Trying to buy package of routes

[BusVenture1]

Seeing so many useful tips out here . I am in northern california and looking to buy routes sold as a package . Have a few questions to you experienced folks .
1. What is the lifetime of truck and cost for a truck ? That will help to deflate the high cashflow numbers posted .

2. When u buy a business is ur route automatically extended for 3 years . or ur buying whatever is left of that route from seller and then ur at the mercy of Fedex ?

3. How do you guys manage driver quitting ? is bench driver an option .. does it really work ?

One of the sellers I talked to mentioned for a 5 route ground business with a manager spending 20 hrs is more than enough per week . this sounds too good to be true . Pls comment .

 

[It will be fine]

Seeing so many useful tips out here . I am in northern california and looking to buy routes sold as a package . Have a few questions to you experienced folks .
1. What is the lifetime of truck and cost for a truck ? That will help to deflate the high cashflow numbers posted .

2. When u buy a business is ur route automatically extended for 3 years . or ur buying whatever is left of that route from seller and then ur at the mercy of Fedex ?

3. How do you guys manage driver quitting ? is bench driver an option .. does it really work ?

One of the sellers I talked to mentioned for a 5 route ground business with a manager spending 20 hrs is more than enough per week . this sounds too good to be true . Pls comment .

1. Going to depend on many factors, gas/diesel, step van/sprinter style, manufacturer etc. I run mostly diesel Freightliner step vans and get 400k miles out them.

2. You buy the current contract, any extension beyond that will be dependent on your results. I'd be surprised if you didn't get enough leeway to get at least a second contract.

3. Turnover is a big issue. When someone quits my managers run the route until we find a new driver. It can snowball fast though, you can have a couple quit or get hurt at the same time. Then it's bad and I end up driving a route or 2 at a time.

4. Depending on staffing, I've gone months without having to leave my house or make an appearance at any terminal. I've gone months out driving until 20:00 while we train new hires. It's typically a good idea to have someone in the process of Fedex approval at all times. If you don't need them at the moment another contractor will.

 

[bacha29]

Seeing so many useful tips out here . I am in northern california and looking to buy routes sold as a package . Have a few questions to you experienced folks .
1. What is the lifetime of truck and cost for a truck ? That will help to deflate the high cashflow numbers posted .

2. When u buy a business is ur route automatically extended for 3 years . or ur buying whatever is left of that route from seller and then ur at the mercy of Fedex ?

3. How do you guys manage driver quitting ? is bench driver an option .. does it really work ?

One of the sellers I talked to mentioned for a 5 route ground business with a manager spending 20 hrs is more than enough per week . this sounds too good to be true . Pls comment .

Question 1. It will only last as long as it is taken care of the kind of environment it operates in and how badly the driver abuses it.
Question 2. First part ..NO Second part ... yes
Question 3 Try paying them enough so they don't leave. Good luck with that. With a few exceptions here and there X Gound contractors driver compensation converted to a hourly wage is generally in the $ 15-18 an hour range all straight time zero benefits and maxed out hours. That's about it. Try competing for the best employees against UPS with their $34 and hour plus overtime and full benefits .
As for your manager. Yes about 20 per week performing managerial duties but what they didn't tell you is that he'll spend twice that much in the truck or under the truck. With just 5 routes you're only real chance to recover your purchase price is for you to be the manager. the full time driver and the mechanic.

 

[BusVenture1]

On an average 400k miles translates to how many years and what is the cost of the diesel Freightliner step vans ?

 

[It will be fine]

On an average 400k miles translates to how many years and what is the cost of the diesel Freightliner step vans ?

They run around $72-75K new. Years will depend on your routes, that's why I referenced the mileage. If you average 60 miles/day the truck will last 20-25 years. You can look for used ones and depending on engine make and model year get plenty of life out of them. The new ones have the DEF exhaust system that is total garbage. My new trucks have all been in the shop with DEF issues. This makes the older model trucks without DEF retain quite a bit of value. The rules are stricter in Cali so you may not be able to get away with older trucks without DEF.

 

[bacha29]

On an average 400k miles translates to how many years and what is the cost of the diesel Freightliner step vans ?

It still comes down to operating conditions maintenance driving habits of the operator. the weight they're transporting etc. No two areas are exactly alike No two operators are alike. If you operate in a rural area with poorly designed roads unpaved township roads and are often overloaded you're going to have more busted springs than you can count. If you operate in a metro suburban area 60 miles a day is about right . Out here in the rural areas when I operated 250+ was the norm.

 

[Southwest]

Bacha29 is disgruntled. This site would be better if he wasn't on it. You should disregard any of his responses. Iwbf is accurate. I tell all new guys that the good times are much easier than any other small business. The bad times are much worse than other businesses. You can't use ups as a comparison. You can't walk off the street with one year of driving experience and get a job at ups

 

[It will be fine]

Bacha29 is disgruntled. This site would be better if he wasn't on it. You should disregard any of his responses. Iwbf is accurate. I tell all new guys that the good times are much easier than any other small business. The bad times are much worse than other businesses. You can't use ups as a comparison. You can't walk off the street with one year of driving experience and get a job at ups

Bad times are when you're understaffed. So I'd recommend doing research on the local labor market. Put out an ad and see what type of people you can attract. Find out how long the current owner has kept his people on staff. Talk to the other contractors in the terminal about their experience with hiring.

 

[bacha29]

Bad times are when you're understaffed. So I'd recommend doing research on the local labor market. Put out an ad and see what type of people you can attract. Find out how long the current owner has kept his people on staff. Talk to the other contractors in the terminal about their experience with hiring.

I agree. The most credible information you can get is from other contractors because demographics have a huge impact. You're only as good as the strength of the economy you will serve. IWBF operates in a New England metro area. I on the other hand operate in a severely depressed area of the Mid Atlantic region. He probably has more people living in a 10 block area of his territory than I have living in the entire 1,154 square mile mountainous county in which I live with tons of poorly constructed and maintained township and secondary roads. No doubt that per capita incomes are also much higher in his area and that's extremely important because this is a consumption based economy and so is this line of work. So if you're going to be in an area where population and wallets are both quite thin and you're buying from who's getting out be certain that you know what you're going to be up against before signing on the dotted line.

 

[dmac1]

If you have 5 routes, for example, you better have at least 8 drivers. At some point, you WILL have at least two drivers unavailable at the same time. You are probably better off with a bunch of part-time drivers, maybe vreate 8 part-time routes out of 5 40 hour a week routes, and then you can offer drivers extra hours if absolutely needed. You might even find better people who only want 30 hours a week, and you could have an early and late driver driving the same vehicle, so extra vehicles might not be needed.

Same goes for vehicles- you better be ready with extra vehicles whether rentals or owned. Those extra trucks will be needed when you need to make repairs that take longer than a couple hours, or if one of your trucks is in the body shop when fedex decides it doesn't look good enough or your driver side-swiped a building or high curb while going around a corner. Long term, you are going to need those vehicles, and all your vehicles will last longer anyway if you are putting less miles on each of them.

If you have a fleet of 6 trucks each worth $75k, and ALL of them run only 60 miles a day, it is still $22,000 a year at TODAY's costs to replace them IF you figure a 20 year life, let alone counting for inflation. That is basically $2000 a month minimum that you are losing either out of cash flow, or out of the value of the business if you don't have a replacement fund. And if you don't have a replacement fund, you will need to borrow when trucks need to be replaced, further reducing cash flow.

And your drivers won't care about being easy on the trucks. Coming from HD, I know that regular cargo vans WILL NOT last 400,000 miles when your drivers don't tell you about squeaking brakes, or a squealing water pump, or the smell of burning wires. They will shift from forward to reverse while still moving forward, and vice versa. They will drive over or through construction debris, mud that is obviously too deep, or through tree branches guaranteed to put deep scrapes in your paint, and you will wonder how you got a dent 5 feet or more above ground level. The drivers may be friendly, like you always were to your employers, but they won't be trying to help you.

Basically, you are buying a headache. Do you think the owner is selling because it is a no-brain great deal that pours out cash like the golden eggs fly out of a goose's ass?

 

[bacha29]

If you have 5 routes, for example, you better have at least 8 drivers. At some point, you WILL have at least two drivers unavailable at the same time. You are probably better off with a bunch of part-time drivers, maybe vreate 8 part-time routes out of 5 40 hour a week routes, and then you can offer drivers extra hours if absolutely needed. You might even find better people who only want 30 hours a week, and you could have an early and late driver driving the same vehicle, so extra vehicles might not be needed.

Same goes for vehicles- you better be ready with extra vehicles whether rentals or owned. Those extra trucks will be needed when you need to make repairs that take longer than a couple hours, or if one of your trucks is in the body shop when fedex decides it doesn't look good enough or your driver side-swiped a building or high curb while going around a corner. Long term, you are going to need those vehicles, and all your vehicles will last longer anyway if you are putting less miles on each of them.

If you have a fleet of 6 trucks each worth $75k, and ALL of them run only 60 miles a day, it is still $22,000 a year at TODAY's costs to replace them IF you figure a 20 year life, let alone counting for inflation. That is basically $2000 a month minimum that you are losing either out of cash flow, or out of the value of the business if you don't have a replacement fund. And if you don't have a replacement fund, you will need to borrow when trucks need to be replaced, further reducing cash flow.

And your drivers won't care about being easy on the trucks. Coming from HD, I know that regular cargo vans WILL NOT last 400,000 miles when your drivers don't tell you about squeaking brakes, or a squealing water pump, or the smell of burning wires. They will shift from forward to reverse while still moving forward, and vice versa. They will drive over or through construction debris, mud that is obviously too deep, or through tree branches guaranteed to put deep scrapes in your paint, and you will wonder how you got a dent 5 feet or more above ground level. The drivers may be friendly, like you always were to your employers, but they won't be trying to help you.

Basically, you are buying a headache. Do you think the owner is selling because it is a no-brain great deal that pours out cash like the golden eggs fly out of a goose's ass?

Dmac: my friend. You could not have described the daily experiences of a Fedex contractor in a more precise fashion. Without a family sustaining wage package and a solid benefit plan this prospective buyer will need ( as you have clearly described ) 3 drivers on every truck. One coming one driving and one leaving. Many trucks being used today especially HD's are simply 3/4 ton pickups with box body's on them and have a manufacturer projected life span of about 180,000 miles Even the P1000/1200's step vans have nothing more than medium duty frames under them. Both types were so consistently over loaded that burned out brakes and busted springs and spring cradles were a constant issue. Look within the next few years for X to require contractors to begin converting to CDL full air brake straight trucks with hydraulic tail gates to handle all the motor freight they continue to steal off the LTL's The cost of redundancy that contractors in the past could avoid but can no longer do so will put a mighty heavy burden on that 5 route contractor.

 

[NYCFXG]

Dmac: my friend. You could not have described the daily experiences of a Fedex contractor in a more precise fashion. Without a family sustaining wage package and a solid benefit plan this prospective buyer will need ( as you have clearly described ) 3 drivers on every truck. One coming one driving and one leaving. Many trucks being used today especially HD's are simply 3/4 ton pickups with box body's on them and have a manufacturer projected life span of about 180,000 miles Even the P1000/1200's step vans have nothing more than medium duty frames under them. Both types were so consistently over loaded that burned out brakes and busted springs and spring cradles were a constant issue. Look within the next few years for X to require contractors to begin converting to CDL full air brake straight trucks with hydraulic tail gates to handle all the motor freight they continue to steal off the LTL's The cost of redundancy that contractors in the past could avoid but can no longer do so will put a mighty heavy burden on that 5 route contractor.

I have 4 Straight trucks. All air brakes and tail gates. I easily pick up 150-200 pallets a week. One customer gives me 60-70 pallets a day. It is it's own route. This is the future every one. One of my pick ups today completely loaded out a 24ft Straight truck with 85 packages. That's roughly 1200 cubics and only 85 packs. Brick loaded. This business is ed. My large package mix shows me at almost 5%. Counting down the days to my closing. I am making X so much money... It makes me sick to my stomach.

 

[Fred's Myth]

I have 4 Straight trucks. All air brakes and tail gates. I easily pick up 150-200 pallets a week. One customer gives me 60-70 pallets a day. It is it's own route. This is the future every one. One of my pick ups today completely loaded out a 24ft Straight truck with 85 packages. That's roughly 1200 cubics and only 85 packs. Brick loaded. This business is ed. My large package mix shows me at almost 5%. Counting down the days to my closing. I am making X so much money... It makes me sick to my stomach.

Sounds like you need to Dim weight them like they do Amazon.

 

[bacha29]

I have 4 Straight trucks. All air brakes and tail gates. I easily pick up 150-200 pallets a week. One customer gives me 60-70 pallets a day. It is it's own route. This is the future every one. One of my pick ups today completely loaded out a 24ft Straight truck with 85 packages. That's roughly 1200 cubics and only 85 packs. Brick loaded. This business is ed. My large package mix shows me at almost 5%. Counting down the days to my closing. I am making X so much money... It makes me sick to my stomach.

"We've got to move theses refrigerators. We've got to move these color tv's"........Dire Straits.....Perhaps Mark Knopfler and his band mates knew something we didn't back in the MTV era of the 1980's.

 

[BusVenture1]

If you have 5 routes, for example, you better have at least 8 drivers. At some point, you WILL have at least two drivers unavailable at the same time. You are probably better off with a bunch of part-time drivers, maybe vreate 8 part-time routes out of 5 40 hour a week routes, and then you can offer drivers extra hours if absolutely needed. You might even find better people who only want 30 hours a week, and you could have an early and late driver driving the same vehicle, so extra vehicles might not be needed.

Same goes for vehicles- you better be ready with extra vehicles whether rentals or owned. Those extra trucks will be needed when you need to make repairs that take longer than a couple hours, or if one of your trucks is in the body shop when fedex decides it doesn't look good enough or your driver side-swiped a building or high curb while going around a corner. Long term, you are going to need those vehicles, and all your vehicles will last longer anyway if you are putting less miles on each of them.

If you have a fleet of 6 trucks each worth $75k, and ALL of them run only 60 miles a day, it is still $22,000 a year at TODAY's costs to replace them IF you figure a 20 year life, let alone counting for inflation. That is basically $2000 a month minimum that you are losing either out of cash flow, or out of the value of the business if you don't have a replacement fund. And if you don't have a replacement fund, you will need to borrow when trucks need to be replaced, further reducing cash flow.

And your drivers won't care about being easy on the trucks. Coming from HD, I know that regular cargo vans WILL NOT last 400,000 miles when your drivers don't tell you about squeaking brakes, or a squealing water pump, or the smell of burning wires. They will shift from forward to reverse while still moving forward, and vice versa. They will drive over or through construction debris, mud that is obviously too deep, or through tree branches guaranteed to put deep scrapes in your paint, and you will wonder how you got a dent 5 feet or more above ground level. The drivers may be friendly, like you always were to your employers, but they won't be trying to help you.

Basically, you are buying a headache. Do you think the owner is selling because it is a no-brain great deal that pours out cash like the golden eggs fly out of a goose's ass?

Yes Thanks for calculating $22,000 a year , I had arrived to a figure around that . This should be reduced from cash flow .
Inspite of the many negative comments out here , I am sure there are people making decent money on this without driving a truck .
Nobody is crazy enough to invest to get 2-3% on the investment .
The biggest issue I see here is the driver attrition . Do people really have 8 drivers for 5 trucks ? so 3 of them are on bench or you pay them ?
I don't think one can afford to pay a driver for being a backup other than the manager .

 

[FedGT]

Yes Thanks for calculating $22,000 a year , I had arrived to a figure around that . This should be reduced from cash flow .
Inspite of the many negative comments out here , I am sure there are people making decent money on this without driving a truck .
Nobody is crazy enough to invest to get 2-3% on the investment .
The biggest issue I see here is the driver attrition . Do people really have 8 drivers for 5 trucks ? so 3 of them are on bench or you pay them ?
I don't think one can afford to pay a driver for being a backup other than the manager .

Not many will do PT no one has 8 drivers for 5 routes. You will find varying degrees of truth also major exaggerations, some positive experiences, more negative ones. Many reasons for it most being the obvious that you will have 10 people's negativity posted on boards like this to the 1 content or happy.
In a well developing area 5 routes will not stay 5 routes for long. I bought 5 routes and within 3 years it was 11 full routes, 1 Flex driver route, and 1 manager route (typically 20-50 stops). FedEx worked out great for me there were amazing good times but also bottom of the barrel low times. Eventually I got tired of working with them and sold out but it everything considered for a little over 3 years of my life it was well worth it.
I will say this is not the typical experience with growth but it is out there depending on areas.

 

[Fred's Myth]

If you're not going to listen to the voices of experience, you deserve to lose your money.

 

[bacha29]

Yes Thanks for calculating $22,000 a year , I had arrived to a figure around that . This should be reduced from cash flow .
Inspite of the many negative comments out here , I am sure there are people making decent money on this without driving a truck .
Nobody is crazy enough to invest to get 2-3% on the investment .
The biggest issue I see here is the driver attrition . Do people really have 8 drivers for 5 trucks ? so 3 of them are on bench or you pay them ?
I don't think one can afford to pay a driver for being a backup other than the manager .

Again, it comes right back to the cheap labor issue. That's the only reason WHY you will exist as a contractor in the first place. Remember, cheap labor and DEPENDABLE cheap labor are not the same thing. The same holds true for cheap labor and PRODUCTIVE cheap labor. Comes back to the same old story....You get what you pay for. Likewise as what stated earlier growth varies widely. The terminal I helped start up went from 3 routes total to the current 16. Only one problem. It took 22 years to get there and that only came about as a result of the introduction of Fedex Home Delivery. And that brings about another issue. OVERLAP. In numerous areas you have a Ground contractor and an HD contractor both operating in the same geographical area. Some time in the future ( 2021) there will only be one resulting in some contractors getting hosed big time. You're comments clearly indicate that capital preservation is clearly paramount. If so then this is not the place to be.

 

[NYCFXG]

Not including myself, I have 15 drivers on 12 daily routes. One driver is working as a helper in preparation for a route split pre-peak. I would make 16. I very very rarely have to drive an actual route. But, in spike days I will often times have to grab some excess work depending on the call outs for the day. I have always believed you need 1 manager per 5 routes. You can manage the routes yourself at 5, but you need to be prepared to cover 2 routes in case of an emergency. To be honest, I never feel safe. I hate going on vacation. I am constantly afraid of waking up late, getting sick or becoming physically unable to work. Mind you, I am one of the largest guys around my area. The fear never goes away.

 

[bacha29]

Not including myself, I have 15 drivers on 12 daily routes. One driver is working as a helper in preparation for a route split pre-peak. I would make 16. I very very rarely have to drive an actual route. But, in spike days I will often times have to grab some excess work depending on the call outs for the day. I have always believed you need 1 manager per 5 routes. You can manage the routes yourself at 5, but you need to be prepared to cover 2 routes in case of an emergency. To be honest, I never feel safe. I hate going on vacation. I am constantly afraid of waking up late, getting sick or becoming physically unable to work. Mind you, I am one of the largest guys around my area. The fear never goes away.

Not including myself, I have 15 drivers on 12 daily routes. One driver is working as a helper in preparation for a route split pre-peak. I would make 16. I very very rarely have to drive an actual route. But, in spike days I will often times have to grab some excess work depending on the call outs for the day. I have always believed you need 1 manager per 5 routes. You can manage the routes yourself at 5, but you need to be prepared to cover 2 routes in case of an emergency. To be honest, I never feel safe. I hate going on vacation. I am constantly afraid of waking up late, getting sick or becoming physically unable to work. Mind you, I am one of the largest guys around my area. The fear never goes away.

Not including myself, I have 15 drivers on 12 daily routes. One driver is working as a helper in preparation for a route split pre-peak. I would make 16. I very very rarely have to drive an actual route. But, in spike days I will often times have to grab some excess work depending on the call outs for the day. I have always believed you need 1 manager per 5 routes. You can manage the routes yourself at 5, but you need to be prepared to cover 2 routes in case of an emergency. To be honest, I never feel safe. I hate going on vacation. I am constantly afraid of waking up late, getting sick or becoming physically unable to work. Mind you, I am one of the largest guys around my area. The fear never goes away.