FedEx Contractors Raise Concerns about ‘Last Miles’ Agreement

Thursday, 21 July 2022 13:17

FedEx Contractors Raise Concerns about ‘Last Miles’ Agreement Featured

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Attorney Tami Hines Attorney Tami Hines hallestill.com

 

Contractors who deliver packages for FedEx with the “Last Miles” agreement are saying the agreement is out-of-date and they simply won’t be able to operate if there’s not a wage increase per stop. Tami Hines is an Oklahoma bankruptcy expert, and she offers her comments below about this “Last Miles” agreement.

Tami Hines is a partner at the law firm Hall Estill and assists clients primarily in bankruptcy and complex commercial litigation. She has significant experience in all aspects of the Debtor/Creditor relationship, both inside and outside of bankruptcy.

Hines has been following the FedEx contractor news closely. Of the latest she says:

“A number of years ago, FedEx – along with other delivery companies—made the decision to contract out the “last mile” of its delivery services to independent companies. As a result, when our packages are delivered by “FedEx” they are actually being delivered by independent contractors working for small businesses that have entered into “last-mile” agreements with FedEx,” explains Tami.

“These “last-mile” agreements govern the relationship between FedEx and the small businesses—they are confidential, but what I can say is that the small businesses are responsible for hiring the drivers, obtaining the vehicles, and ensuring that the packages are delivered on time. FedEx is responsible for virtually everything else, including paying the small businesses per package or per stop (depending on the agreement),” says Tami.

“Back when these “last-mile” agreements were first entered into, they were beneficial for all involved—FedEx, the small businesses, the drivers, and the customers—because we were not experiencing inflation, significant increases in gas prices, supply shortages, and labor shortages. Now, we are. Despite this, FedEx’s profit margins are ever increasing. However, the small businesses with which FedEx has contracted (and thus the drivers that are inevitably subject to those same agreements), are either filing for bankruptcy or on the brink, because they cannot afford gas, they cannot afford to keep their trucks running, and they cannot afford the labor that it takes to deliver the packages they are responsible for under the agreements,” explains Tami.

“Despite many requests by these small businesses to FedEx since last year to modify the terms of the agreements in light of these changing economics (especially since FedEx can clearly afford it), FedEx has remained in “discussions” only. As a result, the small businesses cannot keep the drivers—who refuse to continue to drive and deliver for such paltry sums of money (yet the small businesses cannot afford to pay more under the agreements’ terms). As a result, the small businesses fail to deliver the packages on time on a daily basis because their trucks are breaking down, they cannot afford gas, and they don’t have the necessary labor force,” says Tami.

“FedEx will likely say it does not want to raise prices on these agreements because it will then have to raise prices for its customers. Considering its profit margins, this is likely not true. However, if the agreements’ terms are not modified in light of the changed economic realities, packages will eventually stop being delivered, because these small businesses will file for bankruptcy,” explains Tami.

“If that happens, the only other alternative is for FedEx to pick up the slack, which it cannot do, because it too cannot find the drivers considering (1) labor shortages and (2) the paltry sum it claims it must pay absent raising its customers’ prices,” says Tami.

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