- UPS CEO David Abney got a challenge a few days before his company announced earnings.
- His longtime rival, FedEx CEO Fred Smith, told Bloomberg in an interview that his company will trounce UPS in the next two to three years by revenue.
- Abney told Business Insider in an interview that he's not worried. "In their terminology, they're chasing us," he said. "That's not the terminology we use, but we are very confident where we are."
- FedEx's stock has slumped in 2019, but the Memphis-based parcel titan has caught up to UPS in recent years. FedEx boosted its daily average volume by 33% from 2014 to 2018, while UPS saw a jump of just 15% over the same period.
- Visit Business Insider's homepage for more stories.
FedEx CEO and founder Fred Smith has declared war on his ultimate foe: UPS.
"I will say to you unequivocally: In the next two or three years, I'm firmly of the belief we will pass UPS in terms of size and be the largest by-revenue transportation and logistics" company, Smith told Bloomberg's Thomas Black in an interview published on January 28.
Days later, UPS CEO David Abney shared that he isn't losing sleep over Smith's claim.
"If you're chasing a target and the target is stationary, that's one way. You're chasing a moving target - and we are definitely a moving target with the investments that we're making," Abney told Business Insider in an interview on Jan. 30. UPS released its 2019 Q4 earnings that morning.
"We are charging forward - not only looking back in our mirrors to see who may or may not be chasing us," Abney added. "What matters is that we've put the customer first and we focus on the customer.
Smith's claim may seem shaky when one compares UPS and FedEx over the past year. FedEx's shares have sank 18% from last year, while UPS is up 8%. Both companies' most recent earnings announcement kicked down their respective stocks, but only FedEx inspired NYU's star marketing professor Scott Galloway to recommend Walmart outright buy the company.
Ultimately, UPS managed to snag market share from competitors like FedEx in 2019.
"Last year is just a good example - we took market share both in air and ground and we had a very successful peak," Abney said. "We had the best service levels, we had other companies, customers coming to us during Christmas week because our service was so much better."
Widening the scope, UPS doesn't look quite as secure. FedEx boosted its daily average volume by 33% from 2014 to 2018, while UPS saw a jump of 15% over the same period.
And FedEx's revenue is quickly catching up to UPS'. The Memphis-based package giant doubled its revenue from fiscal years 2010 to 2019, compared to UPS' 50% bump of its own topline.
A FedEx spokesperson had no additional comment to Abney's quotes when asked by Business Insider, and referred this publication to Smith's interview in Bloomberg.
Not your typical rivalry
The duel between Smith and Abney goes beyond other corporate rivalries like McDonald's vs. Burger King or Apple vs. Microsoft - it's decades-deep personal.
Mississippi-native Abney began his career at UPS in 1974. The 19-year-old started working nights as a package handler while taking business classes. He stayed at the company after graduating from Delta State University, and took the helm of the package giant in 2014.
Three years before Abney began loading UPS trucks, Tennessee-bred Smith founded FedEx in 1971 with venture funding and a small family fortune. The Vietnam veteran built FedEx into the one of the world's largest airlines with a whopping 678 jets.
"Fred started his company in about the same year that I started with UPS - around 1974," Abney said.
"Each of us have 46 or years and I would say that both of us have a strong allegiance to our home team," he added. "So, when Fred talks about this, he's giving his perspective and his view. "
But it's beyond that, too. As Black pointed out in Bloomberg, the competition between UPS and FedEx, and the two men who helm the package giants, represent the future of retail.
UPS has embraced Amazon's existence in its topline, even as the mega-retailer builds its own logistics network of planes, trucks, and vans. On Thursday, the company announced that Amazon comprises 11.6% of its revenue. Abney noted that big names like Target and Macy's are also scaling with UPS, along with small and mid-sized businesses who are jumping into e-commerce.
"It's across the entire ecommerce ecosystem is the way I've described," Abney said. "We're not picking winners and losers. We're not saying it's us versus them. We're saying that we're going to work across this entire e-commerce space because everybody's trying to reach the same end consumers, so we see the end consumer as our destination, and that entire ecosystem is how we get there."
Meanwhile, FedEx has dumped Amazon for the traditional retailers. Smith's company booted Amazon from its network over the summer, and he made it clear that his roster of big box stores (particularly Walmart) will edge out the Seattle retailer. "We came to this fork in the road that we had to ally with one side or the other," Smith told Bloomberg. "They want to become more adept in the e-commerce space, and we intend to allow them to do that."
Abney hasn't picked sides in the retail battle. Instead, he's emphasizing that his company's $200 billion tech investment will help all online retailers - with tools like package hubs that sort 100,000 boxes an hour, delivery drivers with a navigation tool that's better than Google Maps, and drones aplenty.
The CEO did note that his new network of package sort is more hi-tech than FedEx's. "That means the FedEx ground network will be automated and the UPS ground network will be automated," Abney said. "The difference is we're automating now, and their automation is older."
But ultimately, he doesn't mind the fighting words. They're nothing new - and UPS still has the higher revenue.
"We've heard that before," Abney said. "I'm not talking about Fred, because this is personal between Fred and I, but when they did the TNT acquisition in 2016, that was the big headline. They were going to be bigger than us. We're now 2020, and and in their terminology, they're chasing us. That's not the terminology we use, but we are very confident where we are."