# FedEx's business model **URL:** \ **Category:** In My Humble Opinion\ **Created:** [May 14, 2013, 5:58pm UTC](https://boards.straightdope.com/t/fedexs-business-model/658330 "2013-05-14T17:58:55Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![steronz](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steronz/32/11765_2.png) [@steronz](https://boards.straightdope.com/u/steronz)\ **Post date:** [May 14, 2013, 5:58pm UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/1 "2013-05-14T17:58:55Z")
I don’t think this is pit-worthy, but it’s basically a mild rant. I recently met a guy who I knew was a FedEx driver. As I got to know him, he talked about things like his employees and his trucks. Ends up Fedex doesn’t directly hire very many employees; they have “independent contractors” running the bulk of their routes. The contractors are responsible for purchasing and maintaining their own vehicles, and employing their own drivers. If this was common knowledge, forgive me. I found an article about it [here](http://www.pennlive.com/midstate/index.ssf/2012/08/independent_truck_owners_carry.html). A few of the less savory things I learned: - Contractors have to bid against each other for routes. It’s a cutthroat business. - Like a franchise, FedEx has very specific rules for their vehicles and more importantly, for their drivers. The guy I know can’t hire just anyone to be a driver, they have to have prior commercial driving experience and no screwups on their record. This makes it hard to find employees in what is essentially an entry level driving job. - Because this guy is a small business, he’s not required to offer his full-time employees health insurance. Nor could he if he wanted to, because he’d just get outbid by another contractor who didn’t offer benefits. Since they get paid based on performance and have nearly unlimited expansion potential, a lot of owners like this business model. However, this guy has 2 young kids at home and works 80-100hr weeks because he can’t find employees, and the 2 employees he does have don’t have health insurance. I’ve known some UPS drivers, and they get good pay/benefits/promotion opportunities. Meanwhile, it seems like FedEx is encouraging it’s non-employees to try and gut each other in a race to the bottom. I know nobody is forced to work at FedEx, but still, ugh. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [May 14, 2013, 6:03pm UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/2 "2013-05-14T18:03:54Z")
You’re talking about FedEx Ground (the green ones) which is a completely separate operation from FedEx Express. ---
**Author:** ![Skald\_the\_Rhymer](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Skald\_the\_Rhymer](https://boards.straightdope.com/u/Skald_the_Rhymer)\ **Post date:** [May 14, 2013, 6:06pm UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/3 "2013-05-14T18:06:50Z")
A lot of what you’re talking about just isn’t true, at least not overall. FedEx (for whom I used to work as a sales exec & manager, incidentally) consists of several businesses, not all of which operate under the same rules. The FedEx Express group (i.e., the overnight, air delivery folks) consists almost entirely of FedEx employees; that’s the core of their business, or at least was when I worked there. What you described is how FedEx GROUND works. And even in that case, it’s not all of the workers who are independent contractors: just the drivers. ---
**Author:** ![steronz](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steronz/32/11765_2.png) [@steronz](https://boards.straightdope.com/u/steronz)\ **Post date:** [May 14, 2013, 6:07pm UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/4 "2013-05-14T18:07:12Z")
Yes, you’re correct. The article I linked to is very careful to always say “FedEx Ground,” but to me as a layman, I don’t typically make a distinction. It also specifies, > [@](#): > > FedEx’s premium overnight, on-time and international services are separate companies that employ their own drivers. eta: Thanks for the further clarification, Skald. I didn’t figure the processing center employees were independent contractors. So just to clarify everyone, my rant is just about FedEx’s Ground business model for drivers. ---
**Author:** ![Dallas\_Jones](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dallas_jones/32/3277_2.png) [@Dallas\_Jones](https://boards.straightdope.com/u/Dallas_Jones)\ **Post date:** [May 14, 2013, 6:51pm UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/5 "2013-05-14T18:51:03Z")
> [@steronz](#): > > I’ve known some UPS drivers, and they get good pay/benefits/promotion opportunities. UPS drivers are members of the Teamsters Union or the International Brotherhood of Teamsters. Their benefits are the result of negotiations by one of the strongest unions in the country. ---
**Author:** ![Omar\_Little](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/omar_little/32/269_2.png) [@Omar\_Little](https://boards.straightdope.com/u/Omar_Little)\ **Post date:** [May 14, 2013, 6:53pm UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/6 "2013-05-14T18:53:18Z")
Truck drivers are in pretty decent demand in many places across the country right now. Your friend has many options that a lot of Americans don’t have. He has the perfect opportunity to protest FedEx grounds practices by taking his talents elsewhere. Enough FedEx ground drivers do that and they will be forced to change their practices to attract drivers. ---
**Author:** ![suranyi](https://avatars.discourse-cdn.com/v4/letter/s/e36b37/32.png) [@suranyi](https://boards.straightdope.com/u/suranyi)\ **Post date:** [May 14, 2013, 6:59pm UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/7 "2013-05-14T18:59:13Z")
> [@steronz](#): > > Yes, you’re correct. The article I linked to is very careful to always say “FedEx Ground,” but to me as a layman, I don’t typically make a distinction. It also specifies, > > eta: Thanks for the further clarification, Skald. I didn’t figure the processing center employees were independent contractors. > > So just to clarify everyone, my rant is just about FedEx’s Ground business model for drivers. My brother-in-law is a truck mechanic for FedEx’s “express” services. He definitely is employed by FedEx itself. ---
**Author:** ![Skald\_the\_Rhymer](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Skald\_the\_Rhymer](https://boards.straightdope.com/u/Skald_the_Rhymer)\ **Post date:** [May 14, 2013, 7:08pm UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/8 "2013-05-14T19:08:32Z")
Incidentally, when I was a FedEx field sales person, the several complaints **steronz** had were often problems for me. The fact that the ground & air services were separate and run so differently created headaches for many customers, and that in turn made it hard for me to close some deals, which of course resulted in my having less money for hookers & blow. I blame the Canadians. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [May 14, 2013, 7:55pm UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/9 "2013-05-14T19:55:33Z")
> [@Skald\_the\_Rhymer](#): > > Incidentally, when I was a FedEx field sales person, the several complaints **steronz** had were often problems for me. The fact that the ground & air services were separate and run so differently created headaches for many customers, and that in turn made it hard for me to close some deals, which of course resulted in my having less money for hookers & blow. I blame the Canadians. It does seem like a problem that FedEx will eventually have to address. More shippers want to be able to price-discriminate without having to think about which service to call. ---
**Author:** ![gotpasswords](https://avatars.discourse-cdn.com/v4/letter/g/c57346/32.png) [@gotpasswords](https://boards.straightdope.com/u/gotpasswords)\ **Post date:** [May 15, 2013, 12:11am UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/10 "2013-05-15T00:11:04Z")
Nearly thirty years ago, RPS (Roadway Package System) was a collection of independent contractor drivers. It sounds like they are still that way after being absorbed by FedEx. Apparently, that works OK for them. ---
**Author:** ![DummyGladHands](https://avatars.discourse-cdn.com/v4/letter/d/49beb7/32.png) [@DummyGladHands](https://boards.straightdope.com/u/DummyGladHands)\ **Post date:** [May 15, 2013, 3:27am UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/11 "2013-05-15T03:27:43Z")
Well, I know they completely ruined Kinkos when they acquired it ---
**Author:** ![Sateryn76](https://avatars.discourse-cdn.com/v4/letter/s/a88e4f/32.png) [@Sateryn76](https://boards.straightdope.com/u/Sateryn76)\ **Post date:** [May 15, 2013, 4:25am UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/12 "2013-05-15T04:25:40Z")
Well, I’m glad I read this thread earlier. My son and I were in the back of the house when we heard the screen door open - the inside was open to the house since its so warm. It was a little freaky, since it was 9:30 at night, and we certainly weren’t expecting visitors. It was a Budget rental van, delivering a FedEx ground package for me. The guy didn’t say anything, just dumped the box and drove away. At 9:30 pm. Weird. ---
**Author:** ![AaronX](https://avatars.discourse-cdn.com/v4/letter/a/7bcc69/32.png) [@AaronX](https://boards.straightdope.com/u/AaronX)\ **Post date:** [May 15, 2013, 5:10am UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/13 "2013-05-15T05:10:00Z")
I’ve seen companies get more and more specialized and subcontract smaller and smaller jobs out. Like building management will hire a cleaning company and a security company. I wasn’t sure how to express this, but this looks like what I’m talking about. Oh and apparently car rental companies don’t buy the cars either. They’re on loan from the car companies. > [@friedo](#): > > You’re talking about FedEx Ground (the green ones) which is a completely separate operation from FedEx Express. ATM machine? PIN number? ---
**Author:** ![gotpasswords](https://avatars.discourse-cdn.com/v4/letter/g/c57346/32.png) [@gotpasswords](https://boards.straightdope.com/u/gotpasswords)\ **Post date:** [May 15, 2013, 1:41pm UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/14 "2013-05-15T13:41:42Z")
Eons ago, Federal Express had pretty much just one product - overnight shipping. Now, the name is FedEx, and they have multiple products and service levels, so saying “FedEx Express” is not redundant. It’s just how to distinguish the regular overnight envelope/parcel service from FedEx Freight, FedEx Custom Critical, FedEx Office, FedEx Ground, etc. ---
**Author:** ![Raza](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/raza/32/213_2.png) [@Raza](https://boards.straightdope.com/u/Raza)\ **Post date:** [May 16, 2013, 2:25am UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/15 "2013-05-16T02:25:02Z")
Having driven 1700 miles this past week, I can confirm that the trucks do indeed have the writing “FedEx Express” on them. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [May 16, 2013, 5:15am UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/16 "2013-05-16T05:15:25Z")
> [@AaronX](#): > > ATM machine? PIN number? Don’t blame me. That’s what they call it now. ---
**Author:** ![AaronX](https://avatars.discourse-cdn.com/v4/letter/a/7bcc69/32.png) [@AaronX](https://boards.straightdope.com/u/AaronX)\ **Post date:** [May 16, 2013, 7:20am UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/17 "2013-05-16T07:20:33Z")
I know, I was pointing out FedEx’s naming redundancy. ---
**Author:** ![Skald\_the\_Rhymer](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Skald\_the\_Rhymer](https://boards.straightdope.com/u/Skald_the_Rhymer)\ **Post date:** [May 16, 2013, 3:58pm UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/18 "2013-05-16T15:58:57Z")
> [@Raza](#): > > Having driven 1700 miles this past week, I can confirm that the trucks do indeed have the writing “FedEx Express” on them. Some of the trucks do, some don’t. The Ground & Express operations are run separately. Express is the air business, where packages are moved the majority of the way by plane but for obvious reasons are trucked on the first and last leg. The Ground operation has everything going by truck–the small ones you see on the roads on the first and last legs, and big honking ones in the middle and longer leg(s)s. But they go to different centers in each metro area. A FedEx Ground package never goes to the Hub at the Memphis International Airport; a FedEx Express package never goes to the FedEx Ground sorting facility. ---
**Author:** ![Skald\_the\_Rhymer](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Skald\_the\_Rhymer](https://boards.straightdope.com/u/Skald_the_Rhymer)\ **Post date:** [May 16, 2013, 4:05pm UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/19 "2013-05-16T16:05:33Z")
> [@AaronX](#): > > I know, I was pointing out FedEx’s naming redundancy. The company was originally named Federal Express, and originally only did air delivery. As they expanded, they split into various operating companies, changing the name of the umbrella company to FedEx and giving each operating company a FedEx + (specialty) name. So the air-delivery-within-the-US company is FedEx Express; the ground-delivery-to-businesses is FedEx Ground; the ground delivery to residences is FedEx Home Delivery; and so forth. When I was a district sales manager there, I worked for FedEx Services. ---
**Author:** ![Kevbo](https://avatars.discourse-cdn.com/v4/letter/k/e47774/32.png) [@Kevbo](https://boards.straightdope.com/u/Kevbo)\ **Post date:** [May 16, 2013, 4:17pm UTC](https://boards.straightdope.com/t/fedexs-business-model/658330/20 "2013-05-16T16:17:16Z")
FedEx Ground in Albuquerque used to be an absolute nightmare on signature required packages. Because the drivers were contractors, they never had any idea when delivery would be attempted, nor any way to contact the driver to ask. So you either had to be home 24-7 or have the package held at the terminal. The terminal was at the far north end of town, accessible only via a frontage road with very poor access. The drivers would show up around 7AM to pick up the packages. By 10AM they would all be out making deliveries so the terminal would close for the day. Often they would screw up and put my package on the truck for delivery again, so if I got to the terminal at 8:30 after that truck left, I would have to try again tomorrow. Now they can leave stuff at the Kinko’s locations FedEx bought out. The Kinko’s near me is open 24/7, so I can pickup whenever I want. As a result they have gone from being the absolute worst to deal with, to the easiest. They are, however, the only ones to have actually lost my stuff. Twice. Delores Colorado seems to be a black hole. Stuff gets routed there in error, and is never heard from again.