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DALLAS: FedEx Corp is facing more pressure to raise pay for the small businesses that deliver a big portion of its packages, adding another hurdle to the logistic giant’s plans to boost profitability.
Spencer Patton, who runs more than 200 routes in 10 states for FedEx Ground, launched the latest challenge by distributing a letter to fellow logistics firms and posting a video online that asks for payments to increase by 50 US cents (RM2.23) per stop and 20 US cents (89 sen) per 1.6km when shuttling packages between hubs.
“The FedEx Ground network is in far more peril than what anyone realises,” Patton said in a video viewed by Bloomberg.
“There is not a day that goes by that I do not hear from my fellow contractors that are seeking a financial path out of certain bankruptcy.”
An increasing number of contractors are failing, especially after federal pandemic relief dried up. The extra payments would help contractors survive a spike in driver wages and prices for petrol and trucks, according to Patton, who also runs a consultancy for delivery companies and has helped recruit firms into the FedEx network.,
In his letter, he asks FedEx to negotiate an increase in compensation by Nov 25, which falls on Black Friday, the start of the US holiday-shopping season.
A separate group of contractors organised two petitions earlier this year, decrying dwindling profits, faulty software for predicting package volume and inefficiencies at FedEx’s package sorting hubs that delay drivers.
The contractors earned average revenue of US$2.3mil (RM10.2mil) last year and more than half have provided service for five years or more, helping the Ground unit navigate the rapid growth of e-commerce, FedEx said in an emailed statement.
FedEx said it’s more effective dealing directly with each contractor, whose businesses have unique characteristics depending on their service area.
“We recognise 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,” FedEx said in the statement. — Bloomberg