A FedEx Ground driver contractor leading an effort to convince the FedEx unit that many of its 6,000 contractors are in dire need of financial help has rejected a request for the unit to raise per-stop and per-line rates to to their contractors.
Spencer Patton, who manages a 10-state territory that delivers packages for FedEx Ground, said through a spokesman that he doesn’t want to focus on single numbers because he wants to be sensitive to each contractor’s unique financial situation. .
To reinforce the point, Patton said the Trade Association for Logistics Professionals (TALP), recently formed to work on behalf of all logistics contractors, including those working for FedEx Ground, said that “currently is advocating on behalf of FedEx Ground contractors for renegotiations.” in individual markets”.
In a letterparcter written at the top of FedEx (NYSE: FDX) last month, Patton asked for a 50-cent pay increase per stop at all FedEx Ground and e-commerce stops. Patton also called for the transportation line’s payment to increase by 20 cents per mile on all solo and team runs between centers. Spot runs will receive a 10% increase in compensation.
Patton has invited FedEx Ground CEO John Smith to speak at an annual FedEx Ground contractor conference in Las Vegas on Saturday and Sunday. As of last week, the petition 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 contract changes with third parties representing a contractor or group of contractors. Contracts between the unit and its contractors are usually 12 to 18 months in length.
FedEx Ground also said it is aware of the financial difficulties facing some of its contractors. Over 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 stabilized compared to the frantic pace of the past two years. This has left contractors with the burden of high fixed costs and lower-than-expected volumes to compensate.
Patton has said that a considerable number of contractors are in such dire financial straits that they may not make it through the year without the unit’s financial support. There is no way to accurately quantify how many contractors face these difficult conditions.
FedEx Ground provided general financial assistance to its contractors in the early days of the pandemic, when volumes rose suddenly and violently. Patton said contractors today face cost burdens that far exceed the challenges of more than two years ago.
Over the past week, the DE Shaw & Co. activities group, which won two seats on the parent board, sent a memo to about 200 contractors seeking input on the FedEx Ground model. In the memo, Shaw said the request for information was only part of a fact-finding effort.
In addition, FedEx Ground issued a series of internal “talking points” designed to respond to inquiries about the situation with its contractors. Much of the memo from the unit affirmed what has already been publicly discussed and reported.
The unit revealed it planned to launch a program it said would incentivize contractors to operate safely. Under the program, contractors who 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.
Conversely, contractors with “excellent safety performance” will pay nothing or receive financial reimbursement from FedEx Ground, the unit said.