FedEx overhaul contemplates a future with no drivers on payroll

The future of package delivery looks very different for the two largest parcel delivery providers – FedEx and UPS – according to several most recent news reports. Identifying the best approach for handling an environment that sees costs for deliveries going up exponentially while volumes continue to decrease since their highs during the covid lockdowns will inform the growing debate surrounding the role of independent contractors in our economy.

FedEx recently announced the company will combine both Express and ground transportation, relying on independent contractors to fulfill more deliveries. The switch will continue to remain a hybrid model, yet there was little explanation for how they will implement the merger of these diverse units; it appears they will heavily rely on their lower-cost ground unit. Experts say they will lean toward an independent contractor model and potentially eliminate other employment units.

Meanwhile, UPS, a fully unionized company, has publicly warned its management they intend to call for a full strike if their demands in the upcoming labor talks are not met. Among the Teamsters many demands are their desire to eliminate the two-tier wage system and to promote more part-time drivers to full-time. It remains to be seen how UPS will respond to this and if this is bluster from the Teamsters; whatever the response, it stands in stark contrast to the decisions FedEx made in how to deal with the declining volumes in package delivery.

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