Inflation and the rising cost of fuel and labor have forced the 6,000 independent small businesses that deliver FedEx packages on the ground to demand more compensation.
The multi-national conglomerate has refused to accede to their demands. The impasse could cripple operations.
“When it absolutely, positively has to be there overnight,” crowed the old advertisement. That promise could soon be broken.
“The FedEx Ground network is in far more peril than what anyone realizes,” said Spencer Patton, president of Route Consultant and owner of one of the largest fleets in FedEx’s network.
“If Wall Street analysts, if FedEx corporate, and FedEx Ground understood the degree to which the network is in danger, there would be widespread panic,’ said the beleaguered business owner.
Until recently, Patton was operating 275 trucks across 10 states on behalf of FedEx.
“FedEx Ground has no network without contractors. And we have no network without FedEx Ground. So we are inextricably linked here together in our mutual destiny,” Patton told Insider.
At the start of the crisis earlier this year, Patton wrote a letter to FedEx Corporate which was also signed by hundreds of other contractors for Ground.
FedEx CEO John Smith evaluated the claims of the letter against their contractual standard of fuel compensation and essentially told the contractors to pound sand.
“We recognize the shifting market dynamics and current economic conditions may pose new challenges for service provider businesses, and we remain committed to working with these businesses to create opportunities for continued success,” said a FedEx spokesperson in a statement. Right, challenges and opportunities. That’s corporate speak for “we’re not going to help you.”
Patton was looking to adjust his contract with FedEx, to the tune of 50 cents per delivery. He also sought a 20-cent increase for long-haul trucking contractors leading up to the holiday shipping season.
Patton’s choice to stir the pot publicly rubbed FedEx Corporate the wrong way. They severed their ties with him and initiated a lawsuit. Their complaint alleges that he has been making FedEx look bad through false, misleading statements about its commercial operations “for financial gain.”
Amidst concerns about the company’s reputation with shippers, they also claim that the rising conflict is costing the company big bucks for damage control. Evidently, the increased cost of doing business is a problem when Corporate has to endure them. One wonders whether the irony was recognized. Or the blatant hypocrisy.
(Video: Fox Business)
The complaint was filed in the U.S. District Court for the Middle District of Tennessee. According to Patton, FedEx moved “to cancel our contracts” which was “a clear case of silencing anyone with a voice.” He has not publicly discussed the merits of the lawsuit, but he has publicly aired the termination of his relationship with FedEx.
Nobody wants to pay more for anything, and so no company wants to increase prices. But FedEx corporate is apparently willing to die on that hill. They have no ability to deliver packages without their network of independent contractors, yet they seem ready to tell their ground delivery companies that they are willing for them to go bankrupt.
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