The trading group FedEx Ground Delivery Contractors is disbanding

A trade association formed in August to represent the interests of drivers at package delivery company FedEx Ground disbanded on Friday after the group’s founder claimed the FedEx Corp. have threatened to strip their executives of their contracts if they kept the group alive.

In a statement distributed Thursday night, the 10-member Trade Association for Logistics Professionals (TALP) executive committee said the group was not the “appropriate vehicle” for effective dialogue between the FedEx entity (NYSE: FDX) and the 6,000 across the country to promote delivery companies that work exclusively for them. The group said there are “better options” to achieve their goals. It was not elaborated upon.

In the statement, the group called on contractors to work collegially with FedEx Ground to achieve mutually beneficial outcomes. An unspecified number of contractors have expressed concerns about their financial health in the face of rising costs and slowing supply demand.

FedEx Ground has acknowledged contractors’ concerns and renegotiated an unspecified number of contracts, most of which are 12 to 18 months in length, to provide some financial cushion.

According to a person familiar with the matter, FedEx Ground has offered an unspecified number of contractors higher compensation than they originally received to support their investments during the peak season. Under the “Schedule K” formula, contractors receive additional payments from the unit to ensure they have adequate equipment and staff to handle holiday volume peaks.

The new funding arose from nationwide discussions between the unit and many of its contractors, and may have been influenced by more optimistic holiday projections from several large retailers that are FedEx Ground customers, the person said.

The retail group’s decision to disband came as a surprise to its founder, Spencer Patton, who resigned from the group on October 25. In an email to FreightWaves on Friday, Patton said he was not consulted prior to the announcement and the remaining officers made an “independent decision” to step down from the group, effectively ending it.

He had hoped that his departure would lead to a constructive dialogue between the company and the group. However, FedEx Ground made it clear that it would not speak to any collectively organized contractor group, Patton said. The unit’s CEO, John Smith, said as much a few months ago.

In his email, Patton said the unit had “actively intimidated” committee members, warning they had a “target on their backs and were threatening their contracts if they remained members.” FedEx Ground was not immediately available to comment on the allegations.

In late August, FedEx Ground disconnected Patton, which is based in Nashville, Tennessee, from its 10-state route network. The unit said at the time that their actions were based on Patton’s company’s “continued failure” to honor the terms of their service agreements with FedEx Ground, despite the company offering them ways to do so.

Patton and the company had been at odds since the summer, when Patton launched a high-profile campaign to draw attention to the financial distress of many contractors. He had warned that unless FedEx Ground increases pay for its contractors, about a third would struggle to get through the peak season or the rest of 2022.

However, it appears that the vast majority of contractors will remain operational at least during peak periods. Parent company executives said in mid-September that 96% of contractors had agreed to Schedule K pay.

It is unclear how many contractors were TALP members. According to the person, TALP fell off the radar screens of many contractors after Patton was cleared of his routes. Additionally, contractors who run routes for companies like Amazon.com Inc., DHL e-Commerce and OnTrac said they face the same financial tightness as FedEx Ground contractors, the person said.

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