People hoping to get their holiday shopping delivered on time could be caught in the middle of a growing battle between FedEx and thousands of contractors who deliver most FedEx packages.
Many of the contractors used by the company's FedEx Ground division say they are losing money, even as revenue at that unit soared more than 60% since before the pandemic. As a result, a group of the contractors are threatening to shutter their operations right before Black Friday.
The contractors are not allowed to coordinate a shutdown, the way employees can go on strike under US labor law. Such coordinated action would be considered a violation of antitrust law that prevents separate companies from working in concert with one another. He said the wages he needs to pay to keep drivers are up 37% in the last year, while truck prices are up 30%. 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.
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.FedEx Ground is refusing to offer the kind of across-the-board financial relief to its contractors that Patton and others are seeking. It said since January, only 10% of contractors had sought relief.
FedEx Ground also would not comment directly about the threat of some contractors shutting down just before the holiday shopping season. Some of the contractors who say they are losing money said they have no choice but to try to push through and weather the losses and can't afford to join any shutdown effort.