The Business of Independent Service Provider Contracting

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.

We’d like to make something crystal clear to begin with: FedEx wants you to succeed. We know it doesn’t always feel that way. When you're dealing with terminal audits or mounting pressure, it can feel like the "Eye of Sauron" is fixed squarely on your business. But the reality is that FedEx needs you. They rely on Contracted Service Providers (CSPs) to move every package they sell. It is significantly more expensive and logistically painful for FedEx to intervene and manage "open work areas" than it is to support a healthy, compliant contractor.

Ultimately, your success protects the brand. However, there are lines that, once crossed, make termination or non-renewal a business necessity for FedEx.

While definitely not an exhaustive list, here are 12 critical pitfalls (with eTruckBiz solutions) to avoid to keep your contract secure.