FedEx Express & Ground Merger: What It Means for Contractors in 2025
Introduction
In a major shake-up to the logistics industry, FedEx officially merged its Express, Ground, and Services units under one unified entity—Federal Express Corporation—as of June 2024. While this may sound like an internal consolidation, the real story is in how FedEx plans to deliver packages going forward: by shifting entirely to a contractor-based model.
In short, the FedEx Ground model—built around independent contractors—is now the blueprint for FedEx’s last-mile delivery future.
So, what does this mean for contractors? Opportunity, yes—but also change. Here's what you need to know in 2025.
The FedEx Merger: A Shift Toward Contractor-Driven Delivery
Historically, FedEx Express operated with employee drivers, company-owned equipment, and a unionized workforce, while FedEx Ground has always relied on independent contractors (ISPs) to handle deliveries.
With this merger, FedEx is phasing out the Express employee-based model in favor of the Ground contractor model. This is not just a cost-saving measure—it’s a strategic pivot.
Think of it this way: FedEx didn’t just combine two divisions—it made the Ground model the standard moving forward.
This change will bring new growth opportunities for current contractors, but also higher expectations around performance, branding, and vehicle compliance.
What This Means for Contractors
🔼 Growth Potential
As Express routes shift to contractor-driven operations, more routes and larger territories may become available to qualified ISPs.
Contractors positioned to scale or take on additional volume will benefit most.
🛠️ More Responsibility, Higher Standards
Expect tighter operational requirements and greater scrutiny on your fleet, performance metrics, and staffing.
FedEx will expect contractor fleets to meet branding, maintenance, and technology compliance standards that previously didn’t apply across the board.
💰 Changing Pay Structures
New compensation models may be introduced as FedEx unifies how routes are measured and rewarded—factoring in volume density, efficiency, and service scores, not just stop counts.
Key Operational Changes
FedEx’s Network 2.0 initiative is streamlining everything:
Unified routing for Express and Ground packages
Integrated scanning, tracking, and dispatch tools
Elimination of overlapping facilities and inefficient routes
This will require contractors to be nimble, tech-savvy, and able to scale quickly as network demands shift.
Why It’s a Big Win for Customers—and What That Means for You
Customers now experience:
Single pickups for all FedEx packages
Improved delivery estimates
One driver, one stop—regardless of service level
This simplifies logistics for end users—but raises the bar for contractors, who must now provide top-tier service across all FedEx offerings.
Challenges to Expect
Labor tensions: Express employees are unionized; transitioning routes to contractors may spark resistance.
Increased expectations: Contractors must take on new volumes without sacrificing service.
Cost of entry: New route opportunities may require investment in newer, FedEx-compliant step vans.
Position Your Business for Growth with Fleet Source
If you're looking to expand your fleet or upgrade aging vehicles, Fleet Source has you covered:
New and reconditioned FedEx-compliant step vans
Nationwide delivery
Fast turnaround times
Expert support from a team that understands the ISP model
📞 Call us today at 816-451-7219 to explore our current inventory or sumbit a form HERE