About ISP Model

FedEx has announced it will transition all independent contractors to its new ISP model by 2020.

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:

Rates

For fuel, contract fee, stop rate, and package rate.

Vehicles

FedEx has minimum standards for vehicles, but the ISP will choose their own vehicles to meet these requirements.

Scanners

Can be leased from FedEx or leased / purchased from outside providers.

CSA

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.

Contract Term

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.

Arbitration

An ISP can choose the arbitration revision in the ISP agreement to resolve contract related issues.