FedEx says that an ongoing battle with what was one of its major ground delivery contractors will not impact service.  

Last week, FedEx terminated its business relationship with contractor Spencer Patton and then sued him in federal court in Tennessee, alleging that the Brentwood, TN-based businessman has misrepresented the financial hardships of contractors that deliver for FedEx Ground.

The FedEx complaint asks the court for a permanent injunction and monetary damages for what it describes as a “coordinated and multi-faceted campaign” allegedly orchestrated by Patton to undermine the delivery giant’s relationships with contractors.

FedEx, a multinational transportation/logistics conglomerate, doesn’t directly deliver to homes and businesses. Rather, the Memphis, TN-headquartered company pays independent contractors to do the delivery work using their own drivers and trucks.

Patton has spoken out against FedEx, saying that as many as 35% of FedEx Ground delivery contractors are facing financial failure. He’s called on FedEx to improve compensation to contractors.

Patton also threatened to shut down his company’s FedEx routes on Black Friday (Nov. 25) this year if compensation wasn’t enhanced. He has sought to rally other contractors, encouraging them to join a trade association he’s created.

The pot-stirring led FedEx to end their contract with Patton, which the former hedge fund owner said compelled him to lay off some 225 employees. Patton reportedly had 225 FedEx routes in 10 states. He also offered services to about 6,000 U.S.-based contractors that transport and deliver packages for FedEx Ground.

While described as one of FedEx’s biggest contractors, the company said that Patton’s business accounted for less than 0.5% of its approximately 60,000 Ground routes. Contingency plans are in place and will be executed, FedEx said, adding that service disruptions are not expected.

That’s good news for promotional products companies, however, industry pros might want to watch for potential further fallout between FedEx and its contractors.

The Wall Street Journal reported that more than 2,000 people, including FedEx contractors, attended an event Patton recently hosted in Las Vegas – the aim of which was, in part, to promote participation by contractors in his trade association.

From January onward, some FedEx contractors have sent letters to the company pointing out what they say are issues with FedEx’s shipping forecasts and increased costs of fuel, wages and vehicle maintenance. One gripe, at least for some contractors, is that they believe they should receive a bigger slice of the fuel surcharge that FedEx has been charging customers.

FedEx said the average annual revenue of contractors has more than doubled over the past four years to $2.3 million.