FedEx Ground and HD Contractors in 2007

This is a lengthy post but we wanted to be as thorough in possible in answering a question that FedEx's lawyer refused to answer during the March 20 conference call.

Christine Richards is the General Counsel and Secretary for the FedEx Corporation.  She primarily handled the questions from analysts about FedEx's misclassification troubles on March 20.

William Greene - Morgan Stanley

Okay. Just one last question, on the multi route versus single route drivers, do you have a sense for your thinking for when you'll think about whether that should be applied outside of California, sort of all throughout the network?

Christine P. Richards

We've been looking at options with respect to our independent contractor model and ways to improve it and to continue to provide outstanding service to our customers for years. We'll be continuing to do that. We've been very pleased with the results of our California transition and have achieved overwhelming acceptance from the single route contractors in their move to multi route contractors or in accepting positions with multi route contractors.

 

Operator
We'll go next to Edward Wolfe with Bear Stearns.

Analyst for Edward Wolfe - Bear Stearns

A quick question on the Ground and Home Delivery contractor model, can you tell us the percentage of single work area drivers versus say multi work drivers and maybe how that looked a year ago or five years ago?

Christine P. Richards

I can give you some sense that more than 50% of our routes are currently handled by multi area contractors. That has been growing steadily over the last few years. In California, we have stated our goal and plan by May 31st is to have 100% of the operation be with multi work area contractors so that has obviously contributed significantly to the growth this year.

Analyst for Edward Wolfe - Bear Stearns

Right. But 50% of the routes, what percentage of the driver count?

Christine P. Richards

It's more helpful if you think about this really in terms of the route. The productivity benefits from a multi work approach are significant and it's easier to understand if you look at it from a route point of view than the drivers.

Analyst for Edward Wolfe - Bear Stearns

Okay. But no sense as to the average number of routes carried by your typical MWA?

Christine P. Richards

We have multi work area drivers who have very large operations and we have some that are just a few routes so it varies widely.

Operator

We'll go next to Donald Broughton with Avondale Partners.

And that ended that line of questioning.  (Plus no one asked about the IRS, but that is a different post altogether.)

Very simple question about number of single- versus multi-route contractors.  Very blatantly avoided by Counselor Richards.  It seems like FedEx is unable - or more likely unwilling - to update observers on the 'enhancements and transitions' and provide evidence that the multi-route contractors are the solution to this problem.

Here is the best answer we can give.  Actually, it comes from other FedEx lawyers who submitted declarations with driver numbers in the multi-district litigation.  Email to fedexwatch AT teamster DOT org if you want the spreadsheet version.

A couple of footnotes: First, this is a snapshot in time but at least it creates a base line for the company's happy talk that the transition to multi-route workforce is moving ahead smoothly; Second, California is not included in this because the figures were before the termination of all SVCs; Third, some states have two sets of data because FedEx submitted information in spring 2007 and again in fall 2007 so it is useful to see changes; Fourth, the fall 2007 data for Ground removes any Ground linehaul contractors that were included in the spring 2007 data.

The Home Delivery table is here.