FreightWaves: FedEx Ground Establishes 3-Tier Driver Contractor Grading System

A reliable source has revealed that FedEx Ground is undergoing a thorough performance-grading process with its pickup and delivery partners, which might result in some contractors losing their monopoly on bidding on and negotiating contracts to serve routes.

FedEx Corp. (NYSE: FDX) has developed three performance categories for its ground delivery service in the United States: gold, silver, and bronze. According to the source, contractors that obtain a "bronze" grade—the lowest possible—which the business believes demonstrates bad efficiency, poor customer service, or both—would lose their previously exclusive negotiation rights for their routes and will be subjected to open bidding. This implies that the contractors risk having their routes taken away if the corporation decides that another bidder has offered a better price/value offering.

According to the source, those who receive a silver rating will be treated equally, with no prizes or sanctions. However, the source did not elaborate on what benefits "gold" contractors would receive. According to FedEx Ground, these medal-like ratings are being used for the first time. They will likely take place at each of FedEx Ground's roughly 600 facilities. Roughly 5,000 of the 6,000 independent contractors working for FedEx Ground are local pickup and delivery services. This new scheme will not include the 1,000 contractors that provide line-haul services, the source added.

FedEx Ground has stated that during the following month, there will be in-person forums held in each area to play out the process. The firm has admitted that it is "introducing a new data-driven strategy to delivering contract-specific findings via an online dashboard." According to the release, the findings "may be utilized to discover opportunities and distinguish service provider organizations with superior performance."

The new strategy is “part of how FedEx Ground is adapting its business to evolving market dynamics and customer needs and has been informed by input from many service provider businesses,” the company said in a statement. It, however, made no reference to any particular incentives or penalties.