FedEx Ground ISP

[FedExGround]

Recent lurker, new member, first post. I'm looking into buying quite a few ground routes (more than 8 trucks less than 12) located in a major city with drivers and a manager. Net of over 3K per week after all expenses. This sounds too good to be true so I am in the beginning stages of doing thorough research. If the routes have a manager then who sells a route like this? I know managers can quit and all your drivers can call in sick on the same day and then FedEx wants to terminate your contract, etc. etc. These are the headaches of running a business.

Can I assume the owner is having trouble with the conversion to an ISP? I'd like to hear from Ground owners who are ISPs, specifically bbsam and mom on here. It seems as though even offering drivers and a manager a fair wage with benefits and time off an being a somewhat "absentee" owner there is still significant passive income to be made.

Info you should probably know if you a planning on responding to this post:
1. I have built a business (in a completely different industry than delivery/logistics) basically from scratch before that now provides me with a regular income that I will either sell if I have to in order to invest in FedEx or that I can have someone run and provide passive income to supplement FedEx.
2. I have worked for the USPS before. Granted it's not FedEx or UPS, but same rose different color. Meaning I have dealt with delivery,management, union, non-union, part time temp employees, regular employees, etc. etc.

 

[Mom]

I am a current ISP with an operation about that same size/setup,( I have a Manager who regularly acts as Business Contact, knows all my routes etc.) I was before ISP rollout also, IE incorporated, payrolled employees, workers comp blah blah...Please feel free to PM me with specific questions. Id be happy to look at expense information you have been provided etc and help with getting a feel for how realistic he is representing things.

Absentee ownership is totally possible. I wouldn't do it. It would drive me fricking insane not physically seeing my trucks leave, with my drivers in them, etc. But I'm a worrier. A good, reliable, experienced manager would be a requisite. Id ask to talk to the manager and feel him out...my manager, for example, is the best. There is another largish ISP in our building that lives several hours away, who has a 'manager'. Dude is a tardwad and things do not always go well for that ISP.

IMO, lots of reasons an ISP sells. Reasons I have seen firsthand: #1: Impending termination. This seller generally is in a HURRY to sell, and at a LOW price. Doesn't sound like this is your guy. Another common one is retirement. #3 is simply that people don't know how to handle a 'business' such as this. You have to have a THICK skin, major stress management skills, be able to handle a billion different personalities and make them all happy.

There are lots of other reasons of course, same as with any other person selling any other business.

One I would REALLY watch out for, though, with a new ISP....find out how they operated BEFORE ISP. You might be dealing with 3 former small IC's who either had to 'group up' and form a new operating entity or lose their 'jobs' under ISP. What these guys had to do was band together, so to speak, to create a 'service area' big enough to satisfy the requirements of ISP. So, instead of a a true single Owner, like me for instance, you REALLY have 3 dudes who still own their own trucks but work 'for' the newly formed entity. Did I lose you?

There are a few of these in our station, and they are bad, bad news. Imagine having three 'owning partners', who still actually hold the titles/loans/leases on their vehicles, but get a paycheck from the Authorized Officer. These dudes can walk at ANY TIME with no risk, and take their trucks with them.

Your 'manager' very well might be a former IC-turned-'employee' that will be getting a 'cut' of this sale and is just waiting for the sale to go through to bail on the operation. Might sound extreme, but, Ive seen it.

This whole post probably just confused you more. My kid is rubbing a melting popsicle on the cat right now, so I must go tend to that but feel free to ask whatever.

 

[bbsam]

I concur with mom. Feel free to dive in with eyes wide open. That is, yes it can be quite profitable but especially for an "absentee" ISP you really need all the information you can get. In fact, if I were you, I would forget about the "absentee" bit for a while. You will have alot to learn about the routes, Ground personel, procedures, etc. In fact, it's quite dynamic and interesting. Might want to reinterview the manager too. You and he/she may not see eye to eye on some very important issues.

 

[MCPage]

What did you decide to do? It's been almost a year now. Did you dive in to your FedX Ground routes?

 

[barnyard]

What did you decide to do? It's been almost a year now. Did you dive in to your FedX Ground routes?

OPs last activity date was 2/2012

Will probably not ever see your post.

 

[Nick9075]

It's not a good idea especially since contract is only for a year. They can decide for whatever reason not to renew then you are out your investment. And believe me these people will lie to you to your face then screw you over

 

[MrFedEx]

It's not a good idea especially since contract is only for a year. They can decide for whatever reason not to renew then you are out your investment. And believe me these people will lie to you to your face then screw you over

There are quite a few Ground routes for sale in my local area, in areas with a high concentration of retail, which seems to be Ground gold. The price seems low, but the stated gross also seems low. Maybe the contracts are going to be renegotiated so Fred gets more money and the ISP gets less.

 

[bbsam]

There are quite a few Ground routes for sale in my local area, in areas with a high concentration of retail, which seems to be Ground gold. The price seems low, but the stated gross also seems low. Maybe the contracts are going to be renegotiated so Fred gets more money and the ISP gets less.

What numbers are they listing?

 

[MrFedEx]

What numbers are they listing?

Don't want to reveal exact numbers because then they could trace the ads back to my area. Sale price is only $10,000 above stated net for one of the routes, which isn't very high. One is offering vehicles (which aren't paid for) on a route in a different part of town with sale price only $15,000 above stated net, which is less than $100,000.

In your experience, how often do ISP's inflate their incomes? I would want to take a very close look at their books.

 

[STFXG]

What numbers are they listing?

Don't want to reveal exact numbers because then they could trace the ads back to my area. Sale price is only $10,000 above stated gross for one of the routes, which isn't very high. One is offering vehicles (which aren't paid for) on a route in a different part of town with sale price only $15,000 above stated net, which is less than $100,000.

routes usually sell for around 1 years net + assets.

 

[bbsam]

Don't want to reveal exact numbers because then they could trace the ads back to my area. Sale price is only $10,000 above stated net for one of the routes, which isn't very high. One is offering vehicles (which aren't paid for) on a route in a different part of town with sale price only $15,000 above stated net, which is less than $100,000.

In your experience, how often do ISP's inflate their incomes? I would want to take a very close look at their books.

I don't think most inflate incomes. Think about it. If I tried to sell you a route and showed you the income, your next question would be about expenses. I have in depth tax records to show. So for me to inflate profits, wouldn't I basically have to commit tax fraud? Not happening. There are plenty of ways for a new contractor to make a struggling area profitable without cooking the books. For most getting in, the question almost needs to be turned around into, "How can I make this business work better?" If the buyer is honest and has a real answer to that, it can be very profitable. If the buyer thinks money will just start filling the bank accounts, well, there is no FedEx for that.

 

[DB1626]

Hey, bbsam and mom, I see you guys are owners and former owners of fedex ground routes. I have been reading this forum for the past month or so and I have a couple questions before possibly purchasing 3 ground routes. BBSam, I see were you told delboy back in april of last year that now is a bad time to buy routes, Im assuming the reason was because of the ISP deals that were going on or is there another reason? Is now a good time to purchase routes or do you still advise against it? Mom, you also said that a Home Delivery route isnt any good with just one route and a driver in the truck, that you would never make any money. Of the 3 routes Im thinking about buying, one of them is a home delivery route, so your saying I am not going to make any money from it? Why is that? Im needing help before jumping into something. Thanks.

 

[Nick9075]

I have to get out because I don't think my contract is going to be renewed. The good thing is that I can get around $50,000 - $70,000 over the purchase price. You can be put on notice and contract terminated (before renewal date) if you have more than two or three disputes or missed pickups.
And the NYC area is like a different world compared to the rest of the country -- the way people do business as well as the expenses - $4.50 a gallon for Diesel, now over $9.00 each way per truck for bridge tolls..

 

[bbsam]

I think they have you scared Nick. Contracts are almost always renewed and I have never seen a contract ended for disputes or missed pickups.

 

[bryanturner100]

what i don't even understand what your asking or saying you want to buy fedex routes i thought they were spending 650 million dollars to buy out there own employees

 

[thedownhillEXPRESS]

That's the genius of their plan.

 

[Nick9075]

I think they have you scared Nick. Contracts are almost always renewed and I have never seen a contract ended for disputes or missed pickups.

Uh no they aren't. This isn't a passive investment now for 'extra' income and I don't have mommy & daddy to bail me out or pay my rent & student loans if I have money don't coming in which seems to be common & accepted today with most people. I lose these routes, I am out on the street if I can't sell.

 

[bbsam]

Uh no they aren't. This isn't a passive investment now for 'extra' income and I don't have mommy & daddy to bail me out or pay my rent & student loans if I have money don't coming in which seems to be common & accepted today with most people. I lose these routes, I am out on the street if I can't sell.

Hmmm. I don't know who you think you're talking to, but mommy and daddy stopped bailing me out 20 years ago. If this goes away, I'm looking for a new way to support my wife and three kids.

 

[Nick9075]

As I said the mentality is different in NYC and eastern Massachusetts where you have all these rich and entitled 20 and 30 somethings who have everything paid for by mommy and daddy

 

[bbsam]

As I said the mentality is different in NYC and eastern Massachusetts where you have all these rich and entitled 20 and 30 somethings who have everything paid for by mommy and daddy

ah. Gotcha.