Looking to Purchase a Ground Route

Discussion in 'FedEx Discussions' started by rkj77, Aug 13, 2014.

  1. rkj77

    rkj77 New Member

    Hello,

    Let me start by saying that I have been researching the purchase of a Fed Ex Ground route for the past 6 months. I have looked in depth at a few Home and Ground routes and after speaking to a few current and past route owners and reviewing settlement sheets, I have decided on a rather large Ground route. I am planning to drive the route myself in order for the income to be enough to live on and to learn the ins and outs of the route with the ultimate goal of purchasing additional routes. I have the necessary driving experience. I have never word for Fed Ex or a competitor though, so this job would be new to me.

    I live in the suburbs. The route I am looking at is 5 mins from the terminal, averages only 50-65 miles per day, grosses $145k and nets $119k. The current contractor has owned and driven the route for the past 22 years and is looking to retire. The truck is on the older side and the maintenance averages out to $225/week, so I would likely look to sell and get a newer truck since the reduction in maintenance alone would justify it. I have looked at settlement sheets for the past 2 years as well as 1099's and corporate returns and all the numbers check out.

    The next step would be for me to get approved as a Helper and then ride the route with the owner for a week to get an idea of exactly what is involved and whether I can see myself doing this for a living. I would appreciate any insight from past or present route owners who have driven either Ground or Home routes.

    Thanks very much.
     
  2. cosmo1

    cosmo1 Just another internet hooligan.

    Run screaming while you still have a chance?
     
  3. rkj77

    rkj77 New Member

    Would that be because you have owned and driven a Ground or Home route and have firsthand experience? If so, could you share the reasons behind your advice? Thanks
     
  4. Operational needs

    Operational needs Well-Known Member

    Lol. He is retired UPS.
     
  5. Limper

    Limper Out For Delivery

    It's a harsh environment.....nothing glamorous. Just a lot of hard work. High volume suburban route? Can you deliver 25 stops per hour? Can you drive a truck in bad weather? Do you mind being treated like crap from both managers and customers? Lift overweight packages without getting hurt? Deliver out of a rental
    box truck when your truck is being serviced?
     
  6. bbsam

    bbsam Moderator Staff Member

    Don't bother. If you haven't been doing it for the last.three years, it isn't worth getting into now.
     
  7. rkj77

    rkj77 New Member

    Thanks for the reply. Yes, those are some of the questions I am asking and exactly why I want to ride the route for a week to at least get a taste of the day to day stuff.
     
  8. rkj77

    rkj77 New Member

    Thanks for the reply. Could you please elaborate on why that is the case? What is different about the last three years versus tomorrow? Thanks
     
  9. By The Book

    By The Book Well-Known Member

    I'm a ups driver and was reading your post. From a numbers standpoint it looks to me that you will net $500.00 a week, is this correct using your numbers?
     
  10. rkj77

    rkj77 New Member

    Hello, no, the net is $2300/wk, $119k/yr. I have verified these numbers with settlement sheets and 1099's that are issued directly from Fed Ex as well as the owner's corporate tax returns.
     
  11. TerryFXHD

    TerryFXHD New Member

    rkj: One important thing to research is the prospect of your state going to ISP (Independent Service Provider) as opposed to IC (independent Contractor). When this happens, an ISP has to have a 3 route minimum to make a CSA (Contracted Service area) You will either be forced to sell in a buyers market or be prepared to buy additional routes. And don't be influenced by the bitter, hateful Express drivers on here. They have their own agenda.
     
  12. By The Book

    By The Book Well-Known Member

    Wow, so you are saying after all expenses, you will net just shy of $120,000. A year?
     
  13. rkj77

    rkj77 New Member

    Correct. It is a long established route in a very prime area. It is one of the most profitable routes I have been able to find. The only 50-65 miles per day of driving and it being 5 mins from the terminal definitely helps. Current driver is doing 5 days x 12 hours, so it is definitely a lot of work.
     
  14. rkj77

    rkj77 New Member

    Thanks TerryFXHD. I live in NY and I have been unable to find very much info on the whole IC to ISP thing for NY. The couple of drivers I spoke to about it felt that it would be a while before anything happens here simply because of the volume of routes and complications with instituting that here in NY. I'd imagine if it happens sooner rather later that there would be a number of route owners in the same boat who would be looking to either sell or join up with other contractors.
     
  15. By The Book

    By The Book Well-Known Member

    Good job researching. I did hear something about having to own multiple routes that a previous poster said. I would hate to have to sell my good income route if I couldn't purchase others to keep my job.
     
  16. barnyard

    barnyard KTM rider Staff Member

    Several other potential contractors have come here and asked the exact same question. Do a search and read the answers that have already been posted.
     
  17. soc151

    soc151 Member

    With all due respect, Mr. Barnyard, the answers may have changed. FedEx keeps changing the rules. In my time, I've seen single route contractors forced to sell once the minimum was raised to 3 routes. Now, contractors are being warned to make plans for a 5-route minimum. I'm not sure if FedEx even wants new blood - just the established contractors getting larger by absorbing the poor performing contractors.
     
  18. bbsam

    bbsam Moderator Staff Member

    How long until you'd break even on the purchase price? And as Ground grows, how do you plan to cover? If current driver with many year experience is doing 10 to 12 hours, and at 8% growth, you will probably be looking at adding a supplemental route soon. Another truck to buy, employee to pay, work comp insurance to pay...it gets complicated/messy quickly.
     
  19. rkj77

    rkj77 New Member

    It is selling for 1.4 x net. For coverage, I would plan on using a combination of swing drivers and other contractors in the terminal like the current owner/driver has in the past. I was told that if/when it reaches that level, I could opt to temporarily assign the supplemental packages to other drivers until such time that I wanted to expand. Obviously I would want it to reach that point because that means it is possible for it to grow into an additional PSA, which I would then own from what I understand. I would also like to drive for a year and then hopefully purchase additional routes to manage, but I realize there is no guarantee of that.
     
  20. barnyard

    barnyard KTM rider Staff Member

    Really? The rules have changed in the 4 weeks since 2 other potential buyers came on to ask the exact same question??