FedEx announced it plans to merge FedEx Ground and FedEx Express by June 2024. To understand the broad implications of this move it is necessary to understand how FedEx currently handles packages. Fed Ex has four primary divisions in its workforce of which only one is unionized. FedEx Pilots are unionized. FedEx Freight (Semi truck drivers), FedEx Ground (Independent Contractors) and FedEx Express (Company delivery drivers) are all non-union.
FedEx Express drivers are company employees that work directly for FedEx and get health and retirement benefits from the company. The Proposed “consolidation” will merge FedEx Express with FedEx Ground.
FedEx Ground is comprised of independent contractors and they are not employed directly by the company. They, like FedEx Express workers are non-union.
FedEx Freight also has company drivers and also uses third party drivers to haul semi trailer loads worth of packages over land.
The consolidation they are undergoing will have more freight handled by independent contractors on both the to the door delivery model and the over land trailer shipping model.
While this may mean an improved bottom line for FedEx the company as independent contractors are a lot more inexpensive to use than employees that you have to give health coverage to and retirement benefits, the combining of these operations will lead to mass layoffs of good paying jobs.
This change to a heavier reliance on independent contractors may have unforeseen consequences to the company’s speed of delivery and reliability. The company loses direct control over vehicle maintenance and employee scheduling. These while more expensive to handle in house are typically logistically a lot more efficient when done in house than outsourced.
In the end this consolidation may help FedEx increase its return to shareholders but the good paying jobs that will be lost for non-skilled labor will be substantial and will have broad implications for many local economies across the globe.
