What guarantee does FedEx get from a contractor that if they pay more to not fail at peak? Does FedEx let the packages sit if a contractor is paid more and does not have the capacity or fails to plan?
Peak is a one month (short term) problem each year, hence a short term solution. I would rather pay 20% more one month a year rather than pay 20% more all 12 months a year.
If I were going to help out a failing contractor, I would expect to be paid more money as well and apparently that is what FedEx is doing. I am not saying that FedEx shouldn't pay a contractor more, but paying more money does not guarantee a contractor will be successful.
It does however reduce the chances of him not being successful.
At the same time it requires cooperation on both ends. When XG pays a contractor additional seasonal premiums it is with the expectation that it be used to procure additional seasonal assets not stuff it down his pocket.At the same time the cost of procuring, training, outfitting and equipping extra manpower and vehicles just for a few weeks is staggering. Not to mention the fact that by the time you get that person's production up to the break even level peak season's over.
The core issue still exists year round. The challenge of finding a person willing to go out there everyday match and exceed the average UPS driver's production and do it for half the pay
They'll do it for awhile until they catch onto the game........Trouble is XG still believes that there will always be somebody else standing by ready to step in and fill the void. .... And if there isn't.......well, that the contractor's problem.