Investing in a FedEx route basics

[12yearsaslave]

Over the years I've seen these discussions pop up across the interwebs, decided to share some experience.
I am still a current contractor. Over 10 years experience.

Couple of things to know from the start:
Can you make money in FedEx Ground/Home? Absolutely. We have steadily grown in HD averaging 10%-30% a year. I have yet to spend a dime to attract new customers.
Is it easy? Absolutely not.
Before you put any money into any business you should assess a lot of variables.
The entry floor (knowledge, experience, education etc) is pretty low in FedEx. All you need is a driver's license, a year of driving experience and a tolerance for cardboard.
Can you invest and have it managed for you? No.
The stress level is high. This is not a 9 to 5 job. You are never really done until the last package is delivered (you or employees).
Your contract is not guaranteed. It's pretty straight forward, they can pull it any time they want to. That being said, I've only seen a handful of contracts terminated, and those were some major failures committed across significant amounts of time. It won't happen overnight.

Now, what to look for if you do decide to invest:
Is Home/Ground or a mix? Home is Tue-Sat, Ground is Mon-Fri, mix is Mon-Sat. How do you like your weekends?
Is it a contiguous area? That is preferential obviously. It is easier to manage and is better for future growth.
Does the business have a management team? Makes life a bit easier and hopefully you can learn from them. (1 manager per 7-10 vehicles is a good rule of thumb)
The condition of the fleet. It might be an older fleet. Or a fleet of smaller vehicles which will have to be replaced with bigger vehicles. You can talk to the drivers to see what they think about their trucks.

There are some major changes on the horizon for us right now. ( 6 day operation, Ground/Home merger). Might be the best time to invest, might be the worst. Time will tell.

 

[Schweddy]

You might have this added/moved over to the sticky thread about buying a route.

 

[bacha29]

12 years: you could have put in all in one simple sentence. CHANGE IS THE ONLY CONSTANT AND NOTHING"S BINDING.

 

[It will be fine]

A VP came through here recently and all but told all the HD contractors they will be running 6 days a week starting during peak and it will continue permanently.
FedEx is taking 10-20% off the top of anyone renegotiating right now. For any reason, renegotiating for end of agreement, for a route purchase or sale, all result in dramatically less compensation. They are taking away all profit. They are eliminating the value of our companies.
Now is not the time to invest. I don't know what they are planning, but it doesn't look good.

 

[MAKAVELI]

A VP came through here recently and all but told all the HD contractors they will be running 6 days a week starting during peak and it will continue permanently.
FedEx is taking 10-20% off the top of anyone renegotiating right now. For any reason, renegotiating for end of agreement, for a route purchase or sale, all result in dramatically less compensation. They are taking away all profit. They are eliminating the value of our companies.
Now is not the time to invest. I don't know what they are planning, but it doesn't look good.

Welcome to Fredex. This is exactly what he has been doing to Express for the last 15+ years.

 

[bbsam]

A VP came through here recently and all but told all the HD contractors they will be running 6 days a week starting during peak and it will continue permanently.
FedEx is taking 10-20% off the top of anyone renegotiating right now. For any reason, renegotiating for end of agreement, for a route purchase or sale, all result in dramatically less compensation. They are taking away all profit. They are eliminating the value of our companies.
Now is not the time to invest. I don't know what they are planning, but it doesn't look good.

I think it's their way of insisting on Ground and HD contractors working out inefficiencies. Around here they call it "co-mingling". It makes perfect business sense and they are basically saying, "You can continue to be inefficient, but we aren't going to pay for it."

 

[It will be fine]

I think it's their way of insisting on Ground and HD contractors working out inefficiencies. Around here they call it "co-mingling". It makes perfect business sense and they are basically saying, "You can continue to be inefficient, but we aren't going to pay for it."

That would explain it only if they paid the guys that are co-mingled well. They aren't. They are slashing pay for them as well. If you buy the overlapping HD you have to pay the HD contractor and then pay fedex by accepting lower rates. They are eliminating any incentive to buy overlap.

 

[bbsam]

That would explain it only if they paid the guys that are co-mingled well. They aren't. They are slashing pay for them as well. If you buy the overlapping HD you have to pay the HD contractor and then pay fedex by accepting lower rates. They are eliminating any incentive to buy overlap.

We don't buy overlapping areas. If someone wants to give up area or swap someone will usually accept it but no money trades hands.

 

[It will be fine]

We don't buy overlapping areas. If someone wants to give up area or swap someone will usually accept it but no money trades hands.

If no one buys anything then the areas are worthless and so is every contractor's company. If service area has no value you need a real sucker to sell to.

 

[bbsam]

If no one buys anything then the areas are worthless and so is every contractor's company. If service area has no value you need a real sucker to sell to.

Kinda.

They aren't "worthless" because contractors who don't want to swap areas eventually figure out that they are losing money and the see the wisdom in running efficiently. Doing so makes it easy to make back that money X claimed back. It sucks but don't think for a moment X hasn't thought this out very carefully.

On a funny note, we actually had guys thinking if we just wait, X will come up with monetary incentives to make smart business decisionschool. Yeah, right.

 

[Bounty]

Just spoke to one of my buddies that decided to buy some routes to get to scale last year. He realizes now he made a huge mistake. His business plan now is to dump the mess before Xmas.
Looks like bbsam and iwbf are starting to see the writing on the wall. Remember X needs you two. You are in so deep you must protect the scam. As iwbf said "you need a real sucker to sell to".

 

[Bounty]

By the way I bought some stock in X 2 months ago. So, now I'm rooting for X to keep cutting costs even more. It's kind of like you are working for me now.

 

[bbsam]

Just spoke to one of my buddies that decided to buy some routes to get to scale last year. He realizes now he made a huge mistake. His business plan now is to dump the mess before Xmas.
Looks like bbsam and iwbf are starting to see the writing on the wall. Remember X needs you two. You are in so deep you must protect the scam. As iwbf said "you need a real sucker to sell to".

I didn't pay much for routes ($36,000) so I'd say I'm still doing ok.

 

[bbsam]

By the way I bought some stock in X 2 months ago. So, now I'm rooting for X to keep cutting costs even more. It's kind of like you are working for me now.

I bet my ROI is a lot better than yours.

 

[Bounty]

I bet my ROI is a lot better than yours.

I'm not in competition with you, since I bought the stock you are now one of my employees....oops I mean contractors. Now I must defend the scam. Hey, if you can't beat em, join em.

 

[bbsam]

I'm not in competition with you, since I bought the stock you are now one of my employees....oops I mean contractors. Now I must defend the scam. Hey, if you can't beat em, join em.

Right. You failed as a contractor but that's not reason you shouldn't profit from investing in X.

 

[bbsam]

I'm not in competition with you, since I bought the stock you are now one of my employees....oops I mean contractors. Now I must defend the scam. Hey, if you can't beat em, join em.

But weren't you one of those saying it's all going to come crashing down?

 

[Bounty]

Right. You failed as a contractor but that's not reason you shouldn't profit from investing in X.

I made a living for a while, sold for a profit. Admittedly, did not go the way I thought in the end., but I figured lets turn it into a positive.
Think about it, it's a growing industry, X (ground)doesn't have to buy trucks, hire employees and eliminates liability it's perfect. They found a way to beat the system. So, please continue to run your company efficiently. Im counting on it now.

 

[bbsam]

I made a living for a while, sold for a profit. Admittedly, did not go the way I thought in the end., but I figured lets turn it into a positive.
Think about it, it's a growing industry, X (ground)doesn't have to buy trucks, hire employees and eliminates liability it's perfect. They found a way to beat the system. So, please continue to run your company efficiently. Im counting on it now.

So am i.

 

[Bounty]

So am i.

By the way, now that I'm a shareholder I would appreciate you contractors keep a better maintained fleet of trucks and your employees could use a shave. Thanks