History of FedEx Ground
After beginning service on March 11, 1985, the company grew, expanding service from its initial coverage of the Mid-Atlantic states, so much so that it eventually became the largest subsidiary of its parent company, Akron-based Roadway Services. By 1996, RPS had achieved 100% coverage of the United States and Canada. Also, Roadway Services had been reformed as a new holding company called Caliber System, Inc. The barcode technology developed by RPS revolutionized the packaging industry.
In 1997, Fred Smith, founder of FedEx, contacted Dan Sullivan, co-founder of RPS and now president of Caliber Systems, Inc., about merging the two companies. In 2000, FedEx merged the Caliber System, Inc. operating companies into the FedEx organization, with Roberts Express becoming FedEx Custom Critical and RPS becoming FedEx Ground. In addition, Viking Freight, which initially operated under its original name, was rebranded by FedEx Freight in 2001.
FedEx Ground created FedEx Home Delivery in early 2000. This new company was designed for the business to the consumer market and arguably the birth of E-commerce. At this time, contractors typically owned and operated one route. Soon, a Ground contractor and a home delivery contractor covered the same zip codes. As time passed, E-commerce and consumer demand shifted to ordering virtually everything online, and these once small routes became multi-route owners.
As E-commerce took off, contractors took advantage and bought out other contractors to build their small businesses. Soon, these route owners built a business model with a manager and drivers working for them. Then, FedEx made it mandatory to scale up or sell – driving the market prices of these businesses even higher.
We saw many contractors leave the business with the new model, as they did not want to own more than one route. The writing clearly stated that the Independent Contractor model was about to change to the Independent Service Model (ISP), where contractors needed to purchase their Ground or Home Delivery counterparts by 2020. Linehaul was unaffected by this change.
The new ISP model was completed by May 2020, and with P&D Contractors now overlapping, they can consolidate their routes and run a more efficient operation.