Buying a long haul Fedex route

dssm

Member
I am looking to buy a line (long) haul route from a contractor. it has 5 trucks with one supp and half the routes go all the way from east to west coast. Pros and Cons, things to watch out for? Is it very difficult to find teams willing to do these long haul drives?
 
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It will be fine

Well-Known Member
I am looking to buy a line (long) haul route from a contractor. it has 5 trucks with one supp and half the routes go all the way from east to west coast. Pros and Cons, things to watch out for? Is it very difficult to find teams willing to do these long haul drives?
Sorry, not many Linehaul contractors here. I know a handful though. I believe the money is pretty good for the industry considering they are dedicated runs with guaranteed work. Finding qualified drivers is always a problem, but that's just a constant in the industry. The contractors that do long haul well tell me it's pretty good because we are putting up new buildings all the time which create more runs, so there is a lot of growth potential. I'd be worried about automation, fedex is setup for robot trucks. Long haul static routes with no customer interaction is ripe for automated vehicles, so it depends on your time horizon. If you can pay back your loan in 5 years and make good money in the meantime it's as safe as any trucking company. You just might not be able to sell it when you're done.
 

dssm

Member
W
Sorry, not many Linehaul contractors here. I know a handful though. I believe the money is pretty good for the industry considering they are dedicated runs with guaranteed work. Finding qualified drivers is always a problem, but that's just a constant in the industry. The contractors that do long haul well tell me it's pretty good because we are putting up new buildings all the time which create more runs, so there is a lot of growth potential. I'd be worried about automation, fedex is setup for robot trucks. Long haul static routes with no customer interaction is ripe for automated vehicles, so it depends on your time horizon. If you can pay back your loan in 5 years and make good money in the meantime it's as safe as any trucking company. You just might not be able to sell it when you're done.[/QUOTE

Thanks for that information, just looked it up. Didn't even think of that. Something to consider. with that in mind, is it better to buy the regular customer pick up and deliver routes then? in a very concentrated metropolitan city?
 

dssm

Member
W
Sorry, not many Linehaul contractors here. I know a handful though. I believe the money is pretty good for the industry considering they are dedicated runs with guaranteed work. Finding qualified drivers is always a problem, but that's just a constant in the industry. The contractors that do long haul well tell me it's pretty good because we are putting up new buildings all the time which create more runs, so there is a lot of growth potential. I'd be worried about automation, fedex is setup for robot trucks. Long haul static routes with no customer interaction is ripe for automated vehicles, so it depends on your time horizon. If you can pay back your loan in 5 years and make good money in the meantime it's as safe as any trucking company. You just might not be able to sell it when you're done.[/QUOTE

Thanks for that information, just looked it up. Didn't even think of that. Something to consider. with that in mind, is it better to buy the regular customer pick up and deliver routes then? in a very concentrated metropolitan city?
 

It will be fine

Well-Known Member
P&D has its own issues. If you're planning on this as an investment that doesn't involve driving that is much more difficult with P&D. The margins aren't there unless you have a lot of trucks on the P&D side to reliably never drive. On Linehaul if you can't cover a run you lose points and the hub sends out someone to cover it. On P&D you can't let a route sit and there's no one to call that can cover a route with no notice.
 

dssm

Member
P&D has its own issues. If you're planning on this as an investment that doesn't involve driving that is much more difficult with P&D. The margins aren't there unless you have a lot of trucks on the P&D side to reliably never drive. On Linehaul if you can't cover a run you lose points and the hub sends out someone to cover it. On P&D you can't let a route sit and there's no one to call that can cover a route with no notice.
My partner will be the manager but also a backup driver. There are two routes, one p&d and one line haul, for sale, so hard to decide. the line haul one tho is 3x more expensive but only 2x more cashflow than the P&D.
 

dssm

Member
P&D has its own issues. If you're planning on this as an investment that doesn't involve driving that is much more difficult with P&D. The margins aren't there unless you have a lot of trucks on the P&D side to reliably never drive. On Linehaul if you can't cover a run you lose points and the hub sends out someone to cover it. On P&D you can't let a route sit and there's no one to call that can cover a route with no notice.
Do you recommend getting in at all at this stage with this fedex IC structure. will it still be as profitable in the next 10 years, of course in your opinion through your experience with X,
 

It will be fine

Well-Known Member
Do you recommend getting in at all at this stage with this fedex IC structure. will it still be as profitable in the next 10 years, of course in your opinion through your experience with X,
At this point I would say no to buying into the IC model. If you have someone that can drive a tractor you can just buy a truck and get a contract. They are always recruiting more Linehaul contractors. You wouldn't be starting with any runs or points but you also wouldn't have any unsecured debt. If you have the cash to expand you can buy more tractors as growth dictates. One of corporate's main goals this past year has been to lower its Linehaul costs. I was exploring adding tractors myself and was cautioned against it as I was basing it on current compensation and was told major changes are likely coming. The first few years will be tough regardless so I would start with as little debt as possible, you can always sell a truck.
 

Artee

Well-Known Member
You purchase a business with cash. Why would you take out a loan and get into an industry you know nothing about? If you have $300k or more to spend and you have to come on to a website and ask questions to a bunch of strangers about a business/industry that you have no clue about, then you are over your head. You are a fool looking to throw money away. Ground is not an investment. You are purchasing yourself a job.
 

bacha29

Well-Known Member
You purchase a business with cash. Why would you take out a loan and get into an industry you know nothing about? If you have $300k or more to spend and you have to come on to a website and ask questions to a bunch of strangers about a business/industry that you have no clue about, then you are over your head. You are a fool looking to throw money away. Ground is not an investment. You are purchasing yourself a job.
The endeavor DSSM has nothing to do with creating equity. All they want from you is your money and your cheap labor. Likewise they want you and not themselves to have to buy trucks one of the fastest depreciating pieces of equipment known to the US economy and find somebody without a history of socially irresponsible behavior that you can count on to do the job for what you can pay.The thing about is this...If you have for example some dividend paying stocks or an annuity or some income producing real estate, this way you at least know what you've got. With Fedex contracting it will always come down to this.....Change is the only constant and nothing's binding. On you? Oh yes. On them. ? Not in the least and they they go to great lengths to make sure you understand that.
 

It will be fine

Well-Known Member
You purchase a business with cash. Why would you take out a loan and get into an industry you know nothing about? If you have $300k or more to spend and you have to come on to a website and ask questions to a bunch of strangers about a business/industry that you have no clue about, then you are over your head. You are a fool looking to throw money away. Ground is not an investment. You are purchasing yourself a job.
Why would you only purchase a business with cash? That doesn't make any sense. I know plenty of people that have made a good return on Ground businesses, bought and sold them at a profit. It's a risky investment but it's still an investment.
 

dssm

Member
Thank you for all your opinions. The area I am looking at, California, seems to be very lucrative which may not be the case in other areas of the country. I can see there is a good business opportunity when 1) there are no good line haul routes for sale in my demographics and 2) when they do get listed they sell within months. Contrary to what you think you know about me, i have done a lot of research on the business and am not going in blindly. through my research I have generally found that this site is not helpful at all as a resource, or to build a community. It's more of a place where current IC who have not been successful just come on to gripe and complain. It's a shame because you should be using your precious time trying to organize and work/support each other,
 

bacha29

Well-Known Member
Thank you for all your opinions. The area I am looking at, California, seems to be very lucrative which may not be the case in other areas of the country. I can see there is a good business opportunity when 1) there are no good line haul routes for sale in my demographics and 2) when they do get listed they sell within months. Contrary to what you think you know about me, i have done a lot of research on the business and am not going in blindly. through my research I have generally found that this site is not helpful at all as a resource, or to build a community. It's more of a place where current IC who have not been successful just come on to gripe and complain. It's a shame because you should be using your precious time trying to organize and work/support each other,
Currently there is a shortage of 35,000 class A truck drivers. I hope that you have factored that into the equation because you might find yourself in the same pickle that many other investor class route owners have encountered. They got into the business purely on the dumb assumption that there would always be some slug out there willing to work for next to nothing and be there clean and sober and ready to take that load wherever is has to go in whatever weather conditions that exist at the moment. At the small barn that I worked out of we only had one line haul a single route guy who faithfully did it for 20 years day after day. This October he sold it to an upstate banker. In just these past 9 weeks that investor class owner has gone through 4 drivers on just that 1 overnight trip and is now absolutely begging the original owner to drive the route for him. Yes you could call yourself a "manager" or an " investor' or an owner whatever you like but one fact still remains the same. You are only as good as the guy behind the wheel. He will drive the truck nothing more. He will not manage the logistics or the regulatory requirements or the cash flow or all the misery X has in store for you.
 

Artee

Well-Known Member
Thank you for all your opinions. The area I am looking at, California, seems to be very lucrative which may not be the case in other areas of the country. I can see there is a good business opportunity when 1) there are no good line haul routes for sale in my demographics and 2) when they do get listed they sell within months. Contrary to what you think you know about me, i have done a lot of research on the business and am not going in blindly. through my research I have generally found that this site is not helpful at all as a resource, or to build a community. It's more of a place where current IC who have not been successful just come on to gripe and complain. It's a shame because you should be using your precious time trying to organize and work/support each other,

If you are getting into the truck driving side of things, you better have your class A because you are going to need it sooner or later. Otherwise you would be a prime example of someone getting into an industry you know nothing about without even the basic tools to do the job yourself.
 

bacha29

Well-Known Member
If you are getting into the truck driving side of things, you better have your class A because you are going to need it sooner or later. Otherwise you would be a prime example of someone getting into an industry you know nothing about without even the basic tools to do the job yourself.
Spot on Artee. Class A ......or stay away. There will no doubt come a time or many a time when dssm will have to climb in the cab and pull those doubles himself. You guys have made it perfectly clear to him. If he thinks that all he has to do is just to sit back and collect the money, well wait until one of his guys is in an at fault wreck.
 

STFXG

Well-Known Member
What's the point in getting a class a? If he doesn't have the required previous experience he still won't get approved to drive for himself.
 

It will be fine

Well-Known Member
What's the point in getting a class a? If he doesn't have the required previous experience he still won't get approved to drive for himself.
They have an ELDP for Linehaul as well. It sounds like he's looking at a business with mostly team runs anyway. He's not hopping in the truck and driving to Jersey himself. Linehaul is much easier to get by without driving yourself. They get more leeway when people quit. As long as it's not chronic turnover with uncovered runs a week here or there isn't a big deal.
 

bacha29

Well-Known Member
They have an ELDP for Linehaul as well. It sounds like he's looking at a business with mostly team runs anyway. He's not hopping in the truck and driving to Jersey himself. Linehaul is much easier to get by without driving yourself. They get more leeway when people quit. As long as it's not chronic turnover with uncovered runs a week here or there isn't a big deal.[/QUIT.. Yes, most regional hubs have trip lease guys waiting to take the loads. I was told that if a line haul is not covered for a 30 day period the contract and points are forfeited.At the same time however some guy going from CA to NJ parks the truck in Iowa calls and tells the contractor where he parked the truck then takes the bus back home then it's times like this when the contractor having his own Class A CDL pays off. Events such as this are not uncommon.
 

Exec32

Well-Known Member
Thank you for all your opinions. The area I am looking at, California, seems to be very lucrative which may not be the case in other areas of the country. I can see there is a good business opportunity when 1) there are no good line haul routes for sale in my demographics and 2) when they do get listed they sell within months. Contrary to what you think you know about me, i have done a lot of research on the business and am not going in blindly. through my research I have generally found that this site is not helpful at all as a resource, or to build a community. It's more of a place where current IC who have not been successful just come on to gripe and complain. It's a shame because you should be using your precious time trying to organize and work/support each other,
with that kind of statement,,,you will fit right in
 

bbsam

Moderator
Staff member
You purchase a business with cash. Why would you take out a loan and get into an industry you know nothing about? If you have $300k or more to spend and you have to come on to a website and ask questions to a bunch of strangers about a business/industry that you have no clue about, then you are over your head. You are a fool looking to throw money away. Ground is not an investment. You are purchasing yourself a job.
I would agree except that I have talked both to a contractor who invested 3 years ago and an individual looking to buy now.

The contractor paid $750k and coming from an investing background is pleased with the 7 to 10% margin.

The individual is looking to invest $750k to $1 million.

So if the model continues and growth continues it should be feasible for the investor to sell at a profit down the line. Remember that it is Fedex's interest to make this attractive to investors.
 
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