Brentwood-based outsourcing company Route Consultant is the largest FedEx Ground outsourcer in the United States, and its founder and chairman urges the transportation company to provide financial solutions to its 6+ base 000 contracted service providers (CSP).
Route Consultant Founder and President Spencer Patton wrote a letter and posted a video urging FedEx Ground officials to increase compensation for CSPs.
“Written from the office of one of the greatest entrepreneurs in the United States, believe me when I write that the situation is far more serious than the general public currently understands,” Patton writes.
“Not a day goes by that my phone doesn’t ring with the story of another contractor who is financially collapsing under the weight of these dramatic cost changes that were not resolved by FedEx Ground in 2022.”
He also mentioned that he thought FedEx Ground was used to dealing with difficult circumstances.
“As late as 2020,” he writes, “during the COVID-19 pandemic, FedEx Ground offered a 6-month, lump-sum compensation increase to its contractors to overcome the extraordinary conditions of this year.
Patton said that since 2020 the changes for entrepreneurs have been even more monumental, but says no financial adjustments have been made.
In the following video, Patton said that “entrepreneurs in general are suffering to a degree largely invisible to the general public and to some extent FedEx Ground themselves.”
Patton says Route Consultant’s fuel costs have doubled in less than a year, labor costs have skyrocketed, and truck costs, along with the lack of truck availability, have skyrocketed. He adds that the current financial model of the CSP is collapsing.
In the letter, Patton specifically asked FedEx for two things.
He asked for the pickup and delivery network, a wage increase of $0.50 per stop on all FedEx Ground and e-commerce stops, and for the transport network, a wage increase of $0.20. per mile on all solo and team rides and a 10 percent pay increase for one-time rides.
He asked that all negotiations and decisions be made by November 25, 2022.
At the end of the letter, he explained that the CSP base will meet for its annual expo in Las Vegas, Nevada from August 20-21, and will elect a committee of 10 CSPs to speak with a unified voice at FedEx. . Ground.
During a live Q&A session on Wednesday afternoon, Patton spoke more about his responsibility to the small businesses he works with.
“I have a huge personal interest here,” he said. “We are one of the largest contractors in the United States. No one wants to see routes do better than me, but I also serve and work to run these small businesses.
“I want to make sure we’re doing a great job representing them and advocating for them at a time when we can support it from a business and data perspective.”
He then explained that he wanted this message to be seen as an effort to find a common resolution, and not contradictory, and that this be done to move forward.
“I think there’s a lot of incentive to act because there’s no network without their contractors…FedEx Ground’s obligation is first and foremost to its shareholders,” Patton added. . “It’s to make a profit and repay the capital.
“We are the wheels that make this happen, and the vehicle doesn’t roll without the wheels. So we have to find a way to have a win-win dynamic that has defined this business for decades. »
In response to Patton’s claims, FedEx addressed the climate they currently find themselves in and their plan to address some of Patton’s frustrations.
“FedEx Ground’s entrepreneurial business model includes more than 6,000 service provider companies, which averaged $2.3 million in revenue last year,” reads a statement from FedEx Ground. Allie Addoms, fedex Senior External Communications Specialist.
“More than half of these companies have provided service to FedEx Ground for five or more years, growing and scaling their businesses alongside FedEx Ground as we jointly explore the opportunities presented by the rapid growth of e-commerce. We recognize Changing market dynamics and economic conditions can pose new challenges for service businesses, and we remain committed to working with these businesses to create opportunities for continued success.
“As each service provider agreement is negotiated individually based on a number of factors, including the unique characteristics of each company’s geographic service area, we have found that the most effective solutions are identified through a direct engagement with each independent business FedEx Ground teams across the network continue these productive B2B discussions.
To see Patton’s video and letter, click here.