Is the FDXG ISP Driver Model sustainable long term?

[Franklin Moore]

In light of the UPS/Teamsters job action and critical (qualified) job pool issues, can the ISP's and FDX (in the end) continue down their current path?

What options will the principals have.... to reduce the expanding stresses of more hours and larger/heavier items....while confronted by low unemployment and a low motivated millenneal workforce?

 

[bacha29]

In light of the UPS/Teamsters job action and critical (qualified) job pool issues, can the ISP's and FDX (in the end) continue down their current path?

What options will the principals have.... to reduce the expanding stresses of more hours and larger/heavier items....while confronted by low unemployment and a low motivated millenneal workforce?

It all comes down to Economics 101....Don't invest money you can't afford to lose. Any investor class individual considering buying one of the many contract/routes currently on the market simply must go back to the days of Roadway Package System and get himself up to speed on what has taken place both in the market and in the court room since the day Dan Sullivan rolled this thing out of Akron in 1985.

 

[bbsam]

It all comes down to Economics 101....Don't invest money you can't afford to lose. Any investor class individual considering buying one of the many contract/routes currently on the market simply must go back to the days of Roadway Package System and get himself up to speed on what has taken place both in the market and in the court room since the day Dan Sullivan rolled this thing out of Akron in 1985.

Are there a lot on the market?

 

[bacha29]

Are there a lot on the market?

I receive daily notices from one of the major route brokers. It used to be that the notice would consist of 2 or 3 new routes that have become available. In recent days however the number is often in double digits. Once as high as 28.

 

[bbsam]

I receive daily notices from one of the major route brokers. It used to be that the notice would consist of 2 or 3 new routes that have become available. In recent days however the number is often in double digits. Once as high as 28.

Routes or contracts?

 

[bacha29]

Routes or contracts?

Contracts. What is interesting however is the reasons for selling with what would appear to be an increasing number of contractors downsizing, some down to simply keeping the minimum required in what would appear to be an attempt to minimize risks going forward.

 

[Oldfart]

It all comes down to Economics 101....Don't invest money you can't afford to lose. Any investor class individual considering buying one of the many contract/routes currently on the market simply must go back to the days of Roadway Package System and get himself up to speed on what has taken place both in the market and in the court room since the day Dan Sullivan rolled this thing out of Akron in 1985.

WOW

 

[Franklin Moore]

Are there a lot on the market?

The Economic factor that fascinates me is how FDXG ISP's will keep pace (with onerous FDX service metrics) while only paying new driver's $35 -40 K annually while UPS is adding new hires @ $19 an hr + benefits. I've also been informed that AMZN new hires at a StL contractor are receiving $17.50 per hour.

50 hour work week computations are as follows:

UPS $1072.50 + benefits
AMZN $962.50 w/overtime
FX $750.00 (avg of $150 - $160 per day)

If it is accurate that FDX has screwed down contractor payments 8-11 % how does this play out?

 

[bbsam]

The Economic factor that fascinates me is how FDXG ISP's will keep pace (with onerous FDX service metrics) while only paying new driver's $35 -40 K annually while UPS is adding new hires @ $19 an hr + benefits. I've also been informed that AMZN new hires at a StL contractor are receiving $17.50 per hour.

50 hour work week computations are as follows:

UPS $1072.50 + benefits
AMZN $962.50 w/overtime
FX $750.00 (avg of $150 - $160 per day)

If it is accurate that FDX has screwed down contractor payments 8-11 % how does this play out?

It plays out however Fedex wants it to play out.

Don’t fool yourself. Fedex doesn’t HAVE to screw down on contractor pay. They aren’t hurting for money. In a sense Fedex has been smart over the years in reinvesting money to grow market share. But they’ve also been slow to increase investment in people.

So when you point out the looming pay disparity, don’t think it’s an unknown or a problem that can’t be addressed. It may be that X will wait for signs of a mass exodus of drivers before they step up. It is annoying, frustrating, and stupid. But it isn’t surprising.

So to answer your initial question, yes, it is sustainable but I and other contractors may have to see 200% turnover before the company moves.

Incidentally, it’s control like that that makes the ridiculously vague contract an almost worthless piece of fiction.

 

[bbsam]

Contracts. What is interesting however is the reasons for selling with what would appear to be an increasing number of contractors downsizing, some down to simply keeping the minimum required in what would appear to be an attempt to minimize risks going forward.

I’ve considered downsizing. $300k for an area I’m not particularly fond of? It’s a tantalizing proposition.

 

[Franklin Moore]

I’ve considered downsizing. $300k for an area I’m not particularly fond of? It’s a tantalizing proposition.

Thank you for your perspective. Your forum is very helpful.

 

[bacha29]

I’ve considered downsizing. $300k for an area I’m not particularly fond of? It’s a tantalizing proposition.

If you believe that your under performing routes are currently at maximum value why hang onto them? If you can get that much for them now and are satisfied with that amount and don't know for certain that you that you can get that much for them a couple of years from now then it's like they say....never look a gift horse in the mouth.

 

[dmac1]

It plays out however Fedex wants it to play out.

So to answer your initial question, yes, it is sustainable but I and other contractors may have to see 200% turnover before the company moves.

Incidentally, it’s control like that that makes the ridiculously vague contract an almost worthless piece of fiction.

That 200% turnover may cause you to go bankrupt. Too few drivers = too high pay, even if it is only short term. I don't know what your actual profit is, but is your 'profit' enough to pay extra even for a couple months, and still have enough left to live on? Guess my point is that an ISP needs to prepare for a couple months(or longer) reserve because current income goes to current operating costs for most. Hanging on and hoping that fedex will raise payments may be foolish. There is no way to plan ahead when the contract doesn't include an inflation clause.

Gas prices alone have so much potential volatility that if you have a buyer, it could be time to sell. Add in rising wages, inflation, and lower unemployment and you have a recipe for bankruptcy. Even the fuel supplement doesn't keep up with costs immediately, and with Trump making so many friends in the middle east, gas prices could jump by 50% pretty quickly. And now with refiners being able to sell refined gas on the world market, we aren't even assured a domestic supply even though we are technically a net exporter of energy.

 

[bbsam]

That 200% turnover may cause you to go bankrupt. Too few drivers = too high pay, even if it is only short term. I don't know what your actual profit is, but is your 'profit' enough to pay extra even for a couple months, and still have enough left to live on? Guess my point is that an ISP needs to prepare for a couple months(or longer) reserve because current income goes to current operating costs for most. Hanging on and hoping that fedex will raise payments may be foolish. There is no way to plan ahead when the contract doesn't include an inflation clause.

Gas prices alone have so much potential volatility that if you have a buyer, it could be time to sell. Add in rising wages, inflation, and lower unemployment and you have a recipe for bankruptcy. Even the fuel supplement doesn't keep up with costs immediately, and with Trump making so many friends in the middle east, gas prices could jump by 50% pretty quickly. And now with refiners being able to sell refined gas on the world market, we aren't even assured a domestic supply even though we are technically a net exporter of energy.

It may be ridiculous, but I always view my competition with other local contractors as being on a curve.

I can ride out high costs for several months and possibly more than a year. So I’m fairly confident that I’ll keep my head above water long enough for the company to wake up.

Maybe not though.

 

[Cactus]

So I’m fairly confident that I’ll keep my head above water long enough for the company to wake up.

You're gonna have to wait for Fred to kick the bucket before you see any waking up. He'll never change.

 

[bbsam]

You're gonna have to wait for Fred to kick the bucket before you see any waking up. He'll never change.

Well I haven’t begun to see 200% turnover yet either so there’s that.

 

[Cactus]

Well I haven’t begun to see 200% turnover yet either so there’s that.

In the meantime, better knock on wood and freshen up that uniform of yours.

 

[dvalleyjim]

friend. Moore has been saying what I've been saying all along. He just knows how to say eloquently and politely.