FedEx Ground has signed 96% of its 6,000 contractors onto a peak season incentive program, a feat FedEx President and CEO Raj Subramaniam said leaves the company “well-positioned” to deliver for the holidays.
The sign-on percentage for this year's program "is running ahead of where we were last year," Subramaniam said in a Thursday earnings call. FedEx did not specify how much volume is covered by the 4% of contractors who have yet to sign onto the program.
Still, the higher program interest is a welcome sign for the company as it looks to keep service levels high while assuaging concerns about disgruntled and inflation-weary contractors.
Ground previously flagged the possibility of multiple contractors withholding service on Black Friday, the traditional start of peak season, in a lawsuit against Route Consultant, a consultancy founded by the now-ousted contractor Spencer Patton. Patton planned to stop delivering that day in a push for improved compensation, and Ground said it had been advised other contractors may consider following in his direction.
“We hope FedEx Ground will increase compensation for its contractors throughout the year, and not just during peak season,” a spokesperson for the Patton-founded Trade Association for Logistics Professionals (TALP) said in an emailed statement.
Through the incentive program, also known as Schedule K, contractors agree to raise the maximum number of delivery stops they are required to perform during peak, according to Route Consultant. In exchange, Ground will pay contractors their bonus compensation at a lower number of stops than the original agreement.
"Historically, Schedule K has been around to provide an incentive for contractors to ramp up their delivery capacity for peak season," Patton said in an August video.
Patton has been publicly campaigning for better contract terms and other changes to how Ground conducts business with its contractors, which provide pickup, delivery and linehaul services for the company. TALP released the results of a survey earlier this month that said 1,159 of contractor respondents had no confidence in Ground President and CEO John Smith.
FedEx has publicly downplayed contractor woes. In a statement responding to the survey, FedEx said it was launched "by an individual who has such a vested personal and business interest in the survey’s outcome." And on Thursday, Subramaniam said issues with FedEx Ground contractors were “more a perception issue than reality.”