When you see the FedEx Ground trucks parked outside your home it is part of the last mile delivery, and it is the most critical part of getting your packages delivered your door. The “last mile” of delivery is the final step in a product’s journey from a warehouse shelf to the back of a truck to the point at which the package finally arrives at the buyer’s door. Last mile delivery is both the most expensive and time-consuming part of the shipping process, in addition to being critical to customer satisfaction. You most likely thought the FedEx Ground delivery person was a FedEx employee, but ground truck drivers are contracted out by a third-party company.
FedEx filed a lawsuit against Spencer Patton, owner of Patton Logistics, one of the independent contractors that make up the company’s delivery network, in federal court in Nashville on Friday. FedEx claimed in the lawsuit that negative press coverage resulting from Patton’s campaign could harm Ground’s reputation with shippers who pay it to deliver packages and undermine goodwill within the contractor network. FedEx claimed that Patton’s actions were part of a promotional campaign for his company, which provides consultancy, brokerage, and other services to delivery companies.
The suit, filed in federal district court in Tennessee, accuses Route Consultant of violating federal and state laws by making unfounded allegations that have harmed FedEx Ground’s brand and reputation. The suit seeks unspecified monetary damages, disgorgement of Route Consultant’s profits generated by Patton’s alleged behavior, and a permanent injunction prohibiting Patton from engaging in the allegedly illegal conduct on behalf of his company.
FedEx issued a cease-and-desist letter to Patton on July 26 demanding that he cease all “advocacy” on behalf of any service providers other than his own, that he cease disparaging the company’s brand and reputation, and that he cease any plans to form a committee to negotiate on behalf of other contractors. FedEx Ground has stated that any form of collective bargaining is a violation of the unit’s contract with its contractors. Patton’s actions since then indicate that he has no intention of disbanding the committee.
The lawsuit follows reports of a dispute between the company and its contractors over high operating costs and low profits, which contractors assert FedEx Ground isn’t doing enough to mitigate . Spencer Patton operates 225 FedEx Ground routes in ten states, as well as businesses that provide services to the approximately 6,000 US contractors who transport and deliver packages for that unit.
Patton Logistics operates in 10 states with 275 trucks. Patton also owns the logistics organization Route Consultant, which advises and provides resources to logistics contractors, has been one of the company’s most vocal critics. He chastised FedEx Ground for increasing its own profit margins through fuel surcharges without addressing the financial strains its contractors face as costs rise due to inflation.
Patton says up to 35% of FedEx Ground delivery providers are in financial jeopardy. He has urged its leaders to improve pay and has rallied “peers to his cause.” “It’s unclear how suing their own contractors does anything to help address the rising fuel costs, wage costs, and vehicle costs that everyone is feeling,” Patton said in a statement. “This lawsuit is an attempt to silence the small business owners from talking to the media about the very real threat to the delivery network.”
FedEx said in a statement, “We can confirm FedEx Ground exercised its rights to immediately stop contracting with a small number of service provider businesses owned by one individual,” a FedEx Ground spokesperson said in a statement. “While those businesses operate in several locations, they constitute less than 0.5% of the approximately 60,000 total routes across the FedEx Ground network. We have contingency plans in place and do not anticipate any impact to service based on these contract actions.”
The “last mile” of delivery is the final step in a product’s journey from warehouse shelf to the back of a truck to a customer’s door — the point at which the package finally arrives at the buyer’s door. Last mile delivery is both the most expensive and time-consuming part of the shipping process, in addition to being critical to customer satisfaction. If this lawsuit does not get resolved, many areas are going to be affected. This will affect not only consumers but the vendors that ship your products. Vendors consumers will need to check how their items are shipped to avoid interruptions especially with the upcoming holiday season.
