This morning both Werner and Knight were downgraded by analysts. The reason appeared to be over capacity in the sector leading to reduced margins. In addition, there seems to be an inevitable clash brewing with state Attorneys General regarding the excessive use of questionably classified independent contractors. Clearly, the states lose out when companies classify employees in that manner and as a result, some states are aggressively filing suit to halt the practice. The perfect example is what the state of New Jersey did many years ago to limit the practice in their construction industry. Since the the new UPS master freight contract will enhance Teamster wages and benefits, it means this FDX practice of operating its entire ground operation under this guise obviously slants the competitive landscape. I should think that for reasons of fairness to states, fairness to FDX ground employees and fairness to FDX competitors, this practice needs to end.
I certainly agree with you..FredEx is using every tactic to raise their bottom line especially now that revenue in their time sensitive business is being diverted to their ground business. I wish to clarify though that the FredEx Ground employees do have the option not to be an independent contractor. They have the option to get paid by the number of stops, pieces and a combination of profit made on cost of delivery..and not have to own the required three routes and their vehicle. Of course the other option is the private contractor, which in this case is where the states are having the issue and rightfully so.