To date of this post, many contractors in states across the country have already made the transition from the FedEx Independent Contractor (IC) model to the Independent Service Provider (ISP) model, however, there are some states that are still converting to the ISP model. Furthermore, buyers entering the FedEx Ground arena will want to take note of these changes.
Summary of the ISP Model
The driving force behind FedEx’s decision to move from an IC model to ISP was to allow for clarification of a contractor’s role within the business model. More specifically, FedEx needed to clearly define a contractor and their employees as being completely independent from FedEx Corp.
The ISP model has brought some significant changes to the business as a whole. A few major changes include:
- Minimum transition scale will require an entity to own five PSAs or 500 stops in a station, co-location or designate close-location. May be fewer PSAs or stops in certain smaller stations.
- The ISP Agreement is fundamentally different than an IC Agreement in that the new ISP Agreement is a contract negotiated between an entity and FedEx Ground. The term of the agreement can range from 1-3 years.
Step by Step Guide for ISP Transition
The following is a sample step by step guideline for the ISP transition (excerpt from the FedEx Sample ISP Transition Workbook). A typical transition will take 9-24 months for an entire district. For more detailed information, contact your local FedEx Ground terminal.
- Limited Release and Operating Agreement Modification is available
- Financial growth incentives are available to acquiring eligible PSAs
- Signed Limited Release and Operating Agreement Modification due
- Operating Agreements expire for CSPs that signed a Limited Release and Operating Agreement Modification
- Date by which all CSPs pursuing an ISP Agreement will need to:
- Be registered and in good standing in the state(s) in which they do business*
- Have achieved minimum transition scale*
- Have established a CSP Profile on MyGroundBizAccount*
- Have completed the Initial Compliance Disclosure Process*
- CSPs will need to have finalized and acknowledged their CSA definition
- CSPs agree to submit an RFI Response, and sign Confidentiality and Non-Disclosure Agreement*
- ISP Agreement negotiations end*
- ISP Agreements go into effect
*CSPs will lose exclusive right to negotiate for CSAs in any of the items above in bold are not completed by the associated deadlines.
Be Prepared for ISP
If you are currently involved with an ISP transition process, make sure to set yourself up for success by being fully prepared for the changes. Working with an experienced FedEx route broker that can help you create a plan of action and answer questions related to your new ISP Agreement will be paramount to a successful transition. Contact us for more details.