FedEx Ground is pushing back against efforts by its delivery contractors to collectively negotiate after a prominent contractor announced an alliance last week pushing for higher per-stop pay.
In a memo to contractors Wednesday and viewed by Supply Chain Dive, Ground President and CEO John Smith warned that any effort to negotiate financial terms as a group is a breach of contract.
"FedEx Ground will not discuss, negotiate, or renegotiate service provider agreements or financial terms with a committee or any individual purporting to represent a collective body of service provider businesses," Smith said. "The service provider model was built around the recognition that each business has unique and distinct characteristics and entrepreneurial goals, and therefore each agreement is – and will, without exception, continue to be – negotiated individually."
Spencer Patton, founder and president of Ground contractor Patton Logistics, said last week that a 10-person committee of individual contractors would be formed to act as "a unified voice" for thousands of service providers. The committee will first focus on negotiating pay increases for both pickup and delivery contractors and linehaul contractors by Black Friday on Nov. 25.
In a letter to FedEx executives, Patton said the pay increases are needed to improve service levels and to counter inflationary pressures that are pressuring contractors' profit margins.
Smith acknowledged in the memo that Ground is facing current market challenges and cost pressures, but said Patton's letter contained "several inaccuracies” around service levels and the impact of Sunday operations on the company’s bottom line.
Patton had said that service levels have declined and that Sunday deliveries had cost Ground "upwards of $500 million in earnings drag.” Smith countered that service levels have “improved significantly since January” and that a decision to suspend Sunday home deliveries came after a “thorough analysis” on the service’s efficiency and market demand.
Patton said in an email that a response to Smith's letter would be made Thursday or Friday. FedEx did not immediately respond to a request for comment on the matter.
