Leader of FedEx Ground contractor alliance slams CEO’s ‘tone-deaf’ response

Dive Brief:

  • A FedEx Ground contractor leading a group charge for higher per-stop pay by Black Friday called President and CEO John Smith’s stern response to the alliance “tone-deaf,” as tension continues to brew between corporate leadership and independent delivery providers.
  • “I know what decision I will be financially forced to make for my own business on November 25th of 2022, but every contractor is going to have to make their own individual decision about what is best for his or her own business,” Patton Logistics President and founder Spencer Patton said in a video message Wednesday after Smith warned contractors against group negotiations. Patton did not elaborate further on what that decision would be.
  • Patton also announced the launch of the Trade Association for Logistics Professionals, a non-profit organization that will initially focus on electing a 10-person committee of contractors to represent thousands of service providers. The group’s purpose is to voice concerns, petition for change and, if necessary, “participate in legal challenges against FedEx Ground,” Patton said.

Dive Insight:

Patton and contractors aligned with him are banding together due to inflated wages, fuel costs and vehicle expenses they say are eating away at their profit margins. Patton argues that the negotiating balance between FedEx Ground and its contractors has swung too far in the company’s favor, forcing contractors to bear the brunt of inflationary pressures.

“I have personally requested multiple contractual renegotiations for my own businesses with FedEx Ground, all of which have been denied,” Patton said. “For many other contractors just like me, their stories of rejected renegotiation requests are the same.”

FedEx Ground is an operating company within FedEx making day-definite deliveries with more than 6,000 contracted service providers. These providers, which FedEx said earned an average revenue of $2.3 million last year, use their own fleets and employees to complete deliveries or provide linehaul services for Ground.

“We have a long history of maintaining open lines of communication directly with individual service provider businesses and their owners and not through the media,” FedEx said in an emailed statement Wednesday. “We remain committed to engaging in a productive dialogue with each business to understand and address any challenges they may be facing.”

Contractors will soon have what Patton has called “a unified voice” to push for higher per-stop pay, despite Smith’s warning that a group effort to negotiate financial terms is a breach of contract. The Trade Association for Logistics Professionals will hold nominations for its 10-person leadership committee from Aug. 10 to Sept. 9., with voting taking place from Sept. 12 to Sept. 18.

Beyond securing agreements that counteract inflationary pressures, the association could also call for reclassifying contractors as franchisees via legal challenges and petitioning government officials and regulators, Patton said in an email.

Reclassifying contractors as franchisees would guarantee higher state-level protection, detailed disclosures from the company about the franchise network and a better ability “to organize, gather, and share information with one another,” Patton said.

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