Should It Come As A Surprise?

[bacha29]

I disagree. There is a lot of pressure on them. Drivers will quit. Contractors will shut down routes. It’s already happening and they don’t have enough contingency to cover it.

“When the many no longer fear the few….” That’s where we are.

Oh. And they’re trying to plan for peak. What happens to the stock price with an epically disastrous peak?

Then just let it happen. After all aren't you supposed to be out of it by that time? It's not your fault that they all suffer from Dano59 Syndrome. The belief that everything is just fine and all you need to do is to cut costs to an even greater extent and things will continue to be just fine.

Sure, you could have few contractors here and there toss their contracts back to Fats and Raj and abandon their routes. The contractor will in many cases lose every cent to his name because he has every cent to his name tied up in it while Fats and Raj lose nothing. As a result the vast majority of contractors will continue to struggle along still hoping for a savior to come along and badly overpay for their contract putting enough cash in the contractors bank so as to enable the contractor to retire comfortably.

That hopes is fading quickly with each passing day.

 

[bbsam]

Then just let it happen. After all aren't you supposed to be out of it by that time? It's not your fault that they all suffer from Dano59 Syndrome. The belief that everything is just fine and all you need to do is to cut costs to an even greater extent and things will continue to be just fine.

Sure, you could have few contractors here and there toss their contracts back to Fats and Raj and abandon their routes. The contractor will in many cases lose every cent to his name because he has every cent to his name tied up in it while Fats and Raj lose nothing. As a result the vast majority of contractors will continue to struggle along still hoping for a savior to come along and badly overpay for their contract putting enough cash in the contractors bank so as to enable the contractor to retire comfortably.

That hopes is fading quickly with each passing day.

It’s not a case of “letting it happen”. There’s nothing I can do to stop it if I wanted to.

And there is a “savior” coming to a lot of contractors very soon. It’s not a windfall that puts people in a position to never work again but it does give an effective opportunity to do one or two things. First, walk away and clear up most incurred debt or force negotiations from a position of strength.

I know that’s hard for you to wrap your head around, but it’s very real and FedEx absolutely is aware of it.

 

[bacha29]

It’s not a case of “letting it happen”. There’s nothing I can do to stop it if I wanted to.

And there is a “savior” coming to a lot of contractors very soon. It’s not a windfall that puts people in a position to never work again but it does give an effective opportunity to do one or two things. First, walk away and clear up most incurred debt or force negotiations from a position of strength.

I know that’s hard for you to wrap your head around, but it’s very real and FedEx absolutely is aware of it.

As long as Fats DOT numbers and copyrighted trademark are on the side of the contractors bank financed and rapidly depreciating truck and the only the only thing going in it is Fats bar coded freight and the only place it goes to is to Fats contracted customer located in a geographical service area Fats decides, it will be Fat Freddy not the contractor who will dictate the events going forward.

Always has... always will. After all when you're worth 5.1 billion dollars....he's the rancher....you're the cattle.

 

[bbsam]

As long as Fats DOT numbers and copyrighted trademark are on the side of the contractors bank financed and rapidly depreciating truck and the only the only thing going in it is Fats bar coded freight and the only place it goes to is to Fats contracted customer located in a geographical service area Fats decides, it will be Fat Freddy not the contractor who will dictate the events going forward.

Always has... always will. After all when you're worth 5.1 billion dollars....he's the rancher....you're the cattle.

You are soooooo behind the times.

 

[Cactus]

And there is a “savior” coming to a lot of contractors very soon. It’s not a windfall that puts people in a position to never work again but it does give an effective opportunity to do one or two things. First, walk away and clear up most incurred debt or force negotiations from a position of strength.

This “savior” you speak of, is it some change in the laws pertaining to independent contractors or is it because of some other threat?

 

[bbsam]

This “savior” you speak of, is it some change in the laws pertaining to independent contractors or is it because of some other threat?

No. It’s actually making use of existing tax law.

 

[bacha29]

You are soooooo behind the times.

In what way? All power sufficient to set the pace and control events going forward rest with the guy who is worth 5.1 billion dollars. Remember the old saying... "Ye who has the gold rules". There is simply no possible way a handful disgruntled contractors spread across the continental US are going to disrupt operations to a sufficient degree and for a long enough time to compel Fats and Raj to make major change.

There would have to be at least a 90% effective network shutdown/ disruption covering an entire high population region of the US for at least a month until Fats is convinced that he has to do things different including his attitude.

 

[bbsam]

In what way? All power sufficient to set the pace and control events going forward rest with the guy who is worth 5.1 billion dollars. Remember the old saying... "Ye who has the gold rules". There is simply no possible way a handful disgruntled contractors spread across the continental US are going to disrupt operations to a sufficient degree and for a long enough time to compel Fats and Raj to make major change.

There would have to be at least a 90% effective network shutdown/ disruption covering an entire high population region of the US for at least a month until Fats is convinced that he has to do things different including his attitude.

A handful? You are completely missing the scope of the discontent. It wouldn’t take 90%. Locally it took approximately 17%. Why? Because when one finally has enough to walk, others find their feet as well.

When a contractor with 200 routes per day speaks up to a national paper and completely disregards every letter of a no disclosure agreement, other contractors pay attention.

And when it’s economically viable to simply walk away in September rather than deal with another miserable peak of crappy treatment and losing money, people stop ramping up to handle volume they have no intention of seeing.

 

[Mutineer]

When a contractor with 200 routes per day speaks up to a national paper and completely disregards every letter of a no disclosure agreement, other contractors pay attention.

When I was a teenager, there was a prolonged surge of wild-dog attacks on livestock in my area.

I was working on the property of a landowner who had been affected by this menace when a local news reporter arrived to interview him. I stopped what I was doing in order to see the process unfold.

Clyde, the landowner; was a very salty, crusty, grizzled character who had no use of manners, politeness, or civility.

The young, attractive, well-dressed female news reporter asked Clyde a few questions and put the mic in his face. Clyde's response was a calm, articulate, uninterrupted rant of mostly profanity which lasted more than a few minutes. And with the camera still rolling, he very smoothly transitioned to make a pass at the reporter. Suffice to say, I was highly entertained by this event.

Later at home, I eagerly awaited the local evening news to begin so I could watch the interview. The several minute interview had been edited to begin and end consisting of a three second clip of Clyde saying something like: ..."wild dogs chewed the nose, lips, and tail off of my goat!"...

That is probably what the eagerly awaited "contractor interview" will resemble.

 

[bacha29]

A handful? You are completely missing the scope of the discontent. It wouldn’t take 90%. Locally it took approximately 17%. Why? Because when one finally has enough to walk, others find their feet as well.

When a contractor with 200 routes per day speaks up to a national paper and completely disregards every letter of a no disclosure agreement, other contractors pay attention.

And when it’s economically viable to simply walk away in September rather than deal with another miserable peak of crappy treatment and losing money, people stop ramping up to handle volume they have no intention of seeing.

17% of a local terminals area? That doesn't even approach the level of a work stoppage large enough to bring about fundamental change. It would take a prolonged work stoppage affecting at least one highly populated region of the country. On the scale you're taking about they'll do as they've always done. Bring in the temps in rental trucks dump the boxes into the nearest contractors truck, get low ranking terminal management personnel to run the boxes.

Don't worry, they've got their bases covered and are daring you guys to go out. And as for those 17% local. What did it get them ? Not a damn thing.

 

[bbsam]

17% of a local terminals area? That doesn't even approach the level of a work stoppage large enough to bring about fundamental change. It would take a prolonged work stoppage affecting at least one highly populated region of the country. On the scale you're taking about they'll do as they've always done. Bring in the temps in rental trucks dump the boxes into the nearest contractors truck, get low ranking terminal management personnel to run the boxes.

Don't worry, they've got their bases covered and are daring you guys to go out. And as for those 17% local. What did it get them ? Not a damn thing.

I think what you’re missing is that the fires are already raging.

Here’s a scenario for you. You’re a district manager with three buildings already taking as much contingency work as you can send to them. A fourth building is on the verge after one contractor walked and three more are on the verge.

Contractors have been bitching for months about inadequate compensation and then to top it all off, the company announces a 53% dividend increase to stockholders.

So figure it out bacha. What do you do? Where do you find the contingency drivers? You've seen all the businesses for sale for dirt cheap. You have o businesses that you’ve had to pay contingency for over a year and nobody wants the contract. Contractors can’t sell and you can’t give them away. Do you play tough and pretend that contractors are stuck? They have too much debt and can’t afford to leave?

And when that angry contractor disregards the non disclosure clause of the contract? Do you terminate the contract with him? Do you have any idea how you’re going to fill that contract?

No. Of course you don’t. You don’t have an answer. The one thing you do know for a fact is that this time it’s not a bluff. You’ve checked with legal. You’ve checked with accounting. You’ve had the tax laws explained to you.

Figure it out bacha. Peak is just around the corner.

You’re right. That 17% was nothing. What that 17% was indicative of is massive. It is exactly the conditions to bring about fundamental change.

 

[bbsam]

When I was a teenager, there was a prolonged surge of wild-dog attacks on livestock in my area.

I was working on the property of a landowner who had been affected by this menace when a local news reporter arrived to interview him. I stopped what I was doing in order to see the process unfold.

Clyde, the landowner; was a very salty, crusty, grizzled character who had no use of manners, politeness, or civility.

The young, attractive, well-dressed female news reporter asked Clyde a few questions and put the mic in his face. Clyde's response was a calm, articulate, uninterrupted rant of mostly profanity which lasted more than a few minutes. And with the camera still rolling, he very smoothly transitioned to make a pass at the reporter. Suffice to say, I was highly entertained by this event.

Later at home, I eagerly awaited the local evening news to begin so I could watch the interview. The several minute interview had been edited to begin and end consisting of a three second clip of Clyde saying something like: ..."wild dogs chewed the nose, lips, and tail off of my goat!"...

That is probably what the eagerly awaited "contractor interview" will resemble.

100% true. And it doesn’t even really matter. What matters is that the contractors no longer fear the company. That contractor and many others can afford to lose it because the contract is no longer worth having. At that point, how does the company control anything?

 

[59 Dano]

I hope you are right. What makes you think it won’t happen? Express has been slowly funneling packages to ground for several years now.

They haven't funneled anything. LMO is barely 2 years old. It was to launch in early 2020. Then COVID hit and it was put on the back burner. When it finally launched, it launched with package counts that were much higher than planned (thanks to COVID) and there's not really any consensus on what the ideal balance of freight is. Changes in volume and staffing present challenges in operating a steady, consistent LMO plan.

As for switching to a contractor model, Express has enough trouble with staffing as it is. Who's lining up to work for Express as a courier? No one. Who's going to line up to do the same job for less pay and fewer benefits than what Express provides? Anything is possible to one degree or another but I don't see that happening.

 

[bacha29]

I think what you’re missing is that the fires are already raging.

Here’s a scenario for you. You’re a district manager with three buildings already taking as much contingency work as you can send to them. A fourth building is on the verge after one contractor walked and three more are on the verge.

Contractors have been bitching for months about inadequate compensation and then to top it all off, the company announces a 53% dividend increase to stockholders.

So figure it out bacha. What do you do? Where do you find the contingency drivers? You've seen all the businesses for sale for dirt cheap. You have o businesses that you’ve had to pay contingency for over a year and nobody wants the contract. Contractors can’t sell and you can’t give them away. Do you play tough and pretend that contractors are stuck? They have too much debt and can’t afford to leave?

And when that angry contractor disregards the non disclosure clause of the contract? Do you terminate the contract with him? Do you have any idea how you’re going to fill that contract?

No. Of course you don’t. You don’t have an answer. The one thing you do know for a fact is that this time it’s not a bluff. You’ve checked with legal. You’ve checked with accounting. You’ve had the tax laws explained to you.

Figure it out bacha. Peak is just around the corner.

You’re right. That 17% was nothing. What that 17% was indicative of is massive. It is exactly the conditions to bring about fundamental change.

What you said I get, ok? At the same time the disruption has to be far more expansive and for a far longer duration that you might think. This is where we disagree. A key region of the country has to be focused on and 90% minimum locked down for a good month or more. At the same time the capitulation by minimum and mid size contractors while every one of them helps is not as impactful as several dozen of the multi state contractors located in key regions of the country abruptly quitting in unison , that won't happen. They would go to bankruptcy court first get protection of the court allowing them to operate until they can reorganize.

In the meantime for those who got in too late and those who hung around too long, they'll either have to find a way to keep going or simply walk away resigning themselves to the fact that what they thought they had was highly valuable is in reality worthless. Therefore in a final showdown between contractors and Far Freddy it will be a question of who can hold out the longest. And we know who that will be.

 

[59 Dano]

Oh. And they’re trying to plan for peak. What happens to the stock price with an epically disastrous peak?

Same thing that happened after 2013 peak.

 

[bbsam]

Same thing that happened after 2013 peak.

I don’t know. I don’t remember this level of discontent and all out rage in contractors in 2013 especially not leading up to peak.

Until the last year, I always made money. In 2020 I made really good money and it seems like the company simply couldn’t stand that fact.

 

[bbsam]

What you said I get, ok? At the same time the disruption has to be far more expansive and for a far longer duration that you might think. This is where we disagree. A key region of the country has to be focused on and 90% minimum locked down for a good month or more. At the same time the capitulation by minimum and mid size contractors while every one of them helps is not as impactful as several dozen of the multi state contractors located in key regions of the country abruptly quitting in unison , that won't happen. They would go to bankruptcy court first get protection of the court allowing them to operate until they can reorganize.

In the meantime for those who got in too late and those who hung around too long, they'll either have to find a way to keep going or simply walk away resigning themselves to the fact that what they thought they had was highly valuable is in reality worthless. Therefore in a final showdown between contractors and Far Freddy it will be a question of who can hold out the longest. And we know who that will be.

There is no reason for bankruptcy court. At least not for the vast majority.

It doesn’t have to be a final showdown. I’m pretty sure many like myself will simply watch from the sidelines. Maybe not though. It’s good to be able to walk away and not even think about the place anymore.

 

[59 Dano]

I don’t know. I don’t remember this level of discontent and all out rage in contractors in 2013 especially not leading up to peak.

Until the last year, I always made money. In 2020 I made really good money and it seems like the company simply couldn’t stand that fact.

When is contract time? September? Is it the same for everyone or does it vary from contractor to contractor?

 

[bbsam]

When is contract time? September? Is it the same for everyone or does it vary from contractor to contractor?

It varies. But either side can opt out with notice, usually 30 days.

 

[It will be fine]

What you said I get, ok? At the same time the disruption has to be far more expansive and for a far longer duration that you might think. This is where we disagree. A key region of the country has to be focused on and 90% minimum locked down for a good month or more. At the same time the capitulation by minimum and mid size contractors while every one of them helps is not as impactful as several dozen of the multi state contractors located in key regions of the country abruptly quitting in unison , that won't happen. They would go to bankruptcy court first get protection of the court allowing them to operate until they can reorganize.

In the meantime for those who got in too late and those who hung around too long, they'll either have to find a way to keep going or simply walk away resigning themselves to the fact that what they thought they had was highly valuable is in reality worthless. Therefore in a final showdown between contractors and Far Freddy it will be a question of who can hold out the longest. And we know who that will be.

I think you underestimate how disastrous open contracts can be. One mid sized contractor walking out can cripple a building for months. One large contractor that covers a good chunk of a city would take years to recover. The buildings can’t staff to handle normal volume right now. Having it build up for days or weeks is not easy to recover from.