A FedEx Ground driver contractor spearheading an effort to convince the FedEx unit that many of its 6,000 contractors are in dire need of financial help has backed off a request that the unit boost per-stop and line-haul rates for its contractors.
Spencer Patton, who runs a 10-state territory that delivers packages for FedEx Ground, said through a spokesman that he doesn’t want to focus on one-size-fits-all numbers because he wants to be sensitive to every contractor’s unique financial situation.
To reinforce the point, Patton said the Trade Association for Logistics Professionals (TALP), created recently to work on behalf of all logistics contractors including those working for FedEx Ground, said it is “currently advocating on behalf of FedEx Ground contractors for re-negotiations in individual markets.”
In a letparcter written to top FedEx (NYSE: FDX) executives last month, Patton called for a 50-cent-per-stop pay increase on all FedEx Ground and e-commerce stops. Patton also called for line-haul pay to increase by 20 cents a mile on all solo and team runs between hubs. Spot runs would receive a 10% increase in compensation.
Patton has invited FedEx Ground CEO John Smith to speak at an annual conference of FedEx Ground contractors in Las Vegas on Saturday and Sunday. As of last week, the request was still under consideration.
FedEx Ground said it is willing to discuss contract renegotiations with its contractors but only on an individual basis. The unit has said it will not discuss or negotiate any contractual changes with third parties representing a contractor or a group of contractors. Contracts between the unit and its contractors typically run 12 to 18 months.
FedEx Ground also said it is aware of the financial hardships experienced by some of its contractors. Within the past year, contractors have been hit by rapidly rising costs for fuel, labor, equipment and insurance, among other expenses. At the same time, e-commerce demand has leveled off from the frenetic pace of the past two years. This has left contractors with the burden of high fixed costs and less-than-expected volumes to offset them.
Patton has said that a sizable number of contractors are in such financial difficulty that they may not last the year without financial support from the unit. There is no way to precisely quantify how many contractors face such trying conditions.
FedEx Ground provided across-the-board financial help to its contractors in the earlier days of the pandemic when volumes suddenly and violently spiked. Patton said that contractors face cost burdens today that far exceed the challenges of two-plus years ago.
Within the past week, activity group D.E. Shaw & Co., which won two seats on the parent’s board, sent out a memo to about 200 contractors seeking information about the FedEx Ground model. In the memo, Shaw said the request for information was just part of a fact-finding effort.
In addition, FedEx Ground issued a series of internal “talking points” designed to respond to queries about the situation with its contractors. Much in the unit’s memo affirmed what has already been discussed publicly and reported.
The unit did disclose that it was planning to launch a program that it said would incent contractors to operate safely. Under the program, contractors that experience a higher frequency of accidents as a percentage of their revenue will pay amounts based on that percentage to cover part of the unit’s financial liability.
By contrast, those contractors with an “excellent safety performance” will either pay nothing or receive financial reimbursement from FedEx Ground, the unit said.