So Fedex also supplies the local contractors with branded trucks and uniforms for the Fedex Home deliveryThey do indeed: http://www.braunconsulting.com/bcg/newsletters/winter2004/wi...
(When I was a contractor for Bank of America, I got the same Bank of America business cards that everyone else did. Contracting does necessarily mean "setup this one webserver" or "deliver these 83 random boxes today"; it can also be a full-time thing.)
I assume they don't mind the reputation damage because the price is what matters in the "home delivery" business. They care that their $100 overnight letters get delivered on time; your 60 pound box of laundry detergent doesn't mean much to them.