Though FedEx has historically operated under an Independent Contractor (IC) model, by May 2020 it will fully transition to an Independent Service Provider (ISP) model.
Estimated # of FedEx contractors nationwide Estimated # of FedEx P&D contractors nationwide required to comply with ISP standardsAccording to FedEx 1 , businesses operating under an ISP model are better able to adapt to the dynamics of contemporary market conditions (like e-commerce and differentiated services).
The ISP model requires that contractors have a minimum of 5 routes and/or 500 daily deliveries. The new ISP standards also require that contractors overlap Ground and Home Delivery routes. In order to meet new ISP requirements, some current route owners are buying new routes and/or combining routes with other FedEx contractors. Other contractors are taking this opportunity to sell their routes instead of transitioning to the new model.
This change means reorganization and potential route turnover over the next couple years as contractors sell or work to meet new requirements. The new ISP model is also something that new route buyers in the FedEx market should be aware of. It will have an impact on the way that contracts are negotiated and how routes are run and organized.
ISP contractors are required to conform to a number of FedEx requirements. Among these are scale, overlap, and others.
As a FedEx contractor, your livelihood depends upon your ability to negotiate a favorable and profitable ISP contract.
KR Capital is a full-service brokerage firm with nearly 10 years of FedEx brokerage experience. Our suite of services is specifically tailored to help streamline the process of buying and selling FedEx routes.
