This is pretty much why 1/5 of packages I'm getting via FedEx Ground are smashed or damaged. They aren't even supposed to be "overnight" and mishandling is rife.
The problem they have is that geography drives the business, and their hubs are usually near competing hubs for UPS. They must have made a policy decision to not get into a price war re: wages with UPS.
My guess is that Amazon's logistics buildout is hurting them more than UPS.