FedEx Ground has launched its controversial driver contractor grading program, giving it the name “Medals” and outlining in an internal memo how the program is expected to work.
The program is being introduced across the network through March 2, the FedEx Corp. unit (NYSE: FDX) said in the memo, which was released earlier this week and obtained by FreightWaves. Officers authorized to grade service providers will be invited to rollouts in each district to learn more about the process, according to the memo.
The program will affect about 5,000 of FedEx Ground’s 6,000 contractors who provide local pickup and delivery services. It does not affect a smaller group of contractors who manage longer-haul over-the-road services.
FedEx Ground operates exclusively with a nonunion contractor network. Contractors are responsible for their own drivers, vehicles, fuel and other expenses. They get paid on a per-stop basis.
The new process awards contractors Olympic-style medals — gold, silver and bronze — based on a wide range of performance-based criteria. Gold medalists win the opportunity to negotiate a new agreement and the right of first acceptance. A service provider with that classification may also be able to serve more stops, thus earning more money, and contract to provide lucrative “contingency” services in which one contractor steps in temporarily to serve another’s territory.
Silver medalists will have the same negotiation and first-acceptance opportunities as their gold medal brethren.
A bronze medalist may not be offered the chance to negotiate a new agreement unless it can improve its results, and its classification, within three months of receiving the grade, the memo said.
However, a bronze classification does not automatically mean the provider will be disqualified, according to the memo. A higher level of past performance could result in additional negotiating opportunities for bronze medalists, the memo said.
Under the new process, authorized officers will meet monthly with FedEx Ground station managers to review the results
News of the grading system leaked out at the end of January. In response to concerns about media reports that the process was being portrayed as confrontational, FedEx Ground said the Medals process aims to “enhance engagement and transparency” between the company and its provider network.
For years, FedEx Ground has conducted internal evaluations with contractors over their safety and service quality performance. The key component of the new program is an increased focus on efficiency, according to a contractor who asked to remain anonymous.
In a slow economy, the ability of contractors to operate efficiently has become paramount to the company, contractors have said.
The company said it has launched a new “data-driven approach” to communicating contract-specific results via an online dashboard. The results can be used to “identify opportunities as well as recognize service provider companies with superior results,” according to a statement from late January.