Buying a Fedex Ground Route

[FedGT]

True, but the SBA will only guarantee no more than 75% of a loan of $150,000 or more 85% if less than $150,000 but that's the maximum leaving the lender on the hook for the rest. Furthermore the interest rate can be as high as 2.75% above the base rate. Plus a loan processing fee along with annual service fee. While it can be a solution from the contractor's perspective as well as the lender it's anything but a sure bet. Coming back to the guy who bought my route his father was all too happy that I would finance the entire purchase because of his belief that the SBA would not guarantee a high percentage of the loan leaving a higher exposure than he wanted his bank to take on.

I believe it is over $500,000 in "good will" assets they will only loan up to 75%. Under half a million and they will go up to 85%. Lengthy process but they will loan on these routes and if you have good cash flow they will loan and appraise for top dollar. Ex ended up pissing me off pretty bad a few months back that I decided to sell.
I still believe it is a very profitable, huge growth play if you are in the right area but like I said for a while the times of 10-20+ year contractors is dead. It is too bad, if they ran things a little differently it would yield much longer contractor runs but it is what it is.
Just like all of us say here if you don't like it get out. I got tired of it so that is what happened. We can sell out whenever we want. I have no hard feelings towards Ex and wish all remaining contractors luck going forward.

 

[bacha29]

I believe it is over $500,000 in "good will" assets they will only loan up to 75%. Under half a million and they will go up to 85%. Lengthy process but they will loan on these routes and if you have good cash flow they will loan and appraise for top dollar. Ex ended up pissing me off pretty bad a few months back that I decided to sell.
I still believe it is a very profitable, huge growth play if you are in the right area but like I said for a while the times of 10-20+ year contractors is dead. It is too bad, if they ran things a little differently it would yield much longer contractor runs but it is what it is.
Just like all of us say here if you don't like it get out. I got tired of it so that is what happened. We can sell out whenever we want. I have no hard feelings towards Ex and wish all remaining contractors luck going forward.

Good summation and a correct one . In it for a handful of years then get out.One of the problems that you mentioned is the original lenders are s till on the hook for a chunk of the principal and more local banks especially the rural ones want nothing to do with FedEx Ground. The primary rule under ISP is watch how your margins are trending If they are starting to trend downward time to pack it in. The last guy standing will not be the winner will not be the winner this time.

 

[bbsam]

Sign or not sign. It doesn't matter . X Ground freely admits that it doesn't consider a single provision to be binding upon itself.

if one does not sign, one could say contract is not binding as well.

 

[bbsam]

Whisper it quietly but he's taking independent contracting.....oops sorry I mean ISP to the next level, the silver screen.

Coming soon:

View attachment 90705

Great idea but far too much work. Probably harder than getting Express unionized.

 

[bbsam]

the times of 10-20+ year contractors is dead

Why?

 

[FedGT]

Why?

Takes too much to keep everything going, when things are running great it is phenomenal but like others have said on here when you lose a lot of drivers at the same time it becomes very challenging to get new guys in that are worth anything. Like I said I still think it can definitely be a very profitable venture but I am in a pretty decent sized terminal and there are 3 guys that have been there over 10 years, all of which claim that they have had enough compared to what it was even 5 years ago to today. All of us that dispatch over 10 guys which there are only 5 in the past year 1 has scaled back with the intent to sell out in the next year, 3 have sold out, 1 is planning on scaling back to ISP standards if he can get one more PSA, and 1 is content. It is a great growth model but standards keep getting more strict and at least at our terminal all of the bigger guys are getting sick of the constant irritations.

 

[bacha29]

High turnover, more stringent demands in the face of flat lining revenues, in new format ISP that has an even higher level of command and control than the old IC model, trusting you interests to a guy ( driver) can't even look after his own interests in a competent fashion are just few of the miseries a contractor has to look forward to. When the investor class is not realizing satisfactory margins and are not able to retain managers let alone drivers then and only then will the tipping point be reached.

 

[bbsam]

Takes too much to keep everything going, when things are running great it is phenomenal but like others have said on here when you lose a lot of drivers at the same time it becomes very challenging to get new guys in that are worth anything. Like I said I still think it can definitely be a very profitable venture but I am in a pretty decent sized terminal and there are 3 guys that have been there over 10 years, all of which claim that they have had enough compared to what it was even 5 years ago to today. All of us that dispatch over 10 guys which there are only 5 in the past year 1 has scaled back with the intent to sell out in the next year, 3 have sold out, 1 is planning on scaling back to ISP standards if he can get one more PSA, and 1 is content. It is a great growth model but standards keep getting more strict and at least at our terminal all of the bigger guys are getting sick of the constant irritations.

I agree with most of that.

The one bright spot is the ELDP (Entry Level Driving Program) coming out. Finally be able to bring in young folks at 21 to 25 years old and train them from the ground up.

 

[bacha29]

I agree with most of that.

The one bright spot is the ELDP (Entry Level Driving Program) coming out. Finally be able to bring in young folks at 21 to 25 years old and train them from the ground up.

That only works when after training them you have steady work for them. They are not about to go home and sit there waiting for the phone to ring.

 

[bbsam]

That only works when after training them you have steady work for them. They are not about to go home and sit there waiting for the phone to ring.

Why wouldn't I have work for them? Basically what has happened is the driving experience requirements have gone away in lieu of the ELDP.

 

[Cactus]

I agree with most of that.

The one bright spot is the ELDP (Entry Level Driving Program) coming out. Finally be able to bring in young folks at 21 to 25 years old and train them from the ground up.

Nice pun there.

 

[bbsam]

Nice pun there.

I thought so.

 

[bacha29]

Why wouldn't I have work for them? Basically what has happened is the driving experience requirements have gone away in lieu of the ELDP.

I trained and payed scores of guys at the small terminal I was stationed , trained at the insistence of management but I had no work for them.
Needless to say they quickly moved onto something else .

 

[bbsam]

I trained and payed scores of guys at the small terminal I was stationed , trained at the insistence of management but I had no work for them.
Needless to say they quickly moved onto something else .

I never bring drivers in until i need them.

 

[bbsam]

I trained and payed scores of guys at the small terminal I was stationed , trained at the insistence of management but I had no work for them.
Needless to say they quickly moved onto something else .

Why bring them in ifnyou didn't need them?

 

[bacha29]

I didn't bring them in, terminal manager brought them in and just handed them to me. Things are a lot different in a small barn. With company hired payed and trained temps soon to go among the missing, I imagine the 3 ISP's who remain will be spending a lot of money on training and equipping temps and buying trucks to handle peak season this year.

 

[bbsam]

I didn't bring them in, terminal manager brought them in and just handed them to me. Things are a lot different in a small barn. With company hired payed and trained temps soon to go among the missing, I imagine the 3 ISP's who remain will be spending a lot of money on training and equipping temps and buying trucks to handle peak season this year.

And thats why I never agree to schedule K. Just not worth the risk in my opinion.

 

[STFXG]

What's schedule k?

My terminal has never run temps... Ever. Always been up to us to cover.

 

[It will be fine]

ELDP is very time consuming. It's not a good fix when you're in a bind with turnover. It's only good for when you have a candidate you already know well and can trust to stick it out. ELDP is a minimum 3-4 week process. It's easier to toss 10 people with experience into the Fedex approval gauntlet and train whatever ones survive.
ELDP is a nice option to have, but it's still too cumbersome when stuff hits the fan.

 

[It will be fine]

What's schedule k?

My terminal has never run temps... Ever. Always been up to us to cover.

Schedule K is a peak amendment for ISP. It jacks your decline stop threshold through the roof in exchange for a little money and a lower surge stop payment threshold. It only matters on the HD side. It basically has you agree to cover all the stops that come in your area. I don't know why bbsam wouldn't accept it with only ground.