ISP concerns and questions...

bacha29

Well-Known Member
Hello,

I`m new here and I see that this post is a little old, but I`ve been reading a lot about the ISP transition and got to no conclusion. Besides that it`s something unknown. Probably you have already passed through that and could give some tips about it. Our terminal is schedule just for 2019, but I`d like to get prepared way before that. Some sellers say that its gonna be much better, that you`re gonna make more money than today, but I don't know if it`s really true or not. I see that the routes sale prices increased after ISP, but still not sure why...
Can someone help me with that?
Thanks!
What drove up the price for routes in some area in addition to the required additional routes was the incursion of the investor class, hedge funds, private investment managers etc all looking for yield in a zero interest rate environment. As dmac pointed out a 500% increase in the number of routes owned in no way shape or form guarantees a 500% increase in profits. Keep in mind the the business model was never designed to create equity for contractors but rather a pathway to low cost trucking and labor and that is why Ground's operating margins are the highest in the industry and when X started to see the kind of prices the investor class was paying for the routes based on present and future expected margins X saw that they were making too much money and decided to go after them in the form of heavy downward pressure on settlements making it hard on contractors because they're entire success is entirely dependent on their ability to procure fully vetted highly reliable labor that is willing to deliver top of the scale performance for near bottom of the scale money and do it on a continuous daily basis for an extended period of time. So if you want to be Mr. ISP multi route contractor just remember that you're only as good as the guy you have behind the wheel and if you no pay they no stay. One other thing as an ISP you have to " negotiate" a revenue package but you cannot have an attorney or engineer present during those ( cough, cough), "negotiations".
 

Adao501

New Member
What drove up the price for routes in some area in addition to the required additional routes was the incursion of the investor class, hedge funds, private investment managers etc all looking for yield in a zero interest rate environment. As dmac pointed out a 500% increase in the number of routes owned in no way shape or form guarantees a 500% increase in profits. Keep in mind the the business model was never designed to create equity for contractors but rather a pathway to low cost trucking and labor and that is why Ground's operating margins are the highest in the industry and when X started to see the kind of prices the investor class was paying for the routes based on present and future expected margins X saw that they were making too much money and decided to go after them in the form of heavy downward pressure on settlements making it hard on contractors because they're entire success is entirely dependent on their ability to procure fully vetted highly reliable labor that is willing to deliver top of the scale performance for near bottom of the scale money and do it on a continuous daily basis for an extended period of time. So if you want to be Mr. ISP multi route contractor just remember that you're only as good as the guy you have behind the wheel and if you no pay they no stay. One other thing as an ISP you have to " negotiate" a revenue package but you cannot have an attorney or engineer present during those ( cough, cough), "negotiations".

Thank you, I`ll keep that in mind! It was helpful!
 

It will be fine

Well-Known Member
I appreciate your help and it was valuable, but it brought me another concern: whats gonna happen after the transition?
Have any of you got to ISP? How is the new contract? Was it a good change, about the same or got worse?Are they gonna give new areas to service? Do I need to bid for that? Can someone give a lower bid and I loose it?
If you wish to PM me rather than post publicly, I will be glad to give my cell number or email address. I think that those informations are confidential, because I can`t find answers anywhere.

Thank you!
The ISP agreement is better than the IC. As an ISP you have more control. You have a bit more security since it's harder to find someone to take over 5+ routes on a whim.
If you get a letter to cure within 1 year of the end of agreement they can put your area up for bid. They don't have to tell you they're doing it. You can finish negotiations and they'll say they are going with someone else. Goodbye, thanks for playing. You have to be pretty bad for that to happen from what I've seen though.
If you can get a price you're comfortable with before transition I'd recommend taking it.
 

dmac1

Well-Known Member
The ISP agreement is better than the IC. As an ISP you have more control. You have a bit more security since it's harder to find someone to take over 5+ routes on a whim.
If you get a letter to cure within 1 year of the end of agreement they can put your area up for bid. They don't have to tell you they're doing it. You can finish negotiations and they'll say they are going with someone else. Goodbye, thanks for playing. You have to be pretty bad for that to happen from what I've seen though.
If you can get a price you're comfortable with before transition I'd recommend taking it.


I don't think there is much more security because of the fact of having five routes. Fedex would simply ask your drivers to cover the routes, and rent vehicles, and even offer the drivers more than you paid them. Or they would ask other ISPs to cover the area, and those ISPs would probably jump at the chance, thinking they may be able to take over the area at no cost.

And fedex retains the right to cancel your agreement at any time if they decide to change the system. I think that the larger investment needed outweighs any benefit from being harder to replace because of having more routes. Fedex is fully prepared to take over for any contractor at any time, if necessary.

And I think fedex has more control over you, not less as an ISP. With the bigger investment, you have a lot more to lose, and that means you need to be more careful. Fedex may have given you a few choices over minor details, but if they don't like the choice you made- like uniforms, signage, etc., you may not find out until renewal comes around that someone who makes the choices they like takes over your area. The financial pressure on you to make fedex happy takes away any real freedom. You better do what they want, or else- and that is a big stick that doesn't really give you any freedom, except to say that you had the choice.

I agree that selling is a good idea if prices are inflated. Take the cash, and go to work for an ISP. Then you can invest that money in something like real estate, or even pay down your mortgage. If you make $300 a month less driving for an ISP, but save $400 a month on your mortgage, you've come out way ahead.
 

It will be fine

Well-Known Member
I don't think there is much more security because of the fact of having five routes. Fedex would simply ask your drivers to cover the routes, and rent vehicles, and even offer the drivers more than you paid them. Or they would ask other ISPs to cover the area, and those ISPs would probably jump at the chance, thinking they may be able to take over the area at no cost.

And fedex retains the right to cancel your agreement at any time if they decide to change the system. I think that the larger investment needed outweighs any benefit from being harder to replace because of having more routes. Fedex is fully prepared to take over for any contractor at any time, if necessary.

And I think fedex has more control over you, not less as an ISP. With the bigger investment, you have a lot more to lose, and that means you need to be more careful. Fedex may have given you a few choices over minor details, but if they don't like the choice you made- like uniforms, signage, etc., you may not find out until renewal comes around that someone who makes the choices they like takes over your area. The financial pressure on you to make fedex happy takes away any real freedom. You better do what they want, or else- and that is a big stick that doesn't really give you any freedom, except to say that you had the choice.

I agree that selling is a good idea if prices are inflated. Take the cash, and go to work for an ISP. Then you can invest that money in something like real estate, or even pay down your mortgage. If you make $300 a month less driving for an ISP, but save $400 a month on your mortgage, you've come out way ahead.
Around here no ISPs are jumping at covering more area. They had to force one to take on an area that was soon to be open. The margins are so slim and renegotiations only make them slimmer guys don't want the extra headaches.
You have more control over operations. Management only talks to me about my results. They don't really care how many routes I'm running any given day or if I show up at the building at all.
It's true fedex doesn't much care about an individual contractor, but the senior manager that would need to send the contract up or issue a letter to cure does. They don't want the headaches of a dirty transition to a new contractor. They would lose all their bonus money and likely for a while. Massive failure isn't a good look for them either.
If one likes just driving a truck they should sell. If they like the back end business side they can get to scale and accept sometimes it will suck and other times it will be great. Unfortunately the suck times are becoming more plentiful while compensation is going down with no reason to believe it will go up.
 

bacha29

Well-Known Member
Around here no ISPs are jumping at covering more area. They had to force one to take on an area that was soon to be open. The margins are so slim and renegotiations only make them slimmer guys don't want the extra headaches.
You have more control over operations. Management only talks to me about my results. They don't really care how many routes I'm running any given day or if I show up at the building at all.
It's true fedex doesn't much care about an individual contractor, but the senior manager that would need to send the contract up or issue a letter to cure does. They don't want the headaches of a dirty transition to a new contractor. They would lose all their bonus money and likely for a while. Massive failure isn't a good look for them either.
If one likes just driving a truck they should sell. If they like the back end business side they can get to scale and accept sometimes it will suck and other times it will be great. Unfortunately the suck times are becoming more plentiful while compensation is going down with no reason to believe it will go up.
As time goes by it will become even more obvious that the lowly single route contractors the guys the multi routes despised and looked down on simply by means of their sheer numbers kept X in line. Even greater pressure on contractor equity will occur when the investor class which is the only remaining factor supporting it start seeing the margins and the capital requirements going in opposite directions cut their losses and get out in mass.
 

Fred's Myth

Nonhyphenated American
Even greater pressure on contractor equity will occur when the investor class which is the only remaining factor supporting it start seeing the margins and the capital requirements going in opposite directions cut their losses and get out en masse.[/QUOTE]
Fixed it for you. Sigh
 

instiches

Well-Known Member
If you get a letter to cure within 1 year of the end of agreement they can put your area up for bid. They don't have to tell you they're doing it. You can finish negotiations and they'll say they are going with someone else. Goodbye, thanks for playing. You have to be pretty bad for that to happen from what I've seen though.
If you can get a price you're comfortable with before transition I'd recommend taking it.

Is this in the agreement? I haven't gone ISP yet but I did not know this. The problem is that an OTC seems so subjective.
 

It will be fine

Well-Known Member
Is this in the agreement? I haven't gone ISP yet but I did not know this. The problem is that an OTC seems so subjective.
No, it's their internal rules. The agreement is worse. The agreement says you have no exclusive right to renegotiate for your area at the end of the term.
 

bacha29

Well-Known Member
No, it's their internal rules. The agreement is worse. The agreement says you have no exclusive right to renegotiate for your area at the end of the term.
Despite the way you ISP's looked down on we SRC's nevertheless you don't deserve the impossible situation you find yourself in as an ISP. My only advice retire debt stockpile as much cash as possible then look to get out under the most favorable terms you can get before the investor class catches onto to this and takes their money elsewhere.
 

It will be fine

Well-Known Member
Despite the way you ISP's looked down on we SRC's nevertheless you don't deserve the impossible situation you find yourself in as an ISP. My only advice retire debt stockpile as much cash as possible then look to get out under the most favorable terms you can get before the investor class catches onto to this and takes their money elsewhere.
I still look down on people that were caught by surprise at the ISP transition. Same way I'll look down on people when HD overlap is mandated and they don't own both services or have a trade plan outlined with their counterpart. I agree debt is killer, you can't make any money here if you're carrying any significant debt. You can cover a handful of truck loans but beyond that you get into trouble quickly.
 

bacha29

Well-Known Member
I still look down on people that were caught by surprise at the ISP transition. Same way I'll look down on people when HD overlap is mandated and they don't own both services or have a trade plan outlined with their counterpart. I agree debt is killer, you can't make any money here if you're carrying any significant debt. You can cover a handful of truck loans but beyond that you get into trouble quickly.
When a terminal goes ISP not all SR's can become ISP's . Somebody has to go. That's the entire purpose of the conversion . Get rid of the small but more numerous and therefore more difficult to control single route guys leaving the multi routes who then fall under the complete and absolute control of X by means of a contract that's even more ambiguous and easier for X to interpret in whatever best serves it's interests at that given moment leaving the contractor in the untenable position of either eat it and smile or find his trucks sitting out along the road with a termination notice slapped on the windshields. It is the same impossible situation it has always been only now the potential for loss for the contractor is much larger . X knows it and will seek to make even greater gains at the contractor's expense and there ain't a damn thing he can do about it.
 

Exec32

Well-Known Member
When a terminal goes ISP not all SR's can become ISP's . Somebody has to go. That's the entire purpose of the conversion . Get rid of the small but more numerous and therefore more difficult to control single route guys leaving the multi routes who then fall under the complete and absolute control of X by means of a contract that's even more ambiguous and easier for X to interpret in whatever best serves it's interests at that given moment leaving the contractor in the untenable position of either eat it and smile or find his trucks sitting out along the road with a termination notice slapped on the windshields. It is the same impossible situation it has always been only now the potential for loss for the contractor is much larger . X knows it and will seek to make even greater gains at the contractor's expense and there ain't a damn thing he can do about it.

Things to do about it.....
Stay out of debt
Treat your drivers fair
Pay your guys well
Lead by example
KNOW your contract
Have money in the bank
DO NOT completely rely on X for your only income , that way you can be confident, challenge their lies and move on to the next investment.
 

bacha29

Well-Known Member
Things to do about it.....
Stay out of debt
Treat your drivers fair
Pay your guys well
Lead by example
KNOW your contract
Have money in the bank
DO NOT completely rely on X for your only income , that way you can be confident, challenge their lies and move on to the next investment.
With the ongoing downward pressure settlements task numbers 1,2,3, and 5 will be will be difficult if not impossible to complete.
 
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