Fedex routes in Texas

[DPS25]

All,

I am considering purchasing routes from someone for Fedex ground. This person has 2 routes with 3 vehicles (2 - 2001 Freightliner P1000 and 1 - 2002 Freightliner P1000). He also has 3 drivers who are willing to stay on. I would be a non-driving owner. What should i be looking out for? Would this fit the ISP model if that came to Texas? Does is make sense to keep the 10 year old trucks that have between 200k to 400k miles? Thanks in advance.

Regards,
D.

 

[UpstateNYUPSer(Ret)]

There is a member named bbsam who is a Ground contractor. He would be the best source of information for you.

 

[DPS25]

There is a member named bbsam who is a Ground contractor. He would be the best source of information for you.

Thank you. I will contact him for his advice.

 

[STFXG]

2 routes does not fit the ISP model. The trucks are really old so expect problems. It all depends on the price as to whether or not it's worth it. Show some numbers and we could give you a better idea...

 

[bbsam]

Long answer short, I would not purchase less than three. As STFXG said, 2 won't be enough if Texas changes to the ISP model. Beyond that, I wouldn't hesitate based on the trucks. All trucks are expensive to maintain, even new ones. Even with three routes though I would suuggest you do ALOT of research. I don't know what kind of money you have to invest, but if I were in your position, I would find an ISP in a neighboring state and go visit him or her for a day. Take him or her out for lunch and let him spill his guts. Fedex is still a little new to the ISP model and they definitely have some bugs to work out. It can be a bit of a gamble, but I think in the long run it will pay off. I sat in a meeting on Tuesday with ISP's from our region with some people from Pittsburgh. They know there are serious potential problems and they know they need to be addresses before the wheels fall off. It is in their best interest, but who knows?

 

[STFXG]

I'm interested to hear what the problems with the ISP model are in your opinion bbsam. Anything about it that you can divulge?

 

[bbsam]

I'm interested to hear what the problems with the ISP model are in your opinion bbsam. Anything about it that you can divulge?

One common theme was the quality of drivers we can afford. Let's be honest. We don't exactly have people with years of experience lining up to fill out applications.

 

[DPS25]

2 routes does not fit the ISP model. The trucks are really old so expect problems. It all depends on the price as to whether or not it's worth it. Show some numbers and we could give you a better idea...

Yes, that's what i am concerned about. I'm also trying to see if something works out for this 2 plus 1 other route that someone else maybe be interested in selling. The trucks are definitely a big concern here. 10-11 years seems pushing it. I've put some numbers below that i received. Thanks.

Asking: $325,000
Gross: $285,000
Net: $105,000

The net is after 3 drivers payroll, employer taxes and truck maintenance (200 per truck per month).

Thanks.

 

[DPS25]

Long answer short, I would not purchase less than three. As STFXG said, 2 won't be enough if Texas changes to the ISP model. Beyond that, I wouldn't hesitate based on the trucks. All trucks are expensive to maintain, even new ones. Even with three routes though I would suuggest you do ALOT of research. I don't know what kind of money you have to invest, but if I were in your position, I would find an ISP in a neighboring state and go visit him or her for a day. Take him or her out for lunch and let him spill his guts. Fedex is still a little new to the ISP model and they definitely have some bugs to work out. It can be a bit of a gamble, but I think in the long run it will pay off. I sat in a meeting on Tuesday with ISP's from our region with some people from Pittsburgh. They know there are serious potential problems and they know they need to be addresses before the wheels fall off. It is in their best interest, but who knows?

Thanks bbsam. I'm definitely not going to hesitate. The trucks are old and price seems quite high to me. I am trying to see if it's worth it to buy the routes without the trucks and a much lower price. Thanks for the idea on talking to an ISP in a neighboring state. I think that may be well worth it.

How much would new trucks cost? Approx 50K each? Or is 2-3 years used a good option?
How much would you expect maintenance costs to be on a P1000? I think the 200 per month estimate they gave me it too low.

Thanks for taking the time to answer my questions.

 

[STFXG]

For that old I'd set aside 1000 per month. You'll probably be closer to 500 depending on the miles they drive (just an estimate obviously) But you want enough for catastrophic failure (engine, trans, rear diff, etc).

Btw if you get new trucks you can generally get pretty good extended warranties through freightliner.

Just for reference routes in my area sell for 40-70k per contract plus the value of the truck(s)...

New p1000s are around 50-60k new. Used are fine. There's a lot that are for sale on mygroundbiz used that you can pick up for a good deal with maintenance records. You can find used with under 100k miles for under 40k. Commercialtrucktrader is a good source.

 

[bbsam]

I budget about $6500 per month for maintenance on nine trucks, but I'm picky about who works on them and this shop is a bit expensive. New trucks run about 65k for p1000s.

 

[STFXG]

Been a while since I looked at pricing on p1000s. Didn't know they'd gone up that much. And they wonder why everyone has old trucks that look like polished up terds...

 

[bbsam]

They went up $10000 in 2011 because of the new emissions systems.

 

[DPS25]

Thanks for all the information guys.

 

[Nick9075]

One common theme was the quality of drivers we can afford. Let's be honest. We don't exactly have people with years of experience lining up to fill out applications.

I think the expenses -- both what FedEx deducts (as shown on the settlement sheets) and other expenses related to payroll, gas, tolls (if applicable), repairs, truck payments. I am about to close on 3 home delivery routes in NYC and will be still need to work a full time regular job since net after the above will be only around $1300 a week