by just finding some alternative way to get them into the network.”

‘A small guy can’t do that’

While FedEx declined to share details about how it determines daily limits, experts said smaller businesses are likely being hit the hardest.

“I’ve been particularly worried about the small merchant,” Wingo told Business Insider. “The problem is, they don’t have the ability to go and negotiate a quota.”

Larger businesses can, as part of larger conversations around things like exclusivity and shipping rates, also tell FedEx what they expect to ship and negotiate higher shipping limits.

“A small guy can’t do that. You just don’t have the financial leverage,” Wingo said.

“Think about who FedEx least wants to alienate for next year,” Goldberg said. “It’s a Walmart, right? It’s not the mom and pop shipper.”

Galbraith said he understood that dynamic, admitting Letterfolk is “a drip in the ocean of packages that FedEx is moving.” But, he added, “I was hoping to hear more from FedEx about this issue… to make sure that you’re not being singled out as a small business owner.”

“I understand if it was being applied consistently,” he continued. “But a couple hundred packages for a small business – it kneecaps everything that we’re doing. And so for us to come out of this and then give FedEx all of our business again… I just don’t see that happening.”

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