In an era where e-commerce reigns supreme, FedEx and Amazon have developed unique approaches to manage their last-mile delivery jobs.
This article delves into the details of FedEx’s Independent Service Provider program and Amazon’s Delivery Service Partner network, compares the two, and explains some of their back-office operational responsibilities.
Keep reading to learn more about FedEx vs Amazon, and their respective service partner programs.
What is FedEx ISP?
A FedEx Independent Service Provider (ISP) operates a contracted service business that delivers packages within a specific territory for FedEx Ground. They are not employees of FedEx, but independent business owners that FedEx contracts with to handle “last mile” deliveries.
Here are some of the main duties and responsibilities of a FedEx ISP:
- Manage delivery routes: ISPs manage multiple delivery routes within a specific geographic area. They must ensure that packages are delivered on time and meet FedEx’s service standards.
- Operate as a business entity: As an independent business, ISPs must handle all business operations. This includes keeping documentation in order, maintaining vehicles, and managing daily operations.
- Hire employees: ISPs are required to hire drivers as employees rather than independent contractors. This means they must comply with all applicable labor laws, which includes providing benefits to their employees.
- Maintain vehicles: ISPs are responsible for procuring, maintaining, and insuring their own delivery vehicles. Vehicles must meet certain FedEx standards, and often display the FedEx logo.
- Comply with FedEx standards: ISPs must comply with FedEx’s service standards and requirements. This includes wearing FedEx branded uniforms and following FedEx’s protocols for package handling and customer service.
- Negotiate service agreements: ISPs enter into a Negotiated Service Agreement (NSA) with FedEx. This agreement outlines the terms of their service, including compensation, service areas, and operational requirements.
- Manage financial operations: ISPs are responsible for the financial aspects of running their business. This includes managing operational costs, payroll for their employees, and expenses related to vehicle maintenance and insurance.
What is Amazon DSP?
The Amazon DSP program represents Amazon’s strategy for last-mile delivery. Amazon DSPs are independent delivery companies contracting with Amazon. The model allows these businesses to start small, typically managing teams of 40-100 drivers, with the flexibility to grow over time. Amazon DSP driver requirements are set by individual DSPs, and the DSP portal provides a centralized location for managing operations.
Here’s a detailed look at what an Amazon DSP does:
- Deliver packages: The core function of an Amazon DSP is to deliver packages. They handle last-mile delivery, transporting packages from Amazon’s distribution centers to the customer’s doorstep.
- Manage operations: As business owners, DSPs are responsible for all aspects of their operations. They plan routes, manage schedules, handle day-to-day logistics, and ensure deliveries are completed efficiently and on time.
- Hire and train staff: DSPs recruit, hire, and train their own teams of drivers. This includes ensuring their teams meet Amazon’s standards for safety and customer service.
- Maintain vehicles: DSPs typically lease or own a fleet of delivery vans, which they must maintain and insure. These vehicles are often emblazoned with Amazon branding.
- Ensure compliance: DSPs must adhere to Amazon’s operational guidelines, safety standards, and customer service expectations. They also need to comply with all relevant local, state, and federal regulations governing their operations.
- Provide customer service: As the face of Amazon to many customers, DSPs handle customer service interactions during delivery. They ensure packages are delivered safely and securely, and they handle any issues or complaints that may arise.
Pros and cons of Amazon vs FedEx jobs
The Amazon DSP program and FedEx’s ISP model are both strategies employed by their respective companies to manage the last mile of package delivery — getting the packages from local distribution centers to customers’ doorsteps. However, they operate differently in several ways:
Ownership and control
- In the Amazon DSP program, the business owners are essentially operating their own independent delivery companies that contract with Amazon. They manage their own employees, handle operational issues, and maintain their own fleet of delivery vans (which are often leased through Amazon’s partnerships).
- In the FedEx ISP model, the ISPs are also independent businesses that contract with FedEx, but they are typically required to have multiple routes or a certain number of drivers, and they must operate in a defined territory. ISPs are more integrated into the FedEx system and have greater requirements from FedEx regarding their operations, vehicles, uniforms, etc.
Scale
- Amazon DSPs can start with a smaller scale, managing teams of 40-100 drivers. The program is flexible and enables DSP owners to grow their business over time.
- FedEx ISPs, on the other hand, typically operate on a larger scale from the outset due to FedEx’s requirements for multiple routes and a defined service area.
Employees
- Amazon DSPs are responsible for their own hiring and management of delivery drivers as employees of their individual companies.
- FedEx ISPs are also required to hire drivers as employees, not as independent contractors. This came as a change in the FedEx ISP model to ensure compliance with labor regulations.
Contracts and agreements
- Amazon DSPs enter into agreements with Amazon which outline their partnership details.
- FedEx ISPs negotiate a detailed service agreement with FedEx, outlining the requirements and expectations for their service area.
Delivery network
- Amazon DSPs work within Amazon’s logistics network, delivering packages ordered from Amazon and, in some cases, its partners.
- FedEx ISPs, meanwhile, can deliver any packages within FedEx’s delivery system, which can include a wider variety of clients since FedEx operates as a standalone shipping service as well as serving online retailers.
Handling back-office administration
Running a FedEx ISP or an Amazon DSP involves a significant amount of back-office administration work. Here are some of them:
Accounting and bookkeeping
- Payroll processing
- Invoicing
- Accounts payable
- Mileage and expense reimbursement
- Audits
- Reporting
Human resources
- Recruiting
- Background checks
- Drug screenings and DOT physicals
- Training
- Benefits administration
- Document maintenance
Operational support
- Route performance monitoring and reporting
- Schedule deliveries
- Fleet maintenance
- Ensure hours-of-service compliance
Many businesses choose to use back-office support services from reputable companies that specialize in the unique needs of DSPs and ISPs. These back-off services streamline administrative tasks, enabling DSPs and ISPs to focus more on service delivery and growing their operations.
In addition to offering scalability and increasing productivity, professional back-office service providers can reduce operational costs by up to 40%.
Consider a rewarding new opportunity with room for growth
The appeal of an Amazon DSP driver or a FedEx ISP business lies in the independence and potential for growth these opportunities offer. As an independent contractor, you can grow your business over time, gaining invaluable experience in managing logistics operations.
For those interested in exploring these opportunities, researching FedEx ISP requirements and the Amazon DSP hiring process is a great starting point. Whether you favor the FedEx ISP model or Amazon’s DSP network, both paths offer a rewarding career in last-mile delivery jobs. With the continued growth of e-commerce, these roles provide enticing career opportunities for aspiring entrepreneurs.
FAQ
Yes, becoming an Amazon DSP can be worth it for entrepreneurial individuals looking to run their own logistics business. With comprehensive operational support from Amazon, and the potential for steady income from a constant flow of deliveries, it can be a rewarding endeavor.
The earnings of Amazon DSP drivers vary depending on the specific DSP they work for, their location, and the number of hours they work. As of my knowledge cutoff in September 2021, the average salary for an Amazon DSP driver in the United States is around $16 to $18 per hour, but you should check the most current figures as this can change over time.
Last-mile delivery refers to the final step of the delivery process where a package is transported from a hub, warehouse, or distribution center to the recipient’s doorstep. It’s a critical part of the supply chain, especially for e-commerce companies, because it directly impacts customer satisfaction.
