Changing from IC to ISP
The change from an IC to an ISP model is largely fueled by past legal issues around whether FedEx1 operators should be classified as an employee or independent contractor.
FedEx started the conversion from IC to ISP in 2016 with the goal of converting all contractors to the ISP model by 2020. As part of the new ISP model, FedEx contractors need to operate both Ground and Home Delivery routes within their territory and will need to scale so that they are operating 5 routes and/or making 500 deliveries per day.
Under the ISP model, new ISP agreements will need to be negotiated with contractors.
An ISP agreement will include many elements:
For fuel, contract fee, stop rate, and package rate.
FedEx has minimum standards for vehicles, but the ISP will choose their own vehicles to meet these requirements.
Can be leased from FedEx or leased / purchased from outside providers.
The contract service area is the territory for which the ISP is responsible.
Brand Promotion Program
ISPs can choose whether to use FedEx logos and uniforms in exchange for brand promotion fees.
Contracts are typically negotiated for a period of several years. They are not automatically renewed but may be renegotiated.
Right to Decline
An ISP can decline certain requests. This is detailed in the ISP agreement.
An ISP can choose the arbitration revision in the ISP agreement to resolve contract related issues.