FedEx first route

Discussion in 'FedEx Discussions' started by Jonny246800, Apr 2, 2012.

  1. Jonny246800

    Jonny246800 New Member

    Hello everyone. I'm new to this forum so please excuse me for not knowing some of the terminology you guys and girls use. Anyway the story is I'm 23 years old and I graduated from college last June. I've been having a hard time finding a real career so I was looking at business opportunities such as route contracting. I've come across a guy who's selling 1 route (FedEx home delivery Tuesday-Saturday) I've asked him a little about the route and why he's selling and he basically told me he has 5 routes and doesn't like filling in sometimes on Saturday, along with a few other things. The route has a driver at the moment and from talking to him the figures look good, after expenses. I'd really like to ask Mom and bbsam a few questions. What are some of the things I should beware of? I've read mom's post about "fire sales", and I'm concerned with that too. The revenue this route generates seems too good to be true, and we all know what they say about things that are too good to be true. Thank you guys in advance for any help you may throw my way.
  2. bbsam

    bbsam Moderator Staff Member

    Welcome aboard Jonny. Where to begin...don't do it. Not now. Not sure where you are or your financial situation, but Fedex is in the midst of some structural changes that could soon have serious implications. If it is a one route I assume it is a contracted rather than N ISP station. Problem is that the company is moving away from contracting and toward ISP. The main difference as far as you are concerned is that very soon you may be forced to either acquire more routes, sell to another contractor, partner with other contractors, or lose your entire investment.

    Also, given your relatively young age, I would suggest you look into route driving before route ownership. That is not to say you couldn't do it or wouldn't like it, but there is little to be gained at this point in jumping in the deep end.
  3. Jonny246800

    Jonny246800 New Member

    Thank you bbsam for your quick reply. Financially I have very little debt, an OK income and a great credit score so I'd be able to finance this route. I figured if I'm going to invest into anything I'll do it now while I'm still living with my parents and don't have kids and a wife. I have experience in running a business and coaching people plus I went to school for business. I just feel like I'm ready to go and I don't want to talk about it anymore I want to do it. Is there anything else you would suggest business wise in transport? I'd really like to manage the business rather then drive.
  4. Mom

    Mom New Member

    You will be driving anyway. Also, all the business degrees in the world won't really matter if you are contracted to X. They tell you to the letter what you can and can't do, your entities corporate structure etc. I have a tech school degree in Graphic Design, fwiw.

    Bbsam is right...don't do it. If your state isn't ISP right now, you will be eventually, and one route is not Scale. Scale must be achieved by a minimum of three work areas. One work area with 4 supplementals is still considered ONE work area, so at some point in the future you WILL be expanding, or losing your investment.

    HD routes don't make Jack. I ran two. The volume isn't there. If you are going to own ONLY one route, you HAVE to drive it or you will be losing. Believe me. How is this guy providing you with 'numbers'? Every contractor can cook this easily. Easpecially if he owns other routes, ESPECIALLY if they are Ground...WAY easy to make any single one look fantastic. I know for a fact that a single HD route with a FT driver on it will profit you nothing. Plus, HD comes with the added bonus of being all residentials...which means complaints, theft, misdeliveries, and TONS of send-agains on a daily basis.

    I can take a look at the financials this guy is giving you and pick them apart and give you a real idea of what it would make. What kind of truck is on it? How old is it? What is the daily service % on the route? Hiw bad does the driver suck at his job? Is he being terminated or at the very least is thus specific operating agreement in jeopardy by FedEx for some reason?

    When I'd buy a distressed route, the aforementioned were all reasons they were up for grabs. I would never pay more than the value of whatever truck was on it, and NEVER more than 25-30% of what it had earned gross the previous year. I was 'given' two routes by waiting for the current operator to was abandoned and the other was terminated, by having spare trucks and drivers at the ready.

    You aren't married now, and you don't have kids now, but you will some day. Don't put them through this. Please feel free to PM if you have anything real specific to ask.
  5. Mom

    Mom New Member

    Everything I post is seemingly held for moderation, so I wrote a book for you, but nothing posted. I'll try a PM...
  6. Mom

    Mom New Member

    Ok, I must be heavily deficient in some way, or my iPad is plotting against me or something...Jonny, you send ME a PM and I will try to respond to that. Cripes.
  7. Jonny246800

    Jonny246800 New Member

    Mom, thank you so much for your advice! I briefly talked to the guy on the phone, it did seem like the guy was in a hurry to sell this route. And when I asked him how long he's had it he told me "I've had some routes for 5 years an some for 1 year" so no clear answer there which really set off an alarm in my mind. I'm going to PM you when I get on a pc or iPad.
  8. bbsam

    bbsam Moderator Staff Member

    Let me just say here that Mom, who "hates" Fedex and I who does not, are in complete agreement on this issue. I can say with a good degree of confidence that everything she has said is true. "ISP" is not an entry level position the way "contractor" used to be. That is not to say that I think Ground is a bad job to land. I think it has alot of great potential but it holds alot of risk not readily visible to people just getting in. That's not a knock on Johnny or anybody else. It's just a very risky position to be walking into.
  9. Jonny246800

    Jonny246800 New Member

    Thank you bbsam, I really appreciate both of your input. What exact questions should I be asking this seller to find out more about this route.
  10. dvalleyjim

    dvalleyjim Active Member

    What? Nobody cares what loose canon contractor Dvalley thinks? Go for it kiddo. Make it work.
  11. bbsam

    bbsam Moderator Staff Member

    Ask him what happens when (not if) a driver is sick, the truck breaks down, the rout is overdispatched, etc. Then as the senior manager of the senior managerthe same question.
  12. Mom

    Mom New Member

    Also ask him to give you contact information for other contractors in the same facility. I've been contacted many times by parties interested in routes for sale out of my former location by other contractors and ISPs. It's a good idea to get a feel for the integrity of the seller by speaking to those guys. Because you DO have to develop a working relationship with other contractors. I would regularly have my spare vehicles rented out to other entities who needed them and as the only owner with spare and PT drivers, acted as a sort of in-house temp agency also.

    This guy is not selling a perfectly good HD route because he doesn't want to go in to the station on Saturday mornings or wants to have his phone off on the weekends. As most single HD routes that a contractor tries to operate with a driver on it, there is a problem with it somewhere. Truck is a POS, driver is a POS or it just isn't making him money.

    And yes, I hate FedEx. I can tell you that in my former facility, there is not ONE ISP that is not searching for a way out. Not because they are broke, but because they are miserable at the hands of our extraordinarily unstable senior manager and Contractor Relations a-hole coupled with the most incapable regional staff in the system. But, as Ive said before, I cleaned up and made a killing at it, down to the day I sold. I have a lot of money and nice stuff. That probably makes me sound like a d-bag, but I am one so I guess thats ok. My two year old goes to a private early education daycare. My Navigator is paid for. My Camaro is paid for. My SuperDuty is paid for. I have absolutely 0% debt aside from the mortgage on my 3k sq ft house with two garages sitting on a half acre in a gated subdivision.

    But I didn't get it by being stupid, I didn't buy something just because it became available, and you surely won't get it by buying a route for 'full retail'. It is very difficult, as bbsam correctly stated, you just 'buy in' as a contractor with a single route now.

    My husband was a AM pkg handler, then a terminal temp driver, then a contractors driver, then he managed that contractors 6 routes when the contractor moved out of state. Then, he came home and told me about a rural route with a brand new sprinter on it that was being sold for less than the Sprinter itself cost. We went to the bank, somehow convinced them to give us the $$$, and he operated that route in addition to working for his employer. Everyhting sort of just snowballed, I quit my job ($10/hr at a sign shop) and within the year had saved all the capital from that first route to buy out three of my husbands' boss' trucks that serviced one route with two supps. Between my husband driving and managing drivers and me doing everything else, it worked.

    Four years later we have 7 trucks (had 11 at our highest period), hardly any debt on the books aside from new trucks here and there, and a very capable employee driver who wanted badly to make it his. We priced fairly, and did extend him credit for 25% of the purchase price, so he is making loan payments directly to us. His bank financed 55%, and him and his business partner had to add a second mortgage to each one of their houses for the remainder.

    Oh, also. RUN the other way if the seller won't finance part of it to you. I know the company I sold makes ample money, and my big fancy lawyer made sure the promissory note has me covered in the event of default.

    And spend time with your stations senior manager. He is your boss, so you better get a feel for what he is like. And yes, he IS your boss, regardless of what the contract says. Speaking of, KNOW your contract or pay a lawyer to know it. X likes to pretend like it doesn't exist.
  13. Jonny246800

    Jonny246800 New Member

    Hahaaa loose cannon! Mom and bbsam have pretty much convinced me to stay away and I appreciate their opinion. I may just buy tractor trailers and just start a trucking company , the business model is very simple even a caveman could do it.
  14. Jonny246800

    Jonny246800 New Member

    Mom thanks again for your info. I appreciate you telling me your whole story! And yes before I were to do anything I'd definitely would have my lawyer look at the paperwork and an accountant and you guys of course. Honestly though by just taking all the things you guys mentioned into account I really don't think I'll be getting into it. I hate the fact that FedEx can just terminate my route at any point, there goes my business!
  15. Nick9075

    Nick9075 Member

    I have been in the process of purchasing an ISP consisting of 4 ground routes (probably will be 5 by end of this year) in that services one of the wealthiest counties in the USA in the northeast.. The Numbers (at least for ground) are all obtainable thru the FedEx website (the contractors or ISP portal) so I don't know why you are saying the numbers are false or inflated. This ISP is already over $107,000 as of the end of March. Last year gross was $472,000, likely it will exceed that this year.. Asking price originally was 340K late last year, dropped to $305K. I pushed back at the deal in January and now the seller is willing to do it at 265K cash.

    One route with one driver wouldn't make sense. If it grosses say $100,000 subtract expenses and you are barely breaking even. I already subtracted 50% of the reported net because of taxes, other incidental expenses & health insurance for myself.
  16. newtofed

    newtofed New Member

    what is ISP??
  17. MrFedEx

    MrFedEx Engorged Member

    An ISP is the pretend contractor that Fred Smith uses to make it seem like FedEx doesn't actually run Ground. Kind of like a gay man with a "beard".
  18. newtofed

    newtofed New Member

    lol well said thank you. so its in affect with fedex now? is it a bad time to buy a route??
  19. MrFedEx

    MrFedEx Engorged Member

    I work for Express and I like to give Ground a bad time. bbsam is the one to ask here if the time is right and if you're getting a good deal.
  20. vantexan

    vantexan Well-Known Member