Spencer Patton, a Nashville, Tennessee-based contractor with 225 drivers and 275 trucks in his 10-state territory, said in a letter sent Wednesday to top FedEx executives that the service has been a $500 million earnings drag on the unit, and that the situation isn’t getting better. However, contractors said that the rapid introduction of the service on a nationwide scale created major strains on the unit and its contractor network. The unit launched Sunday service in early 2020 as a way to increase fluidity in its delivery network and to offer a delivery option not available through UPS Inc. The unit did not specify which markets would lose Sunday service, but it said it would be targeted at markets where the suspension would have a “lesser impact on shippers.” FedEx Ground said that the Sunday service would still reach nearly 80% of the U.S.
The change is an opportunity for the unit and the provider network to “recalibrate operations for current market conditions,” FedEx Ground said.
In an email obtained by FreightWaves, FedEx Ground said that Sunday operations have “posed various challenges” to the provider network, which is composed of about 6,000 contractors employing many thousands of drivers. 15, a nod to concerns voiced by many of its independent delivery contractors that the service is a money-loser for the unit and is damaging contractor margins in the process. FedEx Corp.’s (NYSE: FDX) ground-delivery unit said late Thursday that it will suspend Sunday residential deliveries in certain “lower-population” markets starting the week of Aug.
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