Question: Is now a good time to buy a FedEx Ground Route?

[Brown287]

BBSAM So with some money in the bank can someone actually expect to turn a profit in owning a ground route. What is the pay per piece, stop, or mileage? How do you get payed? It seems to me that there is no creditable information on the issue. From what i gather Bbsam is a contractor so can he give me some real information on the issue.

[bbsam]

Originally Posted by Brown287

BBSAM So with some money in the bank can someone actually expect to turn a profit in owning a ground route. What is the pay per piece, stop, or mileage? How do you get payed? It seems to me that there is no creditable information on the issue. From what i gather Bbsam is a contractor so can he give me some real information on the issue.

Sure. $1.54/stop $0.24/package delivered $0.18/package picked up.
$45/day "van availability" (truck payment)
core zone pay
fuel supplement based upon $1.25/gallon.
monthly bonuses based upon quantifiable customer satisfaction goals.
annual bonuses from $500 to $2000 depending upon number of years with contract.
added service bonus (surpassing threshold levels on a given route)
matching money to service account (keep $1000 in company account and company adds $200 every quarter. yes that is an %80 return per contract)
multiple route bonus ($1500 to $6500 per quarter depending upon the number of contracts held)

Core Zone pay is a method of prorating for high and low density stop and package areas. High density areas are usually $0 and routes run 130 to 200 stops per day, 300-400 packages per day. High density with long stems (60-80 miles to the first stop) have a core zone of around $70 per day. Low density areas have Core Zone pay of $100-$120 per day. The prorating occurs when a route moves from high to low density areas.
40 stops in a $100 core zone
60 stops in a $50 core zone
40% of $100 = $40
60% of $50 = $30
thererore the core zone pay for this route on this day would be $40+$30=$70

Fuel supplement calculations were designed back before anyone really believed that fuel would top $1.25/gallon. I don't have a table with me, but the math is fairly straight forward. The company bases it's number on a truck getting 9 miles per gallon. If a route drives 180 miles in a day the company would figure on 20 gallons of fuel. There is a table available that gives lowest fuel prices within six miles of each terminal on any given day. If fuel is $2.50/gallon, the chart would accurately reimburse the contractor $1.25/gallon or $25. This is one of the gray areas I like to exploit. I use a minivan that gets almost twice the mileage and I usually fill up across the river where fuel often runs $0.10 to $0.15 cheaper. Add to that fact when gasoline prices run quite a bit cheaper than diesel, I save even more.

There is probably alot more that I am leaving out, but this is a rough idea. Hope I didn't bore you.

[Ricochet1a]

The costs per stop/package to Ground are very close to the costs to Express for delivery (labor only though, NOT vehicle maintenance or managerial overhead). Assuming 13 sph, this is $20/hr for stops. Figuring 1.3 packages per stop, add another $4 an hour. This means FedEx is paying out $24/hr to have packages delivered in a "tight" area. Obviously sph will decrease in rural areas.

What is the purpose of the "matching money to service account"? Is this just a method of granting operator profit outside of a cut of the deliveries?

Multiple route bonus makes sense. It give an incentive to have more routes. It also makes operating just two routes almost impossible.

You make no mention of maintenance overhead. I'm assuming all of your maintenance costs come out of the revenue mentioned. With $24 an hour revenue for a tight area and paying drivers $13/hr, this means about $10 per operating hour to cover everything.

[MrFedEx]

Originally Posted by FedEX 4 Life

I love when MrFedex makes it seem like the drivers are forced into slavery for taking the position.There are many McDonalds managers who evenutually become owners themselves and become milionares.Ya gotta start somewhere.

Did you know that you need a net worth of over a million dollars to even be considered for a McDonald's franchise? There are NOT very many McDonald's managers who become franchisees on $50,000 or so per year. So you are WRONG again.

And FedEx Ground drivers are not slaves...they are just exploited for their ignorance. Please sign me up for a job where I get to work 55-60 hrs a week with no pay for OT or any benefits so I can make bbsam and Fred Smith wealthy.

[bbsam]

Originally Posted by Ricochet1a

The costs per stop/package to Ground are very close to the costs to Express for delivery (labor only though, NOT vehicle maintenance or managerial overhead). Assuming 13 sph, this is $20/hr for stops. Figuring 1.3 packages per stop, add another $4 an hour. This means FedEx is paying out $24/hr to have packages delivered in a "tight" area. Obviously sph will decrease in rural areas.

What is the purpose of the "matching money to service account"? Is this just a method of granting operator profit outside of a cut of the deliveries?

Multiple route bonus makes sense. It give an incentive to have more routes. It also makes operating just two routes almost impossible.

You make no mention of maintenance overhead. I'm assuming all of your maintenance costs come out of the revenue mentioned. With $24 an hour revenue for a tight area and paying drivers $13/hr, this means about $10 per operating hour to cover everything.

Yes, sph decrease in rural areas. Part of the reason for Core Zone pay.

Maintenance costs. I see it this way. First six years of truck ownership are under initial lease. Maintenance is generally fairly low. After the six year lease, the contractor has the option to replace the vehicle and keep a truck payment or I prefer to use the previous lease money for maintenance. There is a point when maintenance costs deem that the vehicle should be scrapped. Personally I have found the late 90's Internationals to be among the best value. Also the Ford 5.4L used by Home Delivery have been nothing short of amazing. Not uncommon to see 400-500 thousand miles before replacing the engine.

Over all, I think the dollar amount is closer to $30/hr but I don't have the contract with me to find documentation for the actual numbers.

The matching money for the service account was put in place near the beginning of RPS as an incentive for contractors to save money for maintenance.

There also is the quarterly bonus of 2 1/4% of gross settlement. That number can be rather substantive expecially when fuel prices and thus fuel surplus are in the $4.00/gallon range.

[MrFedEx]

Originally Posted by FedEX 4 Life

There you go again,making stuff up.

I looked into getting a McDonald's franchise 5 years ago since they're almost always profitable. Let's just say that you need a very high net worth and a lot of cash. I had the net worth, but I didn't have the cash, so I got a polite letter saying to try again when I had more money.The numbers I quoted were for my part of the US...they may be different in other areas of the country. In short, they can afford to be very selective about their franchisees because they have an extremely desirable and successful opportunity for sale.

A friend of mine managed a McDonald's after he retired from the Air Force. This was 4 years ago, but he made less than $50,000 per year. Please explain to me how he could ever afford to become a franchisee unless he inherited money or worked several jobs for a long time?

The original point of this was the question whether or not a Ground driver could ever afford to become a contractor. Of course they could, if they worked 20 hrs a day or went into hock with loans (much more likely). Under the single-operator scenario FedEx really has you by the short hairs because they want you to buy the vehicle from them ($$$$) too. A few years back there were scores of ads from single vehicle operators looking to unload their routes and vehicles at a big loss. That's changed with the explosion of growth at Ground, but the ones making the money are FedEx Corporation and the multiple-vehicle operators like bbsam. The individual contractor still has some hefty costs and isn't making good money.

By the way, what is a BST? Ask your friend who works for us what it stands for, OK?

[bbsam]

Originally Posted by MrFedEx

I looked into getting a McDonald's franchise 5 years ago since they're almost always profitable. Let's just say that you need a very high net worth and a lot of cash. I had the net worth, but I didn't have the cash, so I got a polite letter saying to try again when I had more money.The numbers I quoted were for my part of the US...they may be different in other areas of the country. In short, they can afford to be very selective about their franchisees because they have an extremely desirable and successful opportunity for sale.

A friend of mine managed a McDonald's after he retired from the Air Force. This was 4 years ago, but he made less than $50,000 per year. Please explain to me how he could ever afford to become a franchisee unless he inherited money or worked several jobs for a long time?

The original point of this was the question whether or not a Ground driver could ever afford to become a contractor. Of course they could, if they worked 20 hrs a day or went into hock with loans (much more likely). Under the single-operator scenario FedEx really has you by the short hairs because they want you to buy the vehicle from them ($$$$) too. A few years back there were scores of ads from single vehicle operators looking to unload their routes and vehicles at a big loss. That's changed with the explosion of growth at Ground, but the ones making the money are FedEx Corporation and the multiple-vehicle operators like bbsam. The individual contractor still has some hefty costs and isn't making good money.

By the way, what is a BST? Ask your friend who works for us what it stands for, OK?

Originally I was going to let this go, but it really smacks of ugliness. I have a route that I am in the process of selling. $75,000 is the price. That's a good chunk of money. But let's see it in another light. What's a 4 year college degree cost? How much money can you make while going to school full time? What kind of job are you guaranteed when you finish school and at what salary? Don't most college graduates have a sizable amount to pay back in loans? This is why I always say that getting into ground depends upon the individual. Now in this light, how bad is the deal?

[Ricochet1a]

Originally Posted by FedEX 4 Life

I dont know what a BST is.Am i suppose to?

I didn't think you'd bite on this one. You latched on and proven your initial statements as to who you are completely false. Bravo Mr. Fedex. You caught a phoney.

What you've done FedEx4Life is to prove you are not a topped out part-time Courier.

ANY Courier that was with Express before mid-2006 would immediately know what the BST was.

Your lack of knowledge regarding the BST proves you came into FedEx after mid-2006 (so much for being topped out).

Basic Skills Test.

If you are going to tell lies, don't admit you don't know something... It is a sure fire method of finding you out.

[Ricochet1a]

Originally Posted by FedEX 4 Life

Are you sure about that?

I'm positive, since it was a requirement. You've been found out, just admit it.

[MrFedEx]

Originally Posted by bbsam

Originally I was going to let this go, but it really smacks of ugliness. I have a route that I am in the process of selling. $75,000 is the price. That's a good chunk of money. But let's see it in another light. What's a 4 year college degree cost? How much money can you make while going to school full time? What kind of job are you guaranteed when you finish school and at what salary? Don't most college graduates have a sizable amount to pay back in loans? This is why I always say that getting into ground depends upon the individual. Now in this light, how bad is the deal?

Good post. I have a couple of degrees that cost me (and Fred) good money and I don't use them very often. My gripe is that Ground is just another FredEx method to get more by paying less and taking advantage of a certain demographic. I notice you didn't really touch upon my questioning the ethics of the Ground model.

[mkcrod]

FedEx 4 Life, you didnt know what a BST was? Who got owned now? Good one Mr FedEx!

[MrFedEx]

Originally Posted by FedEX 4 Life

I dont bleed purple,I actually have a life.

The BST has nothing to do with bleeding purple. You would have had to pass it before ever even working for FedEx. A 17-year "employee" would most certainly have knowledge of it. Give it up.

[The Mayor]

Here's a hint.................Basic Skills Test

[FedEx courier]

They don't know how to bleed purple and take their basic skills test. FedEx 4 Life would have never been able to become a courier if they didn't take that. What a joke this person is!

[bbsam]

Originally Posted by MrFedEx

Good post. I have a couple of degrees that cost me (and Fred) good money and I don't use them very often. My gripe is that Ground is just another FredEx method to get more by paying less and taking advantage of a certain demographic. I notice you didn't really touch upon my questioning the ethics of the Ground model.

The question of business ethics is far too large. Do you have a specific in mind? Often it seems that "ethics" charges boil down to "I don't like what they are doing."

[MrFedEx]

Originally Posted by bbsam

The question of business ethics is far too large. Do you have a specific in mind? Often it seems that "ethics" charges boil down to "I don't like what they are doing."

Yes. Is the Ground model ethical? I think not, because it relies on exploitation.

[bbsam]

Originally Posted by MrFedEx

Yes. Is the Ground model ethical? I think not, because it relies on exploitation.

Exploitation "an act that exploits or victimizes (treats unfairly) another". See the problem? You say it's unfair I say it's fair. You and I will continue to see things differently strictly on the basis of our respective ideas of fair and thus my contention that the question is impossibly subjective.

If one wants to, exploitation is seen everywhere. You would probably say Fred is exploitative with his Express dealings. Others would say Ups is exploitive. We could probably make a case for capitalism, oligarchies, slavery, and monarchies are all exploitative. So is it Fedex or capitalism that is unfair? Upstate is right. The labor market determines fairness. Good luck in your organizing efforts.

[Ricochet1a]

Originally Posted by bbsam

Exploitation "an act that exploits or victimizes (treats unfairly) another". See the problem? You say it's unfair I say it's fair. You and I will continue to see things differently strictly on the basis of our respective ideas of fair and thus my contention that the question is impossibly subjective.

If one wants to, exploitation is seen everywhere. You would probably say Fred is exploitative with his Express dealings. Others would say Ups is exploitive. We could probably make a case for capitalism, oligarchies, slavery, and monarchies are all exploitative. So is it Fedex or capitalism that is unfair? Upstate is right. The labor market determines fairness. Good luck in your organizing efforts.

I think the difference in definitions here is whether we use a "normative" definiton, or a comparitive definition. In a free market, the market decides norms. We're not trying to alter the free market definition. We are trying to change the situation in FedEx based upon comparitive analysis with UPS. As long as drivers accept $13/hr to work for Ground, the free market has decided what is acceptable. We want to set the bar higher and compare compensation to UPS levels and deal from there.

Here's our angle. The free market isn't always best for those participating within it. What costs $10/hr to perform in the US costs a fraction of that to perform in the PRC. Free market at work. But does that mean that US workers should be willing to accept that same level of compensation that is provided in China? Should our markets be open to goods that are produced by labor performing under conditions that don't meet US standards? Access to markets isn't just a "low price take all" situation. We have values we want to ensure are maintained by those we trade with.

When a situation exists where labor is being performed and there are widely varying compensation levels depending on which corporation is employing that labor, a free market imbalance exists. Some where in that mix, compensation isn't where the market dictates where it should be. I know many would say that unions are artificially inflating the market equilibrum price point for labor. There is truth to that argument. But the fact remains that the corporation which hires that labor consistently makes a profit.

Free markets are a theoritical construct. Managed markets are the reality. We want to "manage" our labor rate with our employer.

[bbsam]

Originally Posted by Ricochet1a

I think the difference in definitions here is whether we use a "normative" definiton, or a comparitive definition. In a free market, the market decides norms. We're not trying to alter the free market definition. We are trying to change the situation in FedEx based upon comparitive analysis with UPS. As long as drivers accept $13/hr to work for Ground, the free market has decided what is acceptable. We want to set the bar higher and compare compensation to UPS levels and deal from there.

Here's our angle. The free market isn't always best for those participating within it. What costs $10/hr to perform in the US costs a fraction of that to perform in the PRC. Free market at work. But does that mean that US workers should be willing to accept that same level of compensation that is provided in China? Should our markets be open to goods that are produced by labor performing under conditions that don't meet US standards? Access to markets isn't just a "low price take all" situation. We have values we want to ensure are maintained by those we trade with.

When a situation exists where labor is being performed and there are widely varying compensation levels depending on which corporation is employing that labor, a free market imbalance exists. Some where in that mix, compensation isn't where the market dictates where it should be. I know many would say that unions are artificially inflating the market equilibrum price point for labor. There is truth to that argument. But the fact remains that the corporation which hires that labor consistently makes a profit.

Free markets are a theoritical construct. Managed markets are the reality. We want to "manage" our labor rate with our employer.

Well then I would think that there is really no ethics conversation to have. It seems that you and MrFedex want to have it both ways. Ground drivers are inferior and unprofessional but deserve higher compensation. But really it is self interest that motivates your post. Ground with all it's inferiority threatens Express business. Why dress it up in high ideals with talk of ethics? You and I will always respectfully disagree on the Ground model but you may persuade others to organize.

[Ricochet1a]

Originally Posted by bbsam

Well then I would think that there is really no ethics conversation to have. It seems that you and MrFedex want to have it both ways. Ground drivers are inferior and unprofessional but deserve higher compensation. But really it is self interest that motivates your post. Ground with all it's inferiority threatens Express business. Why dress it up in high ideals with talk of ethics? You and I will always respectfully disagree on the Ground model but you may persuade others to organize.

Ethics is a bit too large in scope to adequately relate to what we are attempting. Like you asserted, ethics aren't necessarily universal. What I believe to be acceptable conduct may be a higher standard than your beliefs.

You have hit on an important issue regarding compensation levels though. The quality of individual that will be attracted to a wage, increases in direct proportion to the wage being offered. I'd never work for Ground wages, I'm not happy with Express wages. Express is getting the quality yet not paying for it right now. Some of us would like to change that.

With a higher wage being offered, employers can raise the standards for the potential employees. Unions know this and this is why the model works. Union members by necessity have to meet a higher standard to justify the increased compensation they are receiving. Express Couriers, RTDs and Mechanics have no problem with meeting a higher standard, we already do. We want the compensation levels that go along with that higher standard.

Yes, Ground drivers deserve better wages. With a better wage rate, better quality employees will offer themselves for employment. You'll still get drivers, you'll be able to raise your standards and FedEx would be able to maintain the high quality levels which it made a market for itself with years ago. Quality has a price. FedEx isn't paying right now.

[FedExer267]

Amen, Ricochet hit it right on the head. You want quality but are not willing to pay a fair days wage for a fair days work. I am a former Upser like I said before so my customers get the service they deserve after all I was trained by the best. 13 dollars a hour for a wage is ridiculous in this industry topped off with no benefits no vaction and no sick days. However if you think about it is it really 13 a hour I think not. Doing Kinkos working 65 hours a week for 650.00 sounds like 10 bucks a hour to me. The problem is most contractors are just to cheap to take care of those who pad their pockets. Its not a matter of if but when this scam comes to a end and ground drivers will get theirs. If we work for contractors why is it we are treated like employees by fed ex? We drive a truck that says fed ex we also wear a uniform that does not differ much from express. We have to go to their meetings and if their is a problem its not the contractor that comes to us but fed ex management, If it walks like a duck and talks like a duck hmmm must be a duck

[bbsam]

Originally Posted by FedExer267

Amen, Ricochet hit it right on the head. You want quality but are not willing to pay a fair days wage for a fair days work. I am a former Upser like I said before so my customers get the service they deserve after all I was trained by the best. 13 dollars a hour for a wage is ridiculous in this industry topped off with no benefits no vaction and no sick days. However if you think about it is it really 13 a hour I think not. Doing Kinkos working 65 hours a week for 650.00 sounds like 10 bucks a hour to me. The problem is most contractors are just to cheap to take care of those who pad their pockets. Its not a matter of if but when this scam comes to a end and ground drivers will get theirs. If we work for contractors why is it we are treated like employees by fed ex? We drive a truck that says fed ex we also wear a uniform that does not differ much from express. We have to go to their meetings and if their is a problem its not the contractor that comes to us but fed ex management, If it walks like a duck and talks like a duck hmmm must be a duck

With all due respect sir, wake up. The contractor model is not going anywhere. You've heard of the lawsuits? Now go read the follow-up. Read the court decisions. Show me one place that the court has forced Fedex to abandon the contractor model. I'll save you the time. They haven't. The Estrada case in California I would suggest had exactly the opposite effect than the plaintiffs had envisioned. The company is moving more and more in the contractor direction.

I understand that you are not happy at Ground. Have you looked at moving to Express?

[bbsam]

Originally Posted by FedEX 4 Life

Ok heres a question.If Fedex Ground ever shapes up,is UPS in trouble?

Maybe, maybe not. Express is though.

[bbsam]

Originally Posted by bbsam

With all due respect sir, wake up. The contractor model is not going anywhere. You've heard of the lawsuits? Now go read the follow-up. Read the court decisions. Show me one place that the court has forced Fedex to abandon the contractor model. I'll save you the time. They haven't. The Estrada case in California I would suggest had exactly the opposite effect than the plaintiffs had envisioned. The company is moving more and more in the contractor direction.

I understand that you are not happy at Ground. Have you looked at moving to Express?

Anyone?

[FedEx All the Way!]

Originally Posted by MrFedEx

I looked into getting a McDonald's franchise 5 years ago since they're almost always profitable. Let's just say that you need a very high net worth and a lot of cash. I had the net worth, but I didn't have the cash, so I got a polite letter saying to try again when I had more money.The numbers I quoted were for my part of the US...they may be different in other areas of the country. In short, they can afford to be very selective about their franchisees because they have an extremely desirable and successful opportunity for sale.

A friend of mine managed a McDonald's after he retired from the Air Force. This was 4 years ago, but he made less than $50,000 per year. Please explain to me how he could ever afford to become a franchisee unless he inherited money or worked several jobs for a long time?

The original point of this was the question whether or not a Ground driver could ever afford to become a contractor. Of course they could, if they worked 20 hrs a day or went into hock with loans (much more likely). Under the single-operator scenario FedEx really has you by the short hairs because they want you to buy the vehicle from them ($$$$) too. A few years back there were scores of ads from single vehicle operators looking to unload their routes and vehicles at a big loss. That's changed with the explosion of growth at Ground, but the ones making the money are FedEx Corporation and the multiple-vehicle operators like bbsam. The individual contractor still has some hefty costs and isn't making good money.

By the way, what is a BST? Ask your friend who works for us what it stands for, OK?

Why did you let the opportunity with McDonalds go? You should have applied as a cook, since you're so unhappy at FedEx. I'm sure Fred would have gladly let you go!!!!