Overlap plan

[bbsam]

Let's put it another way......People have shot themselves for less.

That’s kinda stupid.

 

[bacha29]

That’s kinda stupid.

Simply comparing the unnecessary stress levels XG needlessly places on people in an attempt to make a poor setup yield industry leading margins.Even today it still uses the same Roadway model that was designed to serve a small narrowly defined specialty market. When Fat Freddy got a hold of it he tried to make it do all things for all markets. Something it was never meant to do. About the only thing that's holding it together today is people's inexplicable willingness to pay many times the book value of a contract to get one despite ambiguous terms as well as X's continued ability to settle class actions under favorable terms including no admission of fault or liability.

 

[bbsam]

Simply comparing the unnecessary stress levels XG needlessly places on people in an attempt to make a poor setup yield industry leading margins.Even today it still uses the same Roadway model that was designed to serve a small narrowly defined specialty market. When Fat Freddy got a hold of it he tried to make it do all things for all markets. Something it was never meant to do. About the only thing that's holding it together today is people's inexplicable willingness to pay many times the book value of a contract to get one despite ambiguous terms as well as X's continued ability to settle class actions under favorable terms including no admission of fault or liability.

In the cold, dark vacuum of economic theory, everything you say may be 100% correct.

In US capitalism and under contract law, it is all commonplace.

 

[deve]

I have assisted in negotiating 4 contracts that were new overlaps. Every single one had to fight tooth and nail just to get back to equilibrium. There is an ignorance about the supposed benefits of overlap. None of our buildings have co-lo yet. However, X is negotiating as if they are. So, these guys are getting crap contracts as if they were running in the same terminal but need to have a manager in each or have a manager in one. They have to split their spares and sometimes are 20-30 mins away from their other terminal.

The point I made about loss of equity is simple. We lost equity value with ISP because you can't sell routes to an owner operator. Each route used to have a much higher earning potential for the buyer and therefore got a higher resale value. With the next move (overlap), both segments think their routes are worth 100k but when they are combined they aren't going to be worth 200k. They will be worth less. Loss in equity, 6 day a week business, etc. etc. This is a lose for the contractor and a benefit to X.

1) I see your point about col-locaiton. If HD and Ground routes are based off different terminals - overlap is only burden for contractor. Contractor would be better of doubling his HD operation rather than getting overlap. But in case of co-loc (which is my case and all stations in my area) there is no loss in equity. By the time they start 6-day operations, they will address co-location since 6-day operation won't be possible without it.
2) Overlap revenue is exactly old HD + Ground revenues in that same territory. Correct me if I am wrong.
3) 6 operations - correct it is going to be extra profit for FX and our extra expense but we benefit from efficiency being overlapped (i.e. cutting expenses by collapsing redundant routes) so I think it is going to be a wash.
Conclusion: Yes FX will benefit from overlap/6-say operations and won't share its extra profit with us but i do not see loss of equity on our end either.

 

[It will be fine]

2) Overlap revenue is exactly old HD + Ground revenues in that same territory. Correct me if I am wrong.

Wrong, an overlap contract generates much less revenue than 2 separate contracts combined. You will not make up the difference in efficiency savings.

 

[deve]

Wrong, an overlap contract generates much less revenue than 2 separate contracts combined. You will not make up the difference in efficiency savings.

I am not sure I understand.
Lets say I am Ground only. I aquire entire contract from someone else
1) if it is another Ground contract (i.e. non-overlap) in another area then My new revenue will be my old revenue + his revenue
2) if it is HD contract in my territory then my new revenue is less than my old revenue + his revenue ?
Why they have right to pay less for the same service ? How FX can explains this while "negotiating in good faith" (per ISP agreement) ?

 

[It will be fine]

I am not sure I understand.
Lets say I am Ground only. I aquire entire contract from someone else
1) if it is another Ground contract (i.e. non-overlap) in another area then My new revenue will be my old revenue + his revenue
2) if it is HD contract in my territory then my new revenue is less than my old revenue + his revenue ?
Why they have right to pay less for the same service ? How FX can explains this while "negotiating in good faith" (per ISP agreement) ?

In neither case will you get your old revenue plus all the revenue you purchase. They lower all the buckets and justify it by claiming you're more efficient. They never operate in good faith.

 

[NYCFXG]

I am not sure I understand.
Lets say I am Ground only. I aquire entire contract from someone else
1) if it is another Ground contract (i.e. non-overlap) in another area then My new revenue will be my old revenue + his revenue
2) if it is HD contract in my territory then my new revenue is less than my old revenue + his revenue ?
Why they have right to pay less for the same service ? How FX can explains this while "negotiating in good faith" (per ISP agreement) ?

They do not negotiate in good faith. The idea that the revenues are just simply combined shows me you've never negotiated an ISP contract. Like I said earlier, I have spent the last few years negotiating contracts for my fellow contractors.

The first offer is something 4-5% below original price point. I have seen worse but it was quickly "fixed" and called a mistake. They are completely careless. They have the right to pay whatever they think they can force you to take. I know someone who let their contract run down to the last month and they are offering him next to nothing. He was a very small ISP and can get enveloped by anyone around him. They are basically forcing him to decide between taking a massive pay cut or giving up his routes. I warned him last year.

The best way to protect yourself is to be large and offer great service. You will get compensated for being good at what you do. I had leverage because of my size and service area. I built amazing relationships with high profile customers and forced my will at times. The small guys all got pushed out. The guys who hired idiots and didn't maintain their trucks got moved out too.

 

[boxed98]

At the end did X give you the same or above asking?

 

[bacha29]

They do not negotiate in good faith. The idea that the revenues are just simply combined shows me you've never negotiated an ISP contract. Like I said earlier, I have spent the last few years negotiating contracts for my fellow contractors.

The first offer is something 4-5% below original price point. I have seen worse but it was quickly "fixed" and called a mistake. They are completely careless. They have the right to pay whatever they think they can force you to take. I know someone who let their contract run down to the last month and they are offering him next to nothing. He was a very small ISP and can get enveloped by anyone around him. They are basically forcing him to decide between taking a massive pay cut or giving up his routes. I warned him last year.

The best way to protect yourself is to be large and offer great service. You will get compensated for being good at what you do. I had leverage because of my size and service area. I built amazing relationships with high profile customers and forced my will at times. The small guys all got pushed out. The guys who hired idiots and didn't maintain their trucks got moved out too.

Scale will never insulate or protect you from the treacherous behavior X has exhibited over the years when it comes to it's relationship with route contractors. If you're lucky enough to be located in one of the world's largest metropolitan areas it might give them pause as to what the short term impact your disposal could have on service to some of the world's largest corporations that happen to be headquartered in your area but that fact won't stop them should you get out of line and become less than immediately responsive when it comes to answering their every beckon call.

 

[deve]

They do not negotiate in good faith. The idea that the revenues are just simply combined shows me you've never negotiated an ISP contract. Like I said earlier, I have spent the last few years negotiating contracts for my fellow contractors.

The first offer is something 4-5% below original price point. I have seen worse but it was quickly "fixed" and called a mistake. They are completely careless. They have the right to pay whatever they think they can force you to take. I know someone who let their contract run down to the last month and they are offering him next to nothing. He was a very small ISP and can get enveloped by anyone around him. They are basically forcing him to decide between taking a massive pay cut or giving up his routes. I warned him last year.

The best way to protect yourself is to be large and offer great service. You will get compensated for being good at what you do. I had leverage because of my size and service area. I built amazing relationships with high profile customers and forced my will at times. The small guys all got pushed out. The guys who hired idiots and didn't maintain their trucks got moved out too.

You are correct. I never negotiated ISP contract. I purchased my territory already overlapped. Now I am considering to acquire territory next to mine but that territory is not overlapped so I am evaluating impact of getting it overlaped.

According to you, Fedex will not negotiate in good faith and will offer less for combined contract that it used to pay to 2 contractors before the merge. But in this case I can take this to arbitration per ISP agreement. Has anyone tried to do so ?

 

[The Youngin' Of It All]

Has anyone here actually tried using eTruckBiz for their negotiation? I got a great negotiation because of them. First offer was poor like stated above. Stayed patient and played the game with them though. Took about 4 or 5 times before I was satisfied with what the negotiator offered. I know what my guys are capable of doing plus myself. I'm not one of the big contractors in the hub, but my service level is exceptionally high every day and I've only had 1 complaint under ISP since we started up back in June. Depending on your routes you should always try and negotiate on an 80 20 split between fixed and variable costs. I've already beat my 3 year projections / earnings in Year 1 of my 3 year contact, not even considering growth. Definitely going to use them next negotiation and see if I can get an even better deal next time around, especially with the Trump tax cut. If FedEx can get their taxes reduced there should be more of the pie to go around for us too right?

 

[The Youngin' Of It All]

You are correct. I never negotiated ISP contract. I purchased my territory already overlapped. Now I am considering to acquire territory next to mine but that territory is not overlapped so I am evaluating impact of getting it overlaped.

According to you, Fedex will not negotiate in good faith and will offer less for combined contract that it used to pay to 2 contractors before the merge. But in this case I can take this to arbitration per ISP agreement. Has anyone tried to do so ?

Nothing is ever binding with them, as we all know. You do bring up a good point though. How many more times are we going to get taken through the rollers at our time and expense? I'm not trying to bump things from the past but does anyone still not think Express is going into the mix and maybe that's a potential scenario where the value can offset based on overlap plus some of their volume too? I'm not looking to cause a commotion but just looking for feedback. It would be interesting to say the least.

 

[59 Dano]

The best way to protect yourself is to be large and offer great service. You will get compensated for being good at what you do. I had leverage because of my size and service area. I built amazing relationships with high profile customers and forced my will at times. The small guys all got pushed out. The guys who hired idiots and didn't maintain their trucks got moved out too.

That's probably the wisest advice anyone has ever posted here. If fits nearly any occupation.

 

[It will be fine]

You are correct. I never negotiated ISP contract. I purchased my territory already overlapped. Now I am considering to acquire territory next to mine but that territory is not overlapped so I am evaluating impact of getting it overlaped.

According to you, Fedex will not negotiate in good faith and will offer less for combined contract that it used to pay to 2 contractors before the merge. But in this case I can take this to arbitration per ISP agreement. Has anyone tried to do so ?

They will do whatever they want to. You can try an arbitration but it will be the end of your relationship with Fedex. They will find some other reason to put your CSA up for bid when the contract expires. It's how they operate, so it's only worth it if you don't mind moving on after the outcome.