FedEx Corp has severed its relationship with one their largest Ground delivery contractor effective immediately

Dave Hess

Dave Hess

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FedEx Corp has severed its relationship with one their largest Ground delivery contractors effective immediately.

This FedEx Ground contractor (Spencer Patton) has 225 routes in 10 states and says many Ground contractors throughout the USA are struggling financially and some are close to bankruptcy. He was saying there might be a ‘Purple Friday’ just before peak Christmas shopping season if FedEx didn’t adjust his contract to increase the rates for delivery of parcels and help with increased fuel costs.

www.foxbusiness.com

FedEx cuts ties with ground delivery contractor, files suit

FedEx has cut ties with one of its largest delivery contractors after suing him for spreading misinformation about the company.
www.foxbusiness.com www.foxbusiness.com

You can read Spencer Patton’s letter to FexEx corporate here:

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No Longer Available

www.wcvb.com www.wcvb.com

I understand things have changed over the past 2 years and online shopping has increased exponentially….. but once you enter an agreement you are bound by those conditions until your FedEx Ground contract is up for renewal and the Ground contractor / owner can seek better financial terms.

Seems to me it’s not worth the stress and aggravation to be in this type of business.
 
My ground contractor is a pain in the rear who doesn't adhere to scheduled swaps and has already caused major security issues at our warehouse. That being said we are kind of hampered by it because there is no other contractor to do it that I know of.
 
Fedex's ground business would collapse if they begun to lose their contractors and had nobody to replace them. Pretty sure they're well aware of this. It's a sink or swim environment-- if these contractors cannot perform the service per the contract and somebody else can, Fedex wins and so do consumers that pay lower prices (how it's supposed to work anyway).

If contractors start going under and Fedex cannot retain new contractors to fill the routes, that's when they'll start paying more. Simple free market economics. I don't see how going on national news is helping, except perhaps in his mind it was an easy way to boost profits without doing the work to increase efficiency or tighten belts.
 
92saturnsl2 said:
Fedex's ground business would collapse if they begun to lose their contractors and had nobody to replace them. Pretty sure they're well aware of this. It's a sink or swim environment-- if these contractors cannot perform the service per the contract and somebody else can, Fedex wins and so do consumers that pay lower prices (how it's supposed to work anyway).

If contractors start going under and Fedex cannot retain new contractors to fill the routes, that's when they'll start paying more. Simple free market economics. I don't see how going on national news is helping, except perhaps in his mind it was an easy way to boost profits without doing the work to increase efficiency or tighten belts.
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They are beginning to lose their contractors. Contractor’s costs have exploded. The contractors are losing money.

The letter basically says that.

If you think the consumer will win with contractor failure, and replacement, you’re sadly mistaken.

A replacement contractor set will be more expensive, and inexperienced.

Service problems, delivery issues and higher prices are inevitable.
 
Finklejag said:
Roadway Package Service was terrible before Fedex bought them and made it Fedex Ground.
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I used to work for a ground contractor in the early nineties when overnight-service was in its infancy. I can remember a New Year’s Eve at Newark Airport sorting thru a ton of RPS ground freight on a freezing cold tarmac. Simply put, Fed Ex does not want to “re open” existing contracts with sub contractors. It would open a Pandora’s box that could never be closed. When said contracts expire..that’s when to sell your Fed Ex stock.
 
Astro14 said:
They are beginning to lose their contractors. Contractor’s costs have exploded. The contractors are losing money.

The letter basically says that.

If you think the consumer will win with contractor failure, and replacement, you’re sadly mistaken.

A replacement contractor set will be more expensive, and inexperienced.

Service problems, delivery issues and higher prices are inevitable.
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If that's the case then Fedex will suffer, and it's in their business interest to not let that happen. They're not a fortune 500 company because it's run by a bunch of idiots. And if it is, they will lose customers from poor service and someone there will hopefully get the hint they need to pay contractors more.

I never said the consumer will win by contractors going under. But Fedex seems to think their rates / contracts are appropriate. If not, these contractors are free to work for someone else when the contract is up. If they're short on capital because they didn't anticipate economic headwinds, that stinks, but it's the nature of free market economics. If they fail, someone with better business sense will take their place.

Bellyaching on the national news seemed to do nothing but cause that fella's contract to get terminated.
 
I have a lot of different contracts with OEM Tier 1 suppliers. While this is nowhere in our contract, If the bureau of labor statistics index changes we submit to them that our costs have gone up and while there is always some back and forth, they get it and pay us. They'd also do it to us if the situation was reversed. It is in their best interests to make sure we stay healthy and whole.
 
Yes, Fed Ex has no choice but to play hardball..for now. To “renegotiate” with one means you must do it with all. How would you like to own one of these cartage companies? Equipment falling apart, drivers clamoring for raises, etc. And Fed Ex paying you a “set fee” regardless. What fun!
 
I have only survived forty plus years as an independent subcontractor by being lean, clever, agile and finding niches.

Time and again, stressors have created opportunity.

Simply put, Spencer blew it. Others will surely step in. The demand for the service will remain constant and expanding.
 
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Shipping rates have gone way up. Did they not pass some of this on to the contractors?

Most shipping rates have an additional fuel surcharge. Is this not passed on to the contractor?

If the contractor ran their business poorly or signed a bad contract, then it is on him. When he goes belly up and no one else is either available or will work with Fedex then it will be on them.

Perhaps there is more to the story?
 
As someone who depends on FedEx to do my job, I've seen first hand the struggles.

My parts arrive late. Priority, 10:30 AM shipments don't arrive until 16:30, the same day. (Or maybe 3-4 days later in some cases.)
I get my parts for the day's work via Priority or whatever the service is called. All my returns go back ground as parts going back to the repair vendor do not need to travel as quickly as those for customer service actions.

Ground has been better at returning my parts, but they have lost a part or two in the past quarter and that just creates hassle for me as I have to document that the part has been received by FedEx and they lost it, not that I forgot to ship it etc.

I suspect UPS and USPS have similar struggles. The challenges faced by all of them are very similar. Labor costs, fuel costs, fleet costs are largely the same for all the logistics firms, as well as Amazon.

While I feel for them, I also would like to see the systems return to pre-pandemic levels of performance.
 
SC Maintenance said:
Shipping rates have gone way up. Did they not pass some of this on to the contractors?

Most shipping rates have an additional fuel surcharge. Is this not passed on to the contractor?

If the contractor ran their business poorly or signed a bad contract, then it is on him. When he goes belly up and no one else is either available or will work with Fedex then it will be on them.

Perhaps there is more to the story?
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FedEx corporate does not pass on the fuel surcharge to Ground contractors.

Spencer Patton in his Las Vegas video talking about starting a private ‘fuel card’ program with an oil company to help fellow Ground owners with their fleet of trucks and vans.
”Shifting Gears to Power Your Business“ video @ 48:00

He also talks about a pay as you go tire program with Bridgestone tires to help Ground owners @ 53:00
Says UPS uses same tire with good results.
 
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Direct_Rejection said:
I have only survived forty plus years as an independent subcontractor by being lean, clever, agile and finding niches.

Time and again, stressors have created opportunity.

Simply put, Spencer blew it. Others will surely step in. The demand for the service will remain constant and expanding.
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Always more to the story. I’m sure Patton is loaded. With 225 routes across 10 states he better be. Probably just bored and wants to see if the tail can finally wag the dog. He’s not doing 250 residentials a day, that’s for sure.
 
Aredeeem said:
Always more to the story. I’m sure Patton is loaded. With 225 routes across 10 states he better be. Probably just bored and wants to see if the tail can finally wag the dog. He’s not doing 250 residentials a day, that’s for sure.
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I cannot believe that Patton threatened FedEx with a Holiday slowdown. Does no one see that this was the cause of action on the part of FedEx ?

Contractors and their spokespersons must be nimble, proactive and smart.
 
Fedex really needs to look at their own requirements for contractors. I would love to sign on with a local contractor to pull doubles but they require a truck minimum of 2 years old or newer. The Custom Critical guys were supposed to upgrade trucks every 2 years but I don't know if that's how it is right now. Their logic is that anything older costs too much to maintain. I have spent a fraction to run my older trucks that don't sit in the shop waiting on backordered parts or on the side of the road with emissions problems. Basically some of Fedex's requirements are out of hand with what they expect out of contractors and I think it will be harder and harder to secure new contracts as time goes on. If anyone follows Shelby(Happiness by the Mile) on YouTube I believe she has left Fedex too and her and her drivers are pulling for another company now.

Amazon is getting it right. They couldn't care less what equipment their contractors have as long as the job is getting done and things are delivered on time. There's guys making a fortune pulling for them right now.
 
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