Published September 3, 2014
By Lisa Kennedy
Project Manager, Tompkins International
It was inevitable. We knew a detailed look into how FedEx manages its drivers would happen, and it was only a matter of time before the courts would deem them employees. Uniforms, vehicle requirements, company logos, contractual requirements -who else could the contractors work for?
Logistics service providers who use independent contractors have been trying to distance themselves from FedEx to avoid the same fate. But I am an optimist. Those service providers that diligently allow independent contractors to be independent will remain intact; the future of home delivery will depend on it. In order for packages to be delivered to remote areas as cost effectively as possible, independent contractors who can consolidate packages from several different delivery service providers will need to do this.
Key differentiators for custom logistics service providers include:
- Service providers need to offer custom logistics services with delivery as a component that is outsourced to an independent contractor to perform that part of the service. Independent contractors are free to work with multiple competing service providers.
- Delivery vehicles are owned by the independent contractor and if they have a company logo the driver is reimbursed for advertising.
- Independent contractors are allowed to subcontract their services to other drivers to assure deliveries are completed as required by the service provider.
- Uniforms are never required by service providers. Safety and security attire may be required by the customer.
FedEx will need to take a hard look at how it manages its independent contractors. According to Wolf Research, “In the past, we were concerned that these class action suits could force FDX Ground to start using company employees with much higher costs. But even with this negative ruling, we no longer see risk that FDX Ground will be forced to move to an employee model.”
What other services can your company offer to customers to reaffirm your strategy as a custom logistics service provider and not just as a delivery company?
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Photo Credit: Justin Sullivan Getty Images
