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Thomas Black

FedEx Can Do More to Subdue a Contractor Revolt

The company should make conditions more efficient for the thousands of independent partners that deliver packages.

E-commerce has ratcheted up the pressure on Ground contractors.

E-commerce has ratcheted up the pressure on Ground contractors.

Photographer: Christopher Dilts/Bloomberg

Many recipients of packages from FedEx Corp. probably don’t realize that the driver with the FedEx uniform in the truck with FedEx’s logo on the side may not actually work for FedEx but for a small independent company. (Note: The key is to look for the small company’s logo, usually at the bottom of the driver-side door.)

This often-overlooked detail is the crux of a burgeoning feud between FedEx and the thousands of contractors that deliver packages for its Ground unit. As with most fights in business, this one is over money. But it also shines a spotlight on inefficiencies at FedEx Ground that have exacerbated the problem. The financial dispute is also part of industry-wide upheaval that has transformed parcel delivery from a sector that served businesses five days a week to one that’s now dominated by residential e-commerce consumers who expect fast free delivery.