Many may not realize that some drivers seen wearing FedEx uniforms are actually working for contractors and not directly employed by FedEx itself. There is a growing problem between FedEx and these contractors, who deliver a huge amount of the packages.
Many of these contractors, who work delivering packages for FedEx's Ground business, report that they are losing money in the deals. This comes even while revenues have reportedly jumped over 60% since before the start of the pandemic, CNN Business reported.
Deutsche Bank reported that higher costs for almost everything, including for vehicles, wages, and gas, have caused at least 30% of contractors to lose money.
Around 3,500 FedEx Ground contractors, along with other professionals in the industry, gathered at the Route Consultant's 2022 Contractor Expo in Las Vegas in August to discuss inflation-based contractual challenges facing the industry.
Spencer Patton, Founder and President of Route Consultant, said, "I want to see FedEx Ground remember their identity. FedEx Ground is an amazing delivery company," he said. "They are a $60 billion company that could be a $120 billion company if we can work together through these challenges."
Patton's company is one of the largest contractors with FedEx Ground and is one of the most vocal critics of the company's work with contractors. Patton also wants customers to know that it's mostly contractors delivering packages for FedEx.
Suggestions at the conference included ending Sunday deliveries, contract changes that come with consultations with contractors first, and demands that FedEx train and work with staff better to "restore appropriate communication."
Patton said the current model "is hurting to a degree where my company individually has to see change from FedEx Ground.”
Patton urged FedEx not to "jam" contractual changes on contractors with 30-day notice.
Patton, as Supply Chain Dive noted, said during his speech that he would stop operating his delivery routes as of Nov. 25 unless FedEx makes updates to the terms of his contract.
“My business is losing money every day,” Patton said. “And my business will not be able to continue operation past Nov. 25. Peak season is one of highest cost of operations time of the year. I have to double the number of trucks, hire drivers. I will not do so if things don’t change,” he said.
FedEx responded saying:
“We recognize that current economic conditions are posing new challenges,” FedEx Ground said. “We remain committed to working with service provider businesses individually to address the challenges specific to their situation. Our goal is to enable success for both FedEx Ground and service providers,” the statement said.
As CNN Business reported, FedEx Ground replied with multiple contractor statements saying they feel they are doing alright financially but still had concerns about what would happen if a "significant" number of contractors halted operations citing financial concerns.