"The massive labor shortage that’s rocked the U.S. since the pandemic and disrupted long-established employment relationships hasn’t had much impact on UPS, which pays its unionized drivers the highest wages in the industry. That’s helped it maintain a stable workforce and rising profits throughout the current disruptions. Meanwhile, lower-paying, nonunionized FedEx racked up $450 million in extra costs because of labor shortages. And while UPS easily beat earnings expectations and predicted a rising profit margin in the U.S. for the fourth quarter, FedEx signaled that its profit margin will fall further. The lack of workers is taking a toll on its reliability, too. FedEx’s recent on-time performance for express and ground packages has sunk to 85%, while UPS has met deadlines on 95% of those packages, according to data collected by ShipMatrix Inc. With strong package demand and delivery prices jumping more than 10%, FedEx’s struggles have left investors puzzled, says Amit Mehrotra, an analyst at Deutsche Bank. The company’s travails have laid bare some structural inefficiencies in its business model, too. Unlike UPS, FedEx operates two distinct delivery networks: one for its overnight air delivery business, which is handled by FedEx employees, and another for its ground parcel service, which uses independent contractors to make final-mile deliveries employing their own nonunion drivers."