• ITVI.USA
    13,820.510
    57.700
    0.4%
  • OTRI.USA
    22.320
    0.700
    3.2%
  • OTVI.USA
    13,799.390
    60.030
    0.4%
  • TLT.USA
    2.640
    -0.010
    -0.4%
  • TSTOPVRPM.ATLPHL
    2.480
    0.060
    2.5%
  • TSTOPVRPM.CHIATL
    2.190
    0.050
    2.3%
  • TSTOPVRPM.DALLAX
    1.400
    0.180
    14.8%
  • TSTOPVRPM.LAXDAL
    2.730
    0.160
    6.2%
  • TSTOPVRPM.PHLCHI
    1.440
    0.040
    2.9%
  • TSTOPVRPM.LAXSEA
    2.870
    -0.010
    -0.3%
  • WAIT.USA
    108.000
    5.000
    4.9%
  • ITVI.USA
    13,820.510
    57.700
    0.4%
  • OTRI.USA
    22.320
    0.700
    3.2%
  • OTVI.USA
    13,799.390
    60.030
    0.4%
  • TLT.USA
    2.640
    -0.010
    -0.4%
  • TSTOPVRPM.ATLPHL
    2.480
    0.060
    2.5%
  • TSTOPVRPM.CHIATL
    2.190
    0.050
    2.3%
  • TSTOPVRPM.DALLAX
    1.400
    0.180
    14.8%
  • TSTOPVRPM.LAXDAL
    2.730
    0.160
    6.2%
  • TSTOPVRPM.PHLCHI
    1.440
    0.040
    2.9%
  • TSTOPVRPM.LAXSEA
    2.870
    -0.010
    -0.3%
  • WAIT.USA
    108.000
    5.000
    4.9%
Less than TruckloadNews

FedEx’s LTL unit imposes `California compliance’ surcharge

$7 per-shipment charge levied on all of the unit’s shipments moving to, from and within the state

FedEx Freight, the less-than-truckload (LTL) unit of FedEx Corp. (NYSE:FDX), has imposed a $7 per-shipment surcharge on all shipments moving to, from and within California, the parent company said.

The new assessment, dubbed a “California Compliance Surcharge,” took effect Jan. 20. It is part of a slew of pricing adjustments at FedEx which went into force on that date. The company, which posted all of the new charges on its website, did not elaborate on the California surcharge other than to say it will be tacked on to “all other lawful charges” and will be collected from the payor of the charges. The company did not respond to a request for comment.

Transport companies serving California have been bracing for higher operating costs ever since Gov. Gavin Newsom signed the landmark AB5 bill into law last year. The law, which was scheduled to take effect Jan. 1 but has been stayed by the courts, makes it harder for companies to prove that workers are functioning as independent contractors and not as employees.

Transport companies which have long relied heavily on the independent contractor model because it is less costly than adding workers to the payroll are lobbying for an exemption from the law on grounds that state actions impacting transportation are preempted by the 1994 Federal Aviation Administration Authorization Act. The federal law overrides any state’s legislation that governs a carrier’s rates, routes and services. Opponents of the industry’s efforts to pre-empt AB5, notably organized labor, maintain the law covers employment issues and has no effect on a provider’s rates, routes and services.

FedEx Freight’s parent has long experience dealing with the employee classification issue in California. Its FedEx Ground unit, which has always used contractors to haul packages, in 2016 paid about $240 million to settle class-action suits in 20 states, including California, alleging the unit had control over the drivers’ workday yet classified them as independent owner-operators. The unit has since shifted to using an intermediary that employs and manages drivers who move its goods.

Besides the California surcharge, FedEx Freight has changed the weight and dimensional thresholds under which so-called minimum charges would apply. Before Monday, minimum charges applied to shipments exceeding 20,000 pounds or utilizing a linear length of 20 feet inside a trailer. That threshold has been narrowed to 15,000 pounds or utilizing a linear length of 15 feet, the company said.

The measure will likely subject more LTL shippers to minimum charges, which carriers have long used to gain pricing leverage because they typically supersede any discounted rates that have been negotiated under contract. For example, if a minimum charge on a parcel shipment is $8, and a shipper has a 25% discount on a parcel whose list price is $10, the higher minimum charge would take precedence over the discounted rate. The purpose of minimums is often contractually discounted rates less valuable to the shipper.

Most of the changes that took effect Monday are aimed at compensating FedEx for handling heavier and bulky shipments, which can be costly to process and handle, and, in the case of bulkier shipments, may generate less revenue for the carrier because they can occupy a disproportionate space inside a trailer. Perhaps the most significant change calls for “additional handling” surcharges to be imposed on all FedEx Express and FedEx Ground deliveries of shipments weighing more than 50 pounds. Before, the surcharge applied to shipments weighing 70 pounds or more.

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Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.

9 Comments

  1. Quote:

    “Transport companies which have long relied heavily on the independent contractor model because it is less costly than adding workers to the payroll ”

    They’re using the FAAAA to preempt them from paying YOU your fair share !

    AB5 IS A WAKE UP CALL FOR US TO “GEL” !!!

    UNITE !

    Gel – “Collective Soul”

    LISTEN TO IT !

    Uh huh ,Uh huh ,Uh huh , LET’S GEL ! AB5 wants to shake us up ! WAKE UP & GEL !

    1. Here’s a reminder !

      The Logical Song -SUPERTRAMP

      LISTEN TO IT !

      Wake up your mind and release it from the “mould” it has deceptively been entrapped in & UNITE ! Now that would be true FREEDOM ! Stop following the status quo , LEAD !

      Come together and create a better tomorrow for yourselves and the next generations to come !

      SOLIDARITY IS KEY ! It’s the best way !

      In my opinion ………….

  2. Biden gets another national union endorsement as 2020 Democrats fight for labor support

    Silly UNION ! Biden wants to increase capital gain taxes !!!!

    Quote:

    “The most important of these, widely discussed by many Democrats in recent years, is ending the tax code’s practice of taxing capital gains and dividend income at a lower rate than ordinary labor income.”

    And , quote:

    Biden also wants to raise the corporate income tax rate from its current 21 percent to 28 percent !

    That’s like shooting yourselves in the foot !

    You want leverage to bargain with . If corporations pay less tax it means they have more to offer YOU . Increasing capital gain taxes also harms the lower classes if they invest and generate a return ! Don’t endorse him , nor Warren , nor Sanders !

    However , what Biden isn’t mentioning is that the smart money will pay taxes here but then transfer funds in tax havens . Then multiply those funds without paying a penny on those capital gains generated over there , over here !

    Biden is full of hot air ! He’s gonna hurt the lower classes with his snake oil talk about taxing the wealthy !

    In fact , the Democrat that should be picked is among the least favourite ! Pick that Asian fellow , perhaps he can patch things up with China , LOL !

  3. January 23 2020
    Prime takes wait-and-see approach to California’s AB5

    It’s another interesting article on the subject . O/O’s certainly have a funny mentality . They say that AB5 went to far in “outlawing” independent contractors , LOL !

    If you ride on another’s coattail you aren’t “independent” no matter how hard you attempt to argue that you are ! You are dependant through the illusion that you’re dependant just because you own a truck and sign a contract that suggests that you are . Come on , LOL ! But it’s ok , it’s just funny !

    Independent :
    -free from outside control; not depending on another’s authority.
    -not depending on another for livelihood or subsistence.

    If you’re a “lease on” op , then you’re “dependent” ! But that’s ok , let’s just make it clear and not attempt to BS nor COvince one another ! It is what it is , period ! If it walks like a duck , quacks like a duck , then it’s a freaking DUCK ! But what you’re saying is that you’re not a duck , you’re a water bird , LOL ! I agree , you act like a LOON but you’re a DUCK cause you walk and quack like one by rendering yourself dependant !

    I certainly don’t mind as long as you’re uncompetitive with properly classified labourers . But that’s not the case , right ?

    Independent contractors are uncontrolled . However , as I’ve stated in prior comments of mine , if truck drivers agree to create an Alliance and become the “carrier(s)” , then we shall offer you to remain classified through your so called illusion of independence and allow you to haul for us by riding our coattail for less than if you were a collective partner in the Alliance . So you would be our “employee” through the guise of your independent lease on O/O belief . Fair enough ? You’ll be our underling because that’s what you stubbornly desire to be for less compensation .

    No problem ! I am not one to force wealth upon another , LOL ! We shall collectively abide by your underling wishes .

    In my opinion ……………..

    1. Im leased on with a carrier, book my own loads, yes usually off our liad board because coustomer frieght pays better, but can use any broker if wanted, but the cost of my own authority, insurance, etc makes it more profitable to be leased than under my own name, only thing they require is i have 2 dot inspections a year., so by your thinking im not independent, id say i am but also financially better off long term, btw i have my own authority i shelved due to cost.

      1. Correct , we agree to disagree . The reason for which you are leased on to the carrier is due to it decreasing your costs of which lead to an increase in “profitability” . This “carrier/middleman” makes a profit off of you due to you being leased on to them , and they have requirements .

        Now just for argument sake , let’s look at why some truck drivers prefer being misclassified as independent contractors when they are dependant and in an employee/employer relationship .

        Their costs(taxes & expenses) decrease , and their earnings/profitability increases . That’s in “normal” cases due to cheating out the government through the misclassification loophole . They are controlled by “employer requirements” , however , they drive the employers truck .

        Now in your case , I’m not going to argue , I agree that if truck drivers were united and created an Alliance and became the “carrier” , they should allow you to lease on to their coattail and allow you to make less than if you were an equal partner/member in a bigger entity .

        That being said , I firmly believe that if you independently went out to find your own client(s) and cut out the middleman while managing/structuring your business differently , that you could be a lot more profitable than you currently are by being “fully independent” than a leased on “O/O .

        In conclusion : The difference between you and I is that we think differently . The way that YOU are currently structured and managing your business renders you more profitable to be leased on to a carrier than not .This renders you dependant on the carrier . I understand why you prefer it this way .

        Again to clarify , I will not argue with O/O’s . I will not attempt to force power nor capital gains upon another . You are free to dupe yourselves . I am not the law . If you’re happy then fine .

        I am not the government , I am not oppressive . I believe that each person should be free to do as they please as long as it doesn’t harm another nor take advantage of another , nor unfairly compete with another through persuasion shenanigans or due to loopholes . I simply have different beliefs .

        If you are happy with making a dollar an hour , it should not force another to accept nor render them uncompetitive due to not wanting to work for a dollar per hour as you agree to do . Nor should you obtain an unfair competitive advantage by being misclassified .

        Do you understand ? If you understand , then you understand why there’s a problem with the way you are currently set up and leased on to a carrier . It’s not normal that an O/O be more profitable by leasing on to a carrier than fully independent . That carrier obviously has an unfair advantage by having you leased on to them , otherwise you wouldn’t be leased on with them nor would they want you leased on to them . You’re misclassified through a loophole rendering your comrades uncompetitive with you and you’re carrier can offer you perks due to their unfair advantage by having people like you misclassified .

        In my humble opinion ……………….

  4. Bmburds

    Now that I’m done with my rant , allow me to ask you a simple but long question,

    If you could haul the sort of freight that you desire , on a route that you desire , earning a higher rate , while insurance coverage costing you less , fuel costing you less , plates , costing you less , authority costing you less , maintenance on the truck costing you less , The truck and trailer(s) costing you less, lobbying for your business desires costing you less, legal counsel for legal defense if need be costing you less, accountant and book keeping costing you less etc. costing you less, as a legal fully independent business owner , would you still prefer to lease on to a carrier , or be fully independent ?

    It’s a simple question , just a long one . You don’t need to answer the question here if you don’t desire to . You can simply answer it in your head .

    In my humble opinion …………

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