It charges that Patton is seeking to get FedEx Ground contractors riled up as part of “a promotional campaign for the consultancy, brokerage and other services” that a separate business he runs, Route Consultant, provides to other contractors.Īnd the suit also said that while Patton “claimed to be speaking only ‘on behalf of individual businesses,’ he plainly was attempting to influence a group walk-out or boycott” starting on Black Friday.” On Friday, FedEx filed a federal lawsuit against Patton’s company seeking a court order to stop him talking about a possible shutdown, and asking for unspecified monetary damages. “We have confidence in our contingency planning and ability to deliver for our customers during this time as we weather economic changes.” “We are committed to providing outstanding service to shippers and recipients, and we believe the vast majority of service providers are as well,” said the company’s statement. Many if not most of those contracts were due to be renegotiated under terms of the prior agreements.įedEx Ground also would not comment directly about the threat of some contractors shutting down just before the holiday shopping season. FedEx did not comment on what percent of contractors have had the terms of their contracts improved, although it said more than 1,600 contractors are operating under newly negotiated or renegotiated agreements. Patton said almost none of the contractors who have sought better terms from FedEx Ground have been granted them. Our goal is to enable success for both FedEx Ground and service providers.” “We remain committed to working with service provider businesses individually to address the challenges specific to their situation. “We recognize that current economic conditions are posing new challenges,” FedEx Ground said in a statement. It said that since January, only 10% of contractors had sought relief. Meanwhile, FedEx reported that revenue at its FedEx Ground unit increased $2.7 billion, or 9%, to $33.2 billion in the fiscal year ending in May compared to the previous fiscal year, although its operating profit fell 17% to $2.6 billion.įedEx Ground is refusing to offer the kind of across-the-board financial relief to its contractors that Patton and others are seeking. Now he said he’s losing 5% to 10% on that basis. He said historically he had about a 10% profit margin excluding interest, taxes, depreciation and amortization. He started making his own deliveries on a single route before growing the business. ![]() Patton has been a contractor for 10 years. “We are actually competing against FedEx for drivers.” But wage pressures remains boiling hot,” Patton said. “Fuel prices have come down off a boil, and that undoubtedly has been a benefit. Although the average price of diesel is down 14% from the record high hit in June, it is still up 52% compared to a year ago, according to AAA. He said the wages he needs to pay to keep drivers are up 37% in the last year, while truck prices are up 30%. His trucks delivered about 6.5 million FedEx packages last year. His suburban Nashville-based company, Patton Logistics, has 275 trucks serving hundreds of FedEx Ground routes spread across 10 states in the central US. I will not do so if things don’t change.” I have to double the number of trucks, hire drivers. Peak season is one of highest cost of operations time of the year. ![]() “And my business will not be able to continue operation past Nov. “My business is losing money every day,” said Spencer Patton, one of the largest contractors and the most vocal critic of FedEx Ground’s relationship with its partner network. Such coordinated action would be considered a violation of antitrust law that prevents separate companies from working in concert with one another.īut talk of a pre-Black Friday shutdown is spreading among the contractors who are most vocal about the need for change. The contractors are not allowed to coordinate a shutdown, the way employees can go on strike under US labor law. Many of the contractors are in the process of forming a trade group to pressure FedEx to improve the terms of the compensation packages they receive. Higher costs for fuel, trucks and driver pay have as many as 30% of those contractors losing money, according to an estimate from Deutsche Bank. Luke Sharrett/Bloomberg/Getty ImagesįedEx is trimming Sunday delivery to US rural homes Ground semi truck drives through Louisville, Kentucky, U.S., on Tuesday, March 9, 2021.
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