DAGEN: WHERE ARE THE SHIPPING
DELAYS THIS HOLIDAY SEASON.
ONE-THIRD OF FED EX GROUND’S
DELIVERY NETWORK IS REPORTEDLY
AT RISK OF COLLAPSE AHEAD OF THE
HOLIDAY RUSH, AS THE COMPANY’S
CONTRACTORS ARE FACING SOARING
INFLATION, HIGHER DIESEL PRICES
AND FED EX GROUND IS ALLEGEDLY
EXPANDING PROFIT MARGINS BY
WITHHOLDING ADDITIONAL REVENUE
YOU FROM SMALL BUSINESS OWNERS.
JOINING ME NOW, ROOT CONSULTANT
FOUNDER AND PRESIDENT, SPEND SPE
PATENT, THEY WORK TO EDUCATE
OWNERS OF FED EX GROUNDS AND
AMAZON LOGISTICS OPERATIONS.
YOU’RE THE LARGEST CONTRACTOR
WITH FED EX GROUND WITH 210
STATES, TELL US ABOUT THE ISSUE
AND WHAT THE OUTCOME MIGHT BE
FOR THE CUSTOMER.
>> WHAT A LOT OF PEOPLE DON’T
KNOW IS FED EX GROUND ACTUALLY
CONTRACTS OUT 100% OF THEIR
ENTIRE NETWORK.
THE PERSON COMING TO YOUR DOOR,
WEARING A FED EX UNIFORM,
DRIVING A FED EX GROUND IS NOT
ACTUALLY A FED EX GROUND
EMPLOYEE.
THERE ARE 6,000 SMALL BUSINESS
OWNERS, PEOPLE LIKE ME THAT ON
AVERAGE HAVE TEN TO 25 EMPLOYEES
AND THEY’RE THE ONE THAT’S ARE
ACTUALLY DELIVERING ALL OF THE
PACKAGES ACROSS THE UNITED
STATES.
SO MY ORGANIZATION, WE’RE ONE OF
THE LARGEST CONTRACTORS TO FED
EX GROUND IN THE UNITED STATES
AND REALLY WHAT I’VE BEEN
ADVOCATING AND A MAKING THE
PUBLIC AWARE OF IS THAT WE’RE IN
ENORMOUS FINANCIAL DISTRESS.
WE’VE SEEN FUEL PRICES DOUBLE IN
A YEAR.
WE’VE SEEN OUR WAGE RATES UP,
OUR VEHICLE COSTS UP, AND I’M
SOUNDING THE ALARM THAT THE RISK
OF NETWORK INTERRUPTION IN FED
EX GROUND IS AS HIGH AS I’VE
SEEN IT.
DAGEN: I KNEW THAT ABOUT FED EX
GROUND BECAUSE I HAD PROBLEMS
GETTING A PACKAGE ONCE AND I HAD
TO DRIVE TO THE HEADQUARTERS
MANY I FOUND OUT WHERE THEY WERE
LOCATED.
THE ACTUAL, THE INDEPENDENT
SHIPPING COMPANY OR TRANSPORT
COMPANY AND I SHOWED UP AT THEIR
DOOR, MAD AND SO I WAS AWARE OF
THIS.
BUT JUMP IN HERE WITH SPENCER.
>> YEAH.
THANKS, DAGEN.
SPENCER, I KNOW THAT YOU’VE
CALLED FOR THE COMPANY TO
RECOGNIZE THE CONTRACTORS AS
FRANCHISEES.
CAN YOU EXPLAIN THAT A LITTLE
BIT AND WHAT HAS THE RESPONSE
BEEN FROM FED EX MANAGEMENT?
>> SO THE MODEL FOREVER IS THAT
WE HAVE BEEN CONTRACTORS TO FED
EX GROUND.
THERE HAVE BEEN LITIGATION AND
PAST EXPLORATIONS ABOUT WHETHER
US AS CONTRACTORS ARE ACTUALLY
EMPLOYEES, WHETHER WE COULD BE
CLASSIFIED AS FRANCHISEES.
THE WHOLE FRAMEWORK OF WHAT FED
EX GROUND HAS BUILT THEIR
NETWORK UPON IS THAT WE ARE
CONTRACTORS.
THERE’S MANY REASONS WHY WE AS
CONTRACTORS MAKE SENSE BUT
THERE’S ALSO QUESTIONS ABOUT
WHETHER WE COULD BE CLASSIFIED
AS FRANCHISEES.
SOME OF THE BENEFICIARIES OF
BEING A FRANCHISEE IS THE STATE
AND FEDERAL REGULATIONS THAT’S
WOULD PROTECT THE CONTRACTS THAT
WE HAVE WITH FED EX GROUND
BECAUSE EACH OF US AT 6,000
SMALL BUSINESS OWNERS WE HAVE A
CONTRACT WITH FED EX AND THAT
CONTRACT RENEWS EVERY 12 TO 18
MONTHS.
SO THE RISK IS THAT IF WE DON’T
DO EXACTLY WHAT FED EX GROUND
ASKS US TO DO, THEN FED EX
GROUND BEING THE $60 BILLION
BUSINESS CAN SAY SIGN THIS
AGREEMENT OR WE’LL FIND SOMEBODY
ELSE THAT WILL.
SO AS SMALL BUSINESS OWNERS,
WE’RE JUST TRYING TO GET
EVERYBODY’S BOXES DELIVERED,
WE’RE THE DEFINITION OF AN
ESSENTIAL WORKER AS WE’VE BEEN
GOING THROUGH COVID AND ALL OF
THESE PIECES THAT WE’RE JUST
TRYING TO FIND A WAY TO RESTORE
THE FINANCIAL BALANCE TO THE
PROFITABILITY THAT OUR BUSINESS
NEEDS TO HAVE.
DAGEN: IN THE SHORT RUN,
SPENCER, THOUGH, WHAT IS FED EX
DOING?
WHAT ARE THESE INDEPENDENT
BUSINESSES DOING TO ENSURE THAT
THERE ISN’T A DELIVERY
DISRUPTION?
>> OUR BUSINESSES ARE BLEEDING.
I AM WORKING WITH THOUSANDS OF
CONTRACTORS HERE IN VEGAS, MORE
THAN HALF OF ALL THE CONTRACTORS
IN THE UNITED STATES ARE COMING
FOR OUR ANNUAL EXPO THAT ROUTE
CONSULTANT HOSTS AND WE’RE
TALKING ABOUT THE REAL FINANCIAL
DISTRESS THAT WE’RE UNDER AND SO
WE HAVE EYES TOWARDS
NOVEMBER 25th, BLACK FRIDAY,
TO SAY FED EX GROUND PLEASE COME
AND, AS I SPEAK FOR MY OWN
INDEPENDENT BUSINESS, I NEED
FINANCIAL HELP AND SOME 6,000
OTHER FED EX GROUND CONTRACTORS
NEED THE SAME.
WE’VE SEEN FED EX GROUND IN THE
MOST RECENT EARNINGS REPORT ON
JUNE 2 3-RD, FED EX HIGHLIGHTED
AN INCREASE TO MARGINS AS A
RESULT OF PASSING THROUGH FUEL
SURCHARGES TO THE U.S. CONSUMER
BUT NOT PASSING THROUGH THE SAME
SPUR CHARGES TO CONTRACTORS, THE
VERY ONES CONSUMING THE FUEL.