oldrps
Well-Known Member
Now I'm getting it? Is this the "ulterior motive" you are talking about. This is no secret. The fact that FedEx Ground has become the size it has with contractors says it works. Would FedEx Ground have been better with employee drivers? I don't know and don't care as I have not been a part of them for about 20 years. From reading the comments of the Express drivers on this forum, I don't think it would be much better with employee drivers.Now you're getting it. Dan Sullivan's creation of third party contractors was NOT to promote entrepreneurialism or build enterprise value for third party contractors. They were created for the purpose of having a third party upon whom he could dump as much risk liability and variable cost onto in order to preserve parent company margins.....That's the part that has never changed .
However when Fat Freddy got a hold of it he tried to expand it' into additional markets . Now when you consider the publicly embarrassing service related incidents and the on time service percentages that are beginning to lag behind the two other major carriers the question is will Fat Freddy be willing to accept this condition in return for the attractive margins or will he seek to correct the situation and what measures will he take in an effort to correct it? I've been told that he has to pay his mercenary contractors he calls "contingency contractors" 10 bucks a stop to get them to go around the country plugging the growing number of holes in the network created by contractors who quit unexpectedly. Getting to be quite a costly problem with some mercenary contractors having to stay on site for upwards of 6 months.
Your assessment about being promoting as an entrepreneur opportunity is not accurate. I had contractors that would prove you wrong in the 90s. It is how business minded the owner was. Ones that treated it like a business, thrived. The ones that treated it as a purchased job barely survived or failed. Purchasing equipment and depreciation is part of what most businesses do. There are no guarantees that all business will make a profit. Did you feel that RPS/FedEx guaranteed you a profit? How did you keep going for over 20 years and why did you stay so long if it was so bad?
Both FedEx Express and UPS have publicly embarrassing incidents and have employee drivers. I remember a FedEx Express driver throwing a tv over a gate/fence a few years ago. So much for the "Golden Package"; if you remember those commercials from many years ago.
"the question is will Fat Freddy be willing to accept this condition in return for the attractive margins or will he seek to correct the situation and what measures will he take in an effort to correct it?"
I think FedEx has accepted this condition as they have kept the contractor model since the purchase in the late 90s. What measures they will take? I don't care and you shouldn't either as neither one of us have anything to do with FedEx.
"They were created for the purpose of having a third party upon whom he could dump as much risk liability and variable cost onto in order to preserve parent company margins..."
I find it ironic in your reply that FedEx doesn't take risk with this model, but later you state they have to hire mercenary contractors when a contractor leaves. It appears there is a risk to FedEx for this model. The risk is that these large contractors can leave and leave large areas with no provider. That seems pretty risky to me. So much for saving on variable costs if they pay over $10.00 a stop.