ISP Model

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. There was soon a Ground contractor and a home delivery contractor covering the same zip codes. As time went on, E-commerce and consumer demand shifted to ordering virtually everything online, and these once small routes were becoming multi-route owners.

As E-commerce took off, contractors took advantage and bought out other contractors to build their small business. Soon, these route owners built a business model to where they had a manager and drivers working for them. FedEx made it mandatory to scale up or sell – driving the market prices of these businesses even higher.

With the new model, we saw a wave of contractors leave the business, as they did not want to own more than one route. The writing was clear that the Independent Contractor model was about to change to the Independent Service Model (ISP) where contractors needed to purchase either their Ground or Home Delivery counterparts by 2020. Linehaul was unaffected by this change.

The new ISP model is scheduled to be completed by May of 2020, and with P&D Contractors now overlapping, they can consolidate their routes and run a more efficient operation.