Buying a Fedex Ground Route

[dmac1]

Don't see why. No news here. Took 15 years to get a decision will take another 15-20 more than likely to get another verdict. 4 years from now the challenged model will be obsolete. If does come out negatively for FedEx it doesn't challenge the grounds in regards to ISP model and the next challenge would likely take another 10-20 years to get a verdict on. During that time hundreds of contractors will sell/buy, grow, split, sell.

And in the meantime, fedex will be building liabilities like the $258 million they agreed to pay in just one state. That comes to over $1 billion when extended out. And that is just for the time up until 2006.

More lawsuits are in the works under the same contract for more years after that. Fedex will be watching very carefully on what liabilies they end up with under the 'new' model.

In my opinion, fedex has two real problems going forward- their liabilities based on franchise rulings, and the increased possibilities that large 'contractors' with many employees are much easier targets for unionizing that single work area 'contactors.'

Drivers under the new model are unquestionably employees, and the biggest hurdle the teamsters had to unionizing drivers under the old model was in fighting in front of the NLRB to get a ruling at each terminal.

 

[bacha29]

Pending court decisions does not stop X from doing whatever it damn well pleases leaving up to contractors to decide what they want to do about it afterward. It's not about what X does in the aftermath of a court decision that should worry contractors. It what it does during the time leading up to that decision. And in light of the past practices of X which are responsible for past law suits as well as what appears to be many more in the pipeline can you show me the specific contract language that quarantees the huge windfall profit from the sale of your operation you guys are all assuming is going to happen? When it could just as easily be worth nothing in the end .

 

[It will be fine]

And in the meantime, fedex will be building liabilities like the $258 million they agreed to pay in just one state. That comes to over $1 billion when extended out. And that is just for the time up until 2006.

More lawsuits are in the works under the same contract for more years after that. Fedex will be watching very carefully on what liabilies they end up with under the 'new' model.

In my opinion, fedex has two real problems going forward- their liabilities based on franchise rulings, and the increased possibilities that large 'contractors' with many employees are much easier targets for unionizing that single work area 'contactors.'

Drivers under the new model are unquestionably employees, and the biggest hurdle the teamsters had to unionizing drivers under the old model was in fighting in front of the NLRB to get a ruling at each terminal.

ISP is a stronger model. It is much easier to defend than the IC model. I don't think fedex is very exposed on liabilities there. Even multiple route contractors in the IC were properly classified, they only get settlements for weeks they were also full-time drivers. It's hard to drive full time and manage at least 4 other routes.

Why does everyone here have such blind faith in the teamsters? There have been large contractors, 50+ employees, for at least a decade. I've never heard of any of them voting in a union. There's no reason that will change. The biggest hurdle the teamsters face is RTW and the entire American culture.

 

[dmac1]

Stockholders ALREADY see billions in liabilities from current cases. And fedex will be liable for debts owed to drivers if a driver goes out of business and can't pay. Say one of your driver's is injured and causes injuries and damages to the tune of millions of dollars, and goes bankrupt, fedex will have liability.

And the period from 2016 to the present leaves them billions more in liabilities. Remember that the $238 million settlement agreed to in California only covered from 1999-2006. From 2006 on, fedex remains vulnerable.

And I have no blind faith in the Teamsters. I just honestly believe that any contractor with more than 8-10 employees is going to be an easy target for them, especially in certain states. And all fedex has to do to get out of the model is to decide that they don't want to operate that way anymore. With minimum wage going to $15 an hour, drivers will need to set aside $20 or more an hour to pay them. Good luck with that. Fedex will be outsourcing as much as possible to all but the densest areas, leaving suburban and urban contractors out in the cold. The post office can deliver most packages cheaper than fedex simply because those drivers are going there already.

 

[bacha29]

The ISP model is to some degree easier to defend however in the same aspect it is by no means fail safe when you stop and consider for a moment what the Kansas State Supreme Court had to say about contractors with more than one route and that ruling was requested by the U.S. Circuit of Appeals for the 7th District. What they take from that opinion as it pertains to individual states is anyone's quess. The prospect of future involvement by the Teamster 's while quite possible is not as likely as the prospect of greater difficulty finding the cheap labor needed in order to meet X's growing demands for that component . Face the facts. The only bullet an ISP contractor has in his chamber is his continued ability to find the low cost labor needed to make his operation viable. Simple equation. No cheap labor. No ISP contractor.

 

[bbsam]

Cheap labor is not hard to come by.

 

[FedGT]

Pending court decisions does not stop X from doing whatever it damn well pleases leaving up to contractors to decide what they want to do about it afterward. It's not about what X does in the aftermath of a court decision that should worry contractors. It what it does during the time leading up to that decision. And in light of the past practices of X which are responsible for past law suits as well as what appears to be many more in the pipeline can you show me the specific contract language that quarantees the huge windfall profit from the sale of your operation you guys are all assuming is going to happen? When it could just as easily be worth nothing in the end .

Want to show me in the last 20 years when the model has ever been endangered enough to be at risk of stopping contracting? I think there is much more of a history of "guarantees" on my side than on yours.

 

[FedGT]

Stockholders ALREADY see billions in liabilities from current cases. And fedex will be liable for debts owed to drivers if a driver goes out of business and can't pay. Say one of your driver's is injured and causes injuries and damages to the tune of millions of dollars, and goes bankrupt, fedex will have liability.

And the period from 2016 to the present leaves them billions more in liabilities. Remember that the $238 million settlement agreed to in California only covered from 1999-2006. From 2006 on, fedex remains vulnerable.

And I have no blind faith in the Teamsters. I just honestly believe that any contractor with more than 8-10 employees is going to be an easy target for them, especially in certain states. And all fedex has to do to get out of the model is to decide that they don't want to operate that way anymore. With minimum wage going to $15 an hour, drivers will need to set aside $20 or more an hour to pay them. Good luck with that. Fedex will be outsourcing as much as possible to all but the densest areas, leaving suburban and urban contractors out in the cold. The post office can deliver most packages cheaper than fedex simply because those drivers are going there already.

So in your logic every 10 employee+ small business is in danger of being easily unionized?

 

[dmac1]

So in your logic every 10 employee+ small business is in danger of being easily unionized?

No, but the teamsters like the trucking industry. And Fedex is a huge target, not just some mom and pop taco stand. Do you expect them to stop with ONLY those with ten drivers????? Just think about the costs of trying to fight a unionizing effort for an ISP. Didn't you hear about the organizing efforts in New Jersey and another state(Mass?) that scared fedx into spending thousands upon thousands to fight it? And that was in a small terminal, with not much more than ten drivers.

And is there even a single contractor who can really afford a $15 an hour minimum wage????????

 

[bacha29]

SAM: Presently the supply of cheap labor in your market appears based on what you saying favors the employer. What statistics or other such evidence do you have to show that supports what you seem to believe will be a market that will always favor the employer?.As for GT your sense of a secure future is based on the past practices of your master and no matter how many times you try to dance around it the fact still remains . There is simply nothing and I mean NOTHING in that operating agreement that will protect your considerable and obviously growing unsecured investment in the event of a dramatic and unforeseen turn events initiated by X in order to protect the interests of the shareholders who will always come before you.

 

[bbsam]

SAM: Presently the supply of cheap labor in your market appears based on what you saying favors the employer. What statistics or other such evidence do you have to show that supports what you seem to believe will be a market that will always favor the employer?.As for GT your sense of a secure future is based on the past practices of your master and no matter how many times you try to dance around it the fact still remains . There is simply nothing and I mean NOTHING in that operating agreement that will protect your considerable and obviously growing unsecured investment in the event of a dramatic and unforeseen turn events initiated by X in order to protect the interests of the shareholders who will always come before you.

The big manufacturers in the area lay people off. A lot. That pay check comes with no job security.

 

[FedGT]

SAM: Presently the supply of cheap labor in your market appears based on what you saying favors the employer. What statistics or other such evidence do you have to show that supports what you seem to believe will be a market that will always favor the employer?.As for GT your sense of a secure future is based on the past practices of your master and no matter how many times you try to dance around it the fact still remains . There is simply nothing and I mean NOTHING in that operating agreement that will protect your considerable and obviously growing unsecured investment in the event of a dramatic and unforeseen turn events initiated by X in order to protect the interests of the shareholders who will always come before you.

You keep saying the same things. Why don't you come up with what this catastrophic event will be that shareholder will want the contractor model out of Ground. There is virtually zero argument to support you here. No shareholder is going to want changes in the Ground model it is by far the most PROFITABLE segment of FedEx. That is all investors care about.

I am sure your next argument will be teamsters. Try to make the argument something more realistic and plausible in the next 10 years.

 

[bacha29]

Sam: You simply reaffirmed what I had been saying. The labor market by all indications favors you at the present time. But when those key manufacturers are running at full capacity they will pay a lot more than you pay and will you always be able to compete in a local labor market where demographics change rapidly?GT once again you reaffirmed what I had been . The interests of shareholders will always come first as evidenced by the announcement of a 3.25 billion dollar share buyback. There are many possibilites that could impact the future of X operations The introduction of a new competior with the price and services that can take market share. You have an ageing board of directors and who controls that board as well as growing demand for better returns from big shareholders like pension plans hedge funds etc. A steep recession. New regulation. As I told you there are numerous possibilites that are far less obvious than the Teamsters but with the clear potential to impact you in ways you maynever have thought about. Yes you guys will continue to produce the margins they want. They will simply bring greater pressure on rates and there won't be a damn thing you can do about because your margins will suffer before theirs

 

[FedGT]

New competitor will happen, guaranteed, probably owned by Amazon.
Buy backs happen all the time if a company thinks they have taken more of a pps drop than is relevant so not much of any clue there. If you believe your stock is going to $150 but can buy an astonishing amount at $100-125 most companies do it.
Steep recession will happen, just like the last time Ground will keep taking market share and grow.
Can some of that "hurt" our margins, yes. Is there evidence that it will??
Definitely not from a share buy back, not from our last mega recession, not when Ontrac, DHL, lazership (or whatever the hell that one was) came in, still just a constant growth machine with some of the best possible margins they get.
Big shareholders and hedge funds don't demand pensions so not sure where to argue with you on that one.

 

[bacha29]

Newsflash.........pension plans buy stock,lots of stock. Like I saidi before.if you guys want to continue to put more and more capital at risk in response to X's demand that you "get up to scale" without any binding commitments of any kind from X with regard to safeguarding that investment be my guest. If you make out good fine But if you don't then it will in the end come back to the lack of contract language protecting your equity that I have spoken about many times in the past. As I said before, you are only as prosperous and secure as the language in your contract. Unfortunately, yours doesn't have anywhere near enough when it comes to protecting what is yours.

 

[dvalleyjim]

Don't need to be rich but thanks for your confidence in me. I have no idea why you think I called you a failure, I said nothing of the sort. I did call you a liar on the statement that a 1 million dollar grossing contract will pay back $20,000-30,000 a year. You and I both know that is complete garbage

You know, here's my point. You have an $800,000 - 1 million $ business. Can you sell it for this amount? Do you have low debt?
Are you in a position to lose it or go bankrupt on it? For me being a musician and only wanted income I didn't have to work at was great for a long time. I had 3 trucks and when I went to 4 I built it up and sold the oldest truck with the route. But when in 2008 we went to psa's I began thinking that I wanted out. I had to get a corporation, go to a FedEx audited payroll, couldn't 1099 anyone including me mechanic. My drivers were now bringing home $600.00 per wk instead of 750.00, The AQMD made me upgrade my fleet. I said sheesh. This is getting like a job. A guy offered me cash and I sold. Best decision I ever made. I have a stress free exsistance and am only responsible for delivering my packages and not wrecking the truck (easy). (sorry I've had some Jim Beam)

 

[dvalleyjim]

Don't see why. No news here. Took 15 years to get a decision will take another 15-20 more than likely to get another verdict. 4 years from now the challenged model will be obsolete. If does come out negatively for FedEx it doesn't challenge the grounds in regards to ISP model and the next challenge would likely take another 10-20 years to get a verdict on. During that time hundreds of contractors will sell/buy, grow, split, sell.

You're right. By then the truck will drive itself and a drone will fly out and deliver the package. haHa

 

[dvalleyjim]

The ISP model is very good for EX.. It will be hard to overturn it. If I was a lawyer I would tie the drivers to Ex and go after a culture of illegal pay practices. Ex: no overtime, lunches, breaks, eX still controls there work environment since drivers go to an Ex facility with signs, tv telling them how to do their jobs. Customer think their Ex, Home delivery drivers load their own trucks without compensation. This is only crap off the top of my head. This is how I would now go after Ex

 

[bacha29]

The ISP model will be tougher to overturn especially if the level of tax compiance satisfys the U.S. Treasury. However it is by no means fail safe because it is impossible at the present time to determine the extent of the Kansas State Supreme Court ruling regarding contractors with more than 1 route will be adopted by the 7th Circuit Court Appeals and applied to the appeals that are currently pending. In the end it will still as it has always been a matter of tax compliance.

 

[FedGT]

You know, here's my point. You have an $800,000 - 1 million $ business. Can you sell it for this amount? Do you have low debt?
Are you in a position to lose it or go bankrupt on it? For me being a musician and only wanted income I didn't have to work at was great for a long time. I had 3 trucks and when I went to 4 I built it up and sold the oldest truck with the route. But when in 2008 we went to psa's I began thinking that I wanted out. I had to get a corporation, go to a FedEx audited payroll, couldn't 1099 anyone including me mechanic. My drivers were now bringing home $600.00 per wk instead of 750.00, The AQMD made me upgrade my fleet. I said sheesh. This is getting like a job. A guy offered me cash and I sold. Best decision I ever made. I have a stress free exsistance and am only responsible for delivering my packages and not wrecking the truck (easy). (sorry I've had some Jim Beam)

Honestly I am glad you were able to build up and get out on your terms the way you wanted. I hope the same for everyone doing this. There are not many people out there anymore that buy these and hold on to it 10-20 years. I do know for 100% certainty that there are loads of buyers out there paying cash for essentially gross revenue for multiple routes. I have seen as much as 25% over gross revenue (which I do think is quite unwise). There are a lot of people out there that have the money that are buying these up in less than 2 months of being listed as available. As rough As it is sometimes there is a fair bit of money to be made and to be able to buy into a business and instantly be making money on a weekly basis is very appealing to individuals that have cash on hand. Obviously depends a lot on where you are located though too.