FedEx Network 2.0, O Canada announcement, and other thoughts from Adam!
June 20 (Reuters) – FedEx (FDX.N) on Tuesday said it will merge its contractor-based Ground delivery operations in Canada into its company-operated Express unit and convert contractors into employees.
The move, set to be phased in starting in April 2024, comes as the global delivery company is revamping its business to boost profits and better compete with rivals like United Parcel Service (UPS.N), Amazon.com (AMZN.O) and regional delivery firms.
FedEx made a similar change in the U.S. states of Alaska and Hawaii last year.
Still, the company said there will be U.S. markets where packages shift from Express to Ground, its outsourced delivery arm. In those cases, the company said it would continue to use delivery contractors as part of its “hybrid” worker model.
Memphis, Tennessee-based FedEx in April said it planned to combine the two delivery units as part of its wider effort to slash $4 billion in costs by the end of its 2025 financial year. That announcement came about one year after activist investor D.E. Shaw won two additional board seats.
Source: https://www.reuters.com/business/fedex-fold-canada-ground-unit-into-express-2023-06-20/
Thoughts from Adam:
This is not surprising news to us. I will always use a no-nonsense, non-hype approach to whatever is going on out there. Facts are your friend!
- There are only a few hundred contractors in Canada compared to 5,800 contractors in the US.
- The business, tax, and employment laws are different in Canada.
- Canada has ONLY three cities with over a million people, 52 cities between 100,000 and 1 million people, and 393 cities between 10,000 and 100,000 people. The largest city in Canada is Toronto, with a population of 2,600,000 people.
- The largest Canadian shipper is a company called Purolator.
Crossing back into the USA our climate is different.
If Contractors were going to be dissolved it would have happened with Network 2.0.
Now that we have the doom and gloom out of the way what will happen?
Time Definite Deliveries will be the buzzword you hear all the time. What is it? These packages must be delivered before a specific time. It will vary from route to route. For example, here in metro Atlanta Overnight Express packages have to be delivered by 1030 AM.
The traditional way of running routes are about to be thrown out the window.
One of two things are going to happen with Time Definite Deliveries.
- Your driver will have to rearrange the way they operate their routes. UPS puts them all on one truck and the Time Definite Deliveries are delivered to first then they start delivering the rest of the packages and complete their pick ups in the afternoon.
- Wave dispatching. You will have a driver go out and deliver the Time Definite Deliveries plus regular deliveries and have them come back mid afternoon. Another driver will come in mid afternoon and complete any clean up stops and perform the pick ups that was on this route. Maybe they do pick ups for two or three routes? The possibilities are endless on how you can structure this.
FedEx Express recruitment
I knew all of the delivery drivers on my old routes and chances are the drivers do to. I would be offering an incentive to my drivers to recruit the Express drivers. Most express locations are shuttering their doors and these hard working men and women will be looking for a job!
Don’t worry, the sky isn’t falling!