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Sky isn’t falling at FedEx Ground, contractors say

Self-help, not company payouts, should get contractors through slog

FedEx Ground Economy service faces headwinds. (Photo: Jim Allen/FreightWaves)

On Saturday afternoon, Spencer Patton, the leader of an effort to improve the lot of contractors that pick up and deliver packages for FedEx Corp.’s (NYSE: FDX) ground-delivery unit, will speak before a gathering of about 3,000 contractors in Las Vegas. Patton, who has warned of major stresses on the FedEx Ground contractor network that will require the company to make major changes in order to resolve, is expected to talk for more than an hour. 

Satagur Athwal won’t be there to hear it. The contractor, who goes by the surname of “Singh,” will likely spend the weekend overseeing his California-based territory, which encompasses Riverside, Ontario, Mira Loma and Rancho Cucamonga. Athwal, who has operated as a FedEx Ground contractor since 2005, is preparing to add nine trucks and six to seven delivery routes as part of an expansion of his franchise. He operates between 60 and 65 trucks over about 60 routes.

Troy Fulsom won’t be attending either. The Fresno, California-based contractor covers the city of Fresno and fast-growing adjacent towns of Bryant and Madera. He operates 24 trucks with 25 drivers, four of whom are assistant managers of sorts. Fulsom said his volumes are strong, though nothing like they were in the pandemic year of 2020. As traffic slowed the following year, Folsom said he reset his expectations, adjusting his operations to align with changes in demand. Fulsom’s business is still growing and profitable, and he is sold on the contractor model. 

“There is no way I could have this lifestyle if it weren’t for FedEx Ground,” said Fulsom, who began as a contractor in September 2009. He chose to pass on this weekend’s event because the “undertones of the whole movement didn’t sit right with me when I have been so fortunate [as a contractor],” said Fulsom. He added, however, that he doesn’t fault Patton or others who share his alarmist view of the relationship between FedEx Ground and its contractors.


Rockie York, a Peoria, Illinois-based contractor who runs 36 trucks along 22 to 24 routes in the state, has a history with Patton. York became certified under a program established by Patton to train York’s drivers. York agrees with some of the points that Patton has raised. However, he strongly disagrees with the way Patton is going about it.

York said he’s particularly concerned about the possible formation of a 10-person committee to represent FedEx contractor interests. “I don’t want any third party getting between myself and my ability to discuss matters with the company,” said York, who has been a contractor since 2003.

He added that it is impossible for 10 contractors to speak for 6,000 independent businesses, each of whom has unique situations and characteristics. A better approach is for contractors take their concerns directly to the local terminal manager, and then escalate the matter if they don’t get satisfaction, he said.

York also took issue with Patton positioning himself as the leader of the crusade. While acknowledging that Patton is one of the largest contractors in the network, York wondered “how many people asked him to do this? I didn’t ask him.”


Staying put

The three contractors interviewed said they are aware of media reports suggesting that thousands of contractors are in such dire financial shape they may not last the year without monetary support from the unit. They are also mindful of the burdens imposed on contractors by the sharply and rapidly escalating costs of just about everything. They also know some contractors are suffering and will throw in the towel, a phenomenon that occurs at FedEx Ground even during the best of times.

But none of the three said they are going anywhere. The model has proven itself over 25 years and during lean times, they pointed out. Everyone made a lot of money when e-commerce delivery volumes went through the roof during the pandemic. At the same time, fuel and equipment costs were low.

Part of the current problem, they contend, is some contractors failed to adjust to the reality that the boom times for parcel delivery in 2020 would extend into perpetuity. 

The contractor model is as resilient today as it always has been, according to York. However, macroeconomic conditions have made things difficult, he said. “My business has struggled, and I’ve had to make adjustments,” said York, who renegotiated his contract a couple of months ago to account for an economic climate that had quickly become unfavorable.

Today’s pain will eventually pass, and contractors will regain some operating breathing room, Athwal said. Noting his recent expansion efforts, he said “if I didn’t believe in the business, I wouldn’t be doing this.”

“I haven’t agreed with everything FedEx Ground has done,” said York. “But I wouldn’t be contracting with them, and invested hundreds of thousands of dollars into this business, if I didn’t believe the company was making good decisions.”

Several years ago when Amazon.com Inc. (NASDAQ: AMZN) was building its delivery network, Athwal was asked by a somewhat panicked colleague if he would switch to Amazon, whose driver contractor model is similar to that of FedEx Ground’s.

“The thought never entered my mind,” Anthwal said. “We had been doing this for more than 20 years. We weren’t just starting out.” 


The three men chose to talk to FreightWaves in part because they were concerned that the negative media coverage would impact the value of their franchises, which can be bought and sold in a niche aftermarket. Ironically, Patton, a contractor with a 10-state territory out of Nashville, Tennessee, is also a franchise broker whose ability to maximize revenue and profit on transactions could be impaired by adverse publicity largely stemming from his efforts.

“The problem is that (Patton) is under the misconception that” the situation is worse than it actually is, said York. The FedEx Ground model is “self-correcting,” York said. If contractors leave, service will suffer, and the unit will subsequently make it financially desirable for new contractors to step into the breach, he said.

Look in the mirror

None of the contractors support a proposal advanced by Patton–he has since backed away from it–that FedEx Ground should increase contractor pay on a per-stop and line-haul basis to help offset rising costs. Instead, contractors need to steel themselves for the realities of running a business and focus on how to operate more cost effectively, they said.

“You have to look in the mirror and ask yourself how and what you can do differently,” Fulsom said.

Athwal said across-the-board pay increases runs the risk of creating a moral hazard. “If the company increases the pay today, what stops people from going back tomorrow and asking for more?” he said. “Where’s the end?” 

Athwal added that FedEx Ground provides contractors with annual peak season pay bumps to help offset the added costs of labor and equipment during the busiest period of the year.

Just as one could find any number of contractors in financial distress, it could be equally easy to encounter contractors like Athwal, Fulsom and York who acknowledge the macro environment is hardly optimal but are doing well enough to keep at it.

At any given time in FedEx Ground’s quarter century in business, it is believed around 10% of contractors are dissatisfied with the status quo. Patton has heard talk that the percentage of imperiled contractors could be as high as 35%.

One option for contractors is to renegotiate their contracts, which generally run for 12 months, though some extend up to 18 months. According to FedEx Ground, since January about 10% of all agreements have been submitted for consideration to be renegotiated. It did not provide details on how many of those contracts were actually renegotiated.

Patton said that FedEx Ground rebuffed his repeated requests to have his contracts renegotiated. Like York, Fulsom was able to renegotiate his contract. He said his new deal, which went into effect July 16, provides Fulsom with additional buffers to offset his rising costs.

While FedEx Ground said it is willing to renegotiate with individual contractors, it will not discuss or bargain with third parties representing a contractor or group of contractors and has acknowledged the cost pressures they face. At the same time, the company noted contractors, on average, have doubled their annual revenue to $2.3 million over the past four years.

57 Comments

  1. Maxwell Scott

    Before entering negotiations FXG now conducts a Financial Health Assessment through a 3rd party.
    If we really want to know the state of the network and the effects of current pay structure FXG should share current results and historical.
    I am fairly certain that the economic health of most contractors has weakened.

  2. Legitimate FedEx owner

    3 franchise’s. 😂 this is a shame. Totally unrealistic statements, this reporter missed an opportunity to talk with many 1000,s of long time owners, that have been propping up FedEx with our on personal finances to avoid collapse.

    1. R Y

      Once again the three contractors on here recognized the current struggles of contractors including their own. Mr Pattons own data is showing between 10- 35% are headed toward financial ruin. That’s 65%or more are making it through these tough times and some are optimistic that things will improve. FEDEX announced some markets are going back to 6 days mine CSA is one of them that already has. Fuel has also dropped by more than .60 per gallon or more in some places.

    2. R Y

      I can assure my statements are real. I can also that the article clearly acknowledges the struggles of today by contractors. Not every comment for every question makes it into an article. I think the direction of the article is to say although times are tough and serious changes have to addressed changing the operating agreement to something that may exclude contractors is not warranted. I barely made it through in 2011 and I would hope that contractors wouldn’t want to give up their ability to speak for their own businesses going forward.

  3. Grace

    I am a FedEx ground contractor. These three contractors aren’t addressing current problems with FedEx Ground. Are they really okay with FedEx adding a thirty percent fuel charge to it’s consumers, and only passing a nominal amount to ground contractors-who are the ones using the fuel?
    I find it interesting that out of 6,000 ground contractors, there are only three providing you with this type of input.

    1. R Y

      This is a perfect example of people reading what the want to read. All three agreed that there are certainly issues and are sympathetic to the contractors that are struggling. Investigate into what TALP is proposing and then do some research. Can you afford to buy into a franchise now ? This is an article about not agreeing with how Mr Patton is trying to change the operating agreement which could leave many contractors out in the cold like 2011. I’m sure many of the big contractors such as him could afford it but most won’t. So it’s possible this will go completely investment contracting instead of working contracting. No contractor in this article is objecting to the need for assistance but simply stating they adapted.

  4. Dale Heinlein

    After 28 years, I called it quits when Fed Ex rolled out the seven day a week. I sure enjoyed it in the earlier years. But became obnoxious to the constant threats from management. It was relentless. You would get called into their office and one of the managers name Nic would look at his computer and type while giving you ass chewing. Management is totally Clueless.
    If nothing else comes out of this but that management begins to work with contractors not threatening contractors it would be a whole new world. It just became sickening. The good senior managers that you could work with we’re removed. FedEx, it was great at one time. You waste so much time spanking contractors rather than going out and getting sales. You’ve become a woke company.

  5. Sherri

    Fed Ex is awful!!!! Tallahassee had it on the truck to be delivered then it’s delivered on the 4th day..if I know it’s being shipped Fed Ex I cancel my shipment..😡

  6. Jeremy

    I have seen and heard nothing that really addresses the problems. By playing the smoke and mirrors game on freight waves doesn’t seem to produce much either.

  7. Matt

    I love it when a dinosaur tells people to pick themselves up by the bootstraps and look in a mirror. None of you’re metrics have sources, you used the word “Franchising” which is not their business model, and you picked three of the largest contractors leaving a heavily skewed sample size. Do better and replace your photo. It’s creepy, open your eyes.

  8. Stephen Webster

    In ont 🇨🇦 a number of contractors are in financial trouble. This a spin by FedEx PR we need to have more driver on payroll by FedEx

Comments are closed.

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.