The Business of Independent Service Provider Contracting

Driver turnover is climbing across the FedEx Service Provider base, and the timing could not be worse. Our eTruckBiz data shows Service Provider driver turnover running 30–40% annually, with roughly a third of new hires gone before they reach the 90-day mark. That is consistent with the broader sector — Bureau of Labor Statistics JOLTS data shows annual separation rates in transportation and warehousing regularly exceeding 40%. The difference for you is that a national statistic is an abstraction and your roster is not.

Two things are converging right now. First, Network 2.0. FedEx has implemented the new model at roughly 360 locations, has closed more than 200 stations with 475-plus targeted by the end of 2027, and expects 65% of eligible daily volume to run through optimized facilities by the time this peak season hits. Many contractors have not been integrated yet. For those who have, the integration itself — new start times, reworked CSAs, new operational demands, and in some cases, new leadership — has been generating turnover on its own. Change is a resignation trigger, and Network 2.0 is nothing but change.

Second, peak. The 2026 FedEx Ground peak settlement period runs Saturday, November 21 through Friday, January 1, 2027 — six settlement weeks carrying surge stop charges. That is roughly ten weeks from today. A driver you hire in October is not a peak driver; a new hire realistically takes three to five weeks to become productive, and DOT qualification and Qual Cert processing eat into that before they ever run a route solo. The drivers who will actually carry your peak are already on your roster. The only real question is how many of them will still be there on December 15.

FedEx does not publish a list of the contractors it intends to keep. It does publish a number every year that tells you the same thing. In its 2023 annual report, Federal Express contracted with nearly 7,000 independent businesses for pickup, delivery, and linehaul (FedEx 2023 Annual Report). By May 2024 that number was about 6,000 (FedEx FY2024 10-K), by May 2025 about 5,700 (FedEx FY2025 10-K), and by May 31, 2026, approximately 5,300 (FedEx FY2026 10-K). That is roughly 1,700 FedEx contractor businesses gone in three years, a 24% reduction, while the packages did not go anywhere. They are being delivered by the contractors who are left.

Network 2.0 is the engine behind that number, and it is not finished. FedEx had implemented Network 2.0 at about 360 U.S. locations as of May 31, 2026, and expects to complete the U.S. rollout by the end of calendar 2027 (FedEx FY2026 10-K). More than 200 stations have already closed, with over 475 targeted by the end of 2027, about 30% of the facility footprint, and FedEx has said 65% of eligible daily volume will run through optimized facilities by this year's peak (Supply Chain Dive). Where it has been implemented, Network 2.0 has cut pickup-and-delivery cost by 10% (Supply Chain Dive). Read that as a contractor and it means something specific: FedEx is getting the same packages delivered with fewer stations, fewer routes, and fewer contractors, and it intends to keep doing so.

We travel the country holding Network 2.0 sessions, and after enough conversations a pattern becomes impossible to ignore. Contractors are sorting themselves into three groups, and the sorting is happening whether they participate in it or not. This post lays out the three types, what the data says about who makes it and who does not, where we believe the FedEx contractor model will be in five years, and what a contractor needs to do now to be one of the businesses that model is built around.