Tag: International

FedEx to meet with IRS

Posted by | Jan 5, 2008 | |

FedEx will meet with the Internal Revenue Service audit team in the spring to discuss a tax assessment regarding the classification of owner-operators at FedEx Ground.

On Dec. 20, the IRS tentatively concluded that FedEx Ground’s pick-up-and-delivery owner-operators should be reclassified as employees for federal employment tax purposes. The IRS indicated that it anticipates assessing tax and penalties of USD 319 million plus interest for 2002. Similar issues are under audit by the IRS for calendar years 2004 through 2006.

FedEx said Dec. 21 that it would vigorously defend its position that the drivers are independent contractors. On Jan. 3, the carrier said it is preparing an initial response for a meeting with the audit team. The company said it expects final resolution to take a long time.

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Canada Post: Judge OKs class action suit over postal charges

Posted by | Jan 5, 2008 | |

Canada Post could be required to return tens of millions of dollars in shipping charges to thousands of businesses as a result of a recent Ontario court ruling.

Superior Court Justice Joan Lax certified a class-action proceeding initiated by Ottawa-based Lee Valley Tools Ltd., which has been embroiled in a long-running dispute with the Crown corporation about its charges for shipping parcels to customers.

The ruling noted there are more than 57,000 commercial clients that could have a claim against Canada Post, if its billing practices for parcels are found to violate the federal Weights and Measures Act.

For the past seven years, Canada Post has charged customers to ship parcels based on the greater charge of the actual weight or the “volumetric weight” of an item. This is so that the charges on lightweight yet bulky items cover the cost of transportation.

Since 2003, the Crown corporation has used a device known as a “cubiscan,” which Lee Valley has alleged can overstate the volume of objects, especially irregularly shaped parcels, by as much as 20 per cent.

Commercial clients are required to pre-pay and weigh their products and if Canada Post determines that the total was underestimated, it levies an addition charge. Until January 2007, it did not refund any overpayments to customers.

John Caines, a spokesman for Canada Post, described the class-action certification as a “procedural” ruling. “We deal with all of our customers fairly and in the same way,” Mr. Caines said. “This is the way the industry measures parcels.” He added that Canada Post is the only company now issuing credits for overpayments.

Enforcement of the Weights and Measures Act is the responsibility of Measurement Canada, part of Industry Canada. Alan Johnston, president of Measurement Canada, responded in December 2005 that the relevant section of the Act did not define a “proscribed limit of error” for shipping charges, so it could not be enforced.

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Hermes Logistik eyes acquisition in Spain

Posted by | Jan 4, 2008 | |

Hermes Logistik is considering an acquisition in Spain and potentially elsewhere to strengthen its European B2C network, according to the company’s management.

Managing director Hanjo Schneider told the Deutsche Verkehrs-Zeitung (DVZ) that in Spain the Otto Group subsidiary was seeking “a solution in the next 12 – 18 months”. The Spanish B2C market is currently at an early stage of development, according to experts.

Hermes currently covers five countries, representing about 85 pct of the European B2C market, through its own network, Schneider said. The UK and France are served by Otto Group subsidiaries Parcelnet and Mondial Relay, while Hermes started operations in Austria in summer 2007.

In Italy, Hermes bought a 30 pct holding in Porta a Porta, which is majority-owned by Swiss Post, in October 2007. The Swiss postal group, however, might be prepared to split off the Italian company’s parcels distribution business, and sell it to Hermes completely, whilst retaining the mail and logistics activities, the DVZ reported.

Hermes currently uses partners to deliver to other European destinations. TNT covers the Benelux area, Swiss Post covers Switzerland, and DPD is used for all other markets.

French sister company Mondial Relay last year announced plans to expand into Belgium, Spain and Portugal, while British operator Parcelnet grew with the acquisition of the Redcats courier network last spring.

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Special Delivery: Bringing SMBs into the Global Shipping Network

Posted by | Jan 4, 2008 | |

“Each carrier has tools to make international shipping easier. DHL calls its ‘Trade Automation Services.’ UPS’ international tool is named ‘TradeAbility.’ FedEx has its Trade Network. You will have to register in order to access these tools, and some carriers charge a transaction fee for providing a service,” Mark Taylor, chief logistics officer at RedRoller.com told the E-Commerce Times.

The parcel carriers have been a huge factor driving the globalization of commerce, Taylor agreed.

“First, they see this as a high priority in their own growth and success,” he continued. “We can see this from some public statements from their CEOs. Mike Eskew, chairman and chief executive officer of United Parcel Service informs us, ‘Most of our 8 million daily customers at UPS are small businesses.

It turns out that small businesses make up 97 percent of all exporters and nearly 40 percent of exports’ total value, statistics pointed out by FedEx CEO Fred Smith, said Taylor.

“Second, international shipping is where their bread is buttered. Donald Broughton, an analyst who follows both UPS and FedEx for A.G. Edwards & Sons in St. Louis, tells us ‘Direct international is 23 percent of revenue for FedEx, but it’s the fastest growing part of their business, and it’s almost 20 percent for UPS. FedEx is the largest air freight carrier in Asia and UPS is neck-and-neck with DHL in Europe,'” he said.

UPS provides package delivery services to 21 of the top 25 e-tailers in the U.S. as ranked by Internet Retailer magazine, according to Donna Barrett, the company’s technology public relations manager. Tracking requests on UPS.com along average 15 million a day.

There have been more than 25,000 distinct integrations within the last 18 months of UPS Online Tools, which retailers can integrate into their Web sites, Barrett told the E-Commerce Times. These have enabled more than 748,000 individual users to access tracking, time-in-transit, rating and shipping information.

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FedEx Corp. Issues Update on Status of Tentative IRS Assessment Regarding Worker Classification at FedEx Ground

Posted by | Jan 3, 2008 | |

FedEx Corp. today announced that, in response to a tentative assessment by the Internal Revenue Service (IRS) on December 20, 2007 regarding the classification of owner-operators at FedEx Ground, the Company is preparing to meet with the IRS audit team to review their tentative assessment and to provide an initial response. It is expected that the meeting will occur in the spring of 2008 and that a final resolution of this matter will not occur for some time. The Company notes that some reporting concerning this matter has been inaccurate.

As disclosed in the Companys second quarter Form 10-Q filed on December 21, 2007, the IRS has tentatively concluded, subject to further discussion with the Company, that FedEx Grounds pick-up-and-delivery owner-operators should be reclassified as employees for federal employment tax purposes. The IRS has indicated that it anticipates assessing tax and penalties of USD 319 million plus interest for 2002. Substantially all of the IRSs tentative assessment relates to employment and withholding taxes for the 2002 calendar year and, if paid by the Company, would be fully deductible. Similar issues are under audit by the IRS for calendar years 2004 through 2006.

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