Why did you stop being a contractor for FedEx?

[Pitch19]

I've been reading over this forum for a couple of months trying to gather info. I'm looking at buying a single route and depending on how it goes expanding. This would be for investment purposes so I would not be driving. I've seen a lot of negative reviews about FedEx on this site so I'm hoping for responses from contractors and not drivers. The terminal the route runs out of is near my work so I planed on being at it 2-3 days a week to greet my driver and to make sure things are running correctly. I'm looking more at ground routes than HD. A lot of the HD routes I've seen are growing to much and while that's good I view it as a bad thing. There's only so many stops 1 truck and 1 driver can do before you have to run a supplemental route. They way I'm figuring it unless your supplemental route is a true full load your not making enough off it to cover a full time driver, truck, gas and insurance. A lot of these HD routes that are for sale are at that point where they need a supplemental. The ground routes I've seen have room for growth still while only using 1 driver and truck. The route I'm interested in grosses 105k a year. Average day is 150 miles so total diesel for a week at $3.85 while getting 7.5 mpg is $385. I'd start my driver out at $700 a week and FedEx deductions are around $140/wk. I'd set a side $100/wk for maintenance on the vehicle. I'd take home $694/wk if those prices stayed true. The route and truck price are 65k. That's a 55% ROI.

The only cost I see that might be low is $100/wk maintenance. After buying the route I'd have the trucks engine and transmission rebuilt or replaced if need be to cut down on equipment failure. The other area of concern would be only having one route and one driver. I'd like to have 2 routes so I could "promote" 1 of the drivers to manager and have him check in with me daily so I know everyone shows up on time... or even shows up. But for right now and the purpose of this I'm going to stick with one route.

What am I missing here? I know everyone complains about management but I think that varies by terminal. I believe if managed right and with good drivers you could make a decent return off these routes. I wouldn't mind paying a driver more if he showed a great work ethic. My only thing is I don't like my investment in the hands of a driver. So what else am I missing? This route runs out of Georgia.

 

[bbsam]

It isn't worth it. I just had a truck in to fix an issue with the DEF system. $655 to find and fix some broken wires in the wiring loom. Tires at least once a year for a P1000 $900. The list goes on and on. And don't forget work comp insurance. Single routes almost always have to have the owner driving it.

 

[headlight]

What happens if your one driver doesnt show up, gets sick, hurt? You will have to run the truck. Do you have previous commercial driving experience? If not you wont even be able to drive your own truck. The only way I would touch it if I were you would be to quit your job now and jump in and put on a supplemental route and driver and take work from the other guys who are not willing to run supps and grow it with any work you can get your hands on. Be prepared to work your ass off 6 days a week, it's not easy starting from that point. We started with one truck and one route over a decade ago and now have 15 routes running. More money coming in, but more money going out in maint, wages, etc.

 

[Pitch19]

What happens if your one driver doesnt show up, gets sick, hurt? You will have to run the truck. Do you have previous commercial driving experience? If not you wont even be able to drive your own truck. The only way I would touch it if I were you would be to quit your job now and jump in and put on a supplemental route and driver and take work from the other guys who are not willing to run supps and grow it with any work you can get your hands on. Be prepared to work your ass off 6 days a week, it's not easy starting from that point. We started with one truck and one route over a decade ago and now have 15 routes running. More money coming in, but more money going out in maint, wages, etc.

I would qualify as a driver in case of a no show or someone got sick without notice. I would not be willing to quit my current job for one route. If I had 5-7 I'd consider it. Like any other business your employees make or break it.

@bbsam - What other issues have you run in with maintenance on the trucks? Other than tires, oil changes and breaks. With the engine and transmission in good shape there shouldn't be to many other issues. Also, the $140/week FedEx deductions includes works comp. With the owner driving it FedEx deductions are $92/week w/o works comp.

Thanks for the responses btw. Just trying to learn from people who have or are currently doing this.

 

[STFXG]

Your ROI is high. Single route with 1 driver doesn't make much.

Don't forget the FICA/unemployment costs for the employee. Your maintenance is low. You'll spend more than 100 a week. Even if you rebuild everything (which would be stupid).

The price is right though... 65k sounds like a decent valuation.

 

[barnyard]

Replacing a diesel is $15k. Is the truck auto or manual??? Drivers that never take their foot off the clutch go through a clutch every year.

Since I have been a driver, I have seen water pumps, power steering pumps, wheel bearings, windshields, wipers and horns all fail. I have had 3 mechanicals that required tows back to the building and have been stuck in the snow in driveways 3 times.

How much does a commercial tow cost in your area??

Batteries and tires for commercial vehicles are spendy. I bet that you would need to be putting away at least $300/week till you have a substantial balance in your maintenance fund.

I would think that buying a single route is meant for people that are looking to buy a job.

 

[Pitch19]

Replacing a diesel is $15k. Is the truck auto or manual??? Drivers that never take their foot off the clutch go through a clutch every year.

Since I have been a driver, I have seen water pumps, power steering pumps, wheel bearings, windshields, wipers and horns all fail. I have had 3 mechanicals that required tows back to the building and have been stuck in the snow in driveways 3 times.

How much does a commercial tow cost in your area??

Batteries and tires for commercial vehicles are spendy. I bet that you would need to be putting away at least $300/week till you have a substantial balance in your maintenance fund.

I would think that buying a single route is meant for people that are looking to buy a job.

The truck is an automatic. Commercial toes are expensive down here too. You really think $300/wk? That's close to 16K a year in maintenance on a truck. I've seen a lot of contractors going the cheapest route when it comes to fixing their trucks instead of spending the money to do it right the first time. Is this a common thing?

@STFXG - No. You're correct. My figures do not include the employees payroll taxes. I understand one route isn't going to make much. My goal was 25k a year off a route while not driving it. If I like how the operation works I'd go a head and fork out the money and acquire more while leaving my current job.

Great input from you guys so far and it's much appreciated. What else you got for me?

 

[STFXG]

25k is definitely doable. The only other thing you need to be aware of is if your driver quits. Can you take up to a month off of your current job to find, qualify and train a new driver?

The truck expenses will vary year over year. How many miles are on the truck you're getting? Year, make, model? If you're looking to do a major overhaul you might be better off just purchasing a new one. With the cost savings in fuel on a newer model and the lack of maintenance it might be a better choice. You also wouldn't have to worry about breakdowns as much. Keep the other truck for a spare or for expansion. Peace of mind is worth the extra cost some times... But then again you'd be in to it another 1000-1200 a month in truck payments.

 

[Pitch19]

25k is definitely doable. The only other thing you need to be aware of is if your driver quits. Can you take up to a month off of your current job to find, qualify and train a new driver?

The truck expenses will vary year over year. How many miles are on the truck you're getting? Year, make, model? If you're looking to do a major overhaul you might be better off just purchasing a new one. With the cost savings in fuel on a newer model and the lack of maintenance it might be a better choice. You also wouldn't have to worry about breakdowns as much. Keep the other truck for a spare or for expansion. Peace of mind is worth the extra cost some times... But then again you'd be in to it another 1000-1200 a month in truck payments.

The truck that comes with it is old and getting up there in miles. 2000 International p1000 300k miles. I thought about buying a new truck with a warranty but if something happens I have to take it back to the dealership and they take forever. My diesel mechanic will drop a new crate engine and transmission in for 12k. Those engines come with a 3 year warranty so I don't have to take it to a dealership for problems.

The only issue holding me up deals with the driver. I couldn't afford to take a month off. I'd probably look to hire a current FedEx driver that's been doing it for a while and pay him more than what his currently earning from his contractor. I'd also include the probability that if the route does well under him more would be purchased and I'd pay him extra to manage them. That's the only way I see in keeping a driver motivated and not willing to walk away.

 

[Cactus]

You'd being doing way above average if you kept a good driver for 2 years. The turnover for Ground drivers is very high. If you find someone you wanna keep, be prepared to wine and dine them and not just once either.

 

[UpstateNYUPSer(Ret)]

The only issue holding me up deals with the driver. I couldn't afford to take a month off. I'd probably look to hire a current FedEx driver that's been doing it for a while and pay him more than what his currently earning from his contractor. I'd also include the probability that if the route does well under him more would be purchased and I'd pay him extra to manage them. That's the only way I see in keeping a driver motivated and not willing to walk away.

So you want to poach a driver from a rival contractor with the lure of a few extra $$ and the possibility of a driver/manager role. Don't Ground drivers sign a contract with their employer which would include, among other things, a minimum time that he agrees to work for that contractor with a monetary penalty for breaking that contract? What if your venture is unsuccessful and the driver you lured away effectively burned that bridge---what is he supposed to do for work at that point?

Rather than go behind the contractor's back perhaps you should approach him and see if he knows of any driver(s) who are currently looking for work or may be looking to leave their current employer. Best to start your business on a positive note.

 

[bbsam]

Usually this is handled with a "gentleman's agreement". We all tend to realize "screw me today and I'll kill you tomorrow".

 

[Pitch19]

So you want to poach a driver from a rival contractor with the lure of a few extra $$ and the possibility of a driver/manager role. Don't Ground drivers sign a contract with their employer which would include, among other things, a minimum time that he agrees to work for that contractor with a monetary penalty for breaking that contract? What if your venture is unsuccessful and the driver you lured away effectively burned that bridge---what is he supposed to do for work at that point?

Rather than go behind the contractor's back perhaps you should approach him and see if he knows of any driver(s) who are currently looking for work or may be looking to leave their current employer. Best to start your business on a positive note.

So if someone offered you a raise and your current employer wouldn't match it for the same job you wouldn't take it? Good employees are bought from other businesses everyday.

@ Cactus - I heard it was the other way around. That there was high turn over in the HD side. Do you think is varies by location or is this what other contractors are seeing as well?

 

[UpstateNYUPSer(Ret)]

So if someone offered you a raise and your current employer wouldn't match it for the same job you wouldn't take it? Good employees are bought from other businesses everyday.

Usually this is handled with a "gentleman's agreement". We all tend to realize "screw me today and I'll kill you tomorrow".

 

[HomeDelivery]

So if someone offered you a raise and your current employer wouldn't match it for the same job you wouldn't take it? Good employees are bought from other businesses everyday.

@ Cactus - I heard it was the other way around. That there was high turn over in the HD side. Do you think this varies by location or is this what other contractors are seeing as well?

I will take the highest bidder...

why you asking for Cactus? he's not a contractor... um, this definitely varies by location or by the sub-contractor who is mis-managing or not paying enough to keep them on their service areas

I've known a handful of good & bad contractors over the short period i've been in HD.

My current one has me set up close to home so i can just drive 8-10 miles when i'm done my deliveries for the day. I save 300 commuting miles a week now. & he is paying be better than the other contractors of that building since he knows i can cover any route at short notice.

Ground, well you need to head back to the barn everyday to unload your pickups... it's back-breaking work because i've done Ground on some Mondays (just due to sheer volume) & you better have a good package mule humping the cardboard that's dumb enough not to know HD is waaaay easier

 

[CJinx]

Risk assessment is the name of the game. I wouldn't jump ship unless the offer was solid and the paths to both short and long term goals was clear.

 

[MrFedEx]

Risk assessment is the name of the game. I wouldn't jump ship unless the offer was solid and the paths to both short and long term goals was clear.

It's all relative when you are paying someone peanuts. Hey, I'll give you $14 per hr to drive for me and still no benefits. Where do I sign up?

 

[bbsam]

It's all relative when you are paying someone peanuts. Hey, I'll give you $14 per hr to drive for me and still no benefits. Where do I sign up?

You don't. You have a bad attitude.

 

[UpstateNYUPSer(Ret)]

You don't. You have a bad attitude.

Are you questioning his level of professionalism?

(I wouldn't hire him either----he does have a bad attitude)

 

[MrFedEx]

You don't. You have a bad attitude.

I'm worth way more than that, even with a bad attitude. Your definition of "bad attitude" is someone who won't work for your wages.