FedEx routes are routes offered by FedEx Ground in the United States and Canada. FedEx Ground contracts with independent businesses to provide the service of package pickup and delivery to customers. The contracted service providers are responsible for the contracted service areas (CSA) in terms of, providing excellent customer service, route design and delivery sequence, equipment needed, staffing level …etc.
This means the independent business owners have the freedom to operate the business the way they want but also gets the guaranteed volume (and volume increase) from FedEx. However, on the other side of the token, it is the business owners’ obligation to meet the agreed upon results they have with FedEx.
Responsibility of the owners
From a business model perspective, the contract with FedEx Ground is quite simple. The independent business owners provide two types of services to its customers.
– Pickup and Delivery (P&D): Using appropriate trucks and equipment, picking up packages from shippers and transporting to the local FedEx Ground terminal. Vice versa for the delivery of packages.
– Linehaul: Transporting FedEx Ground trailers from terminal to hub, hub to hub and hub to terminal or between customer locations and terminals.
Another frequently asked question is – does the route owner have to be qualified to drive? The answer is “No”, the route owner doesn’t have to drive. However, if the owner wishes to drive, he/she will need to meet FedEx standards just like their drivers.
How do owners get paid and what about expenses?
Business owners are paid based on the contract they have with FedEx Ground. As many investors are aware, FedEx is rolling out the ISP (Independent Service Provider) model across the United States and the compensation is now based on the number of packages, rather than PSAs. FedEx Ground will provide a weekly statement which shows exactly what the routes earned for the week.
As a contracted service provider, the owner is responsible for all the expenses related to the business.
A benefit of owning a FedEx Ground route business is that the expenses are very simple. Depending on the size of the route, the typical P&L would consist of anywhere between 10-20 types of expenses. The largest expenses would be employee related; truck related and various insurance. Therefore it is very easy for investors to understand the FedEx route business from a financial perspective.
If you are an individual looking to drive for FedEx Ground and becoming a working owner, FedEx Ground actually publishes new routes on their website. You can apply and start working as an operator/driver! However, most investors are looking to invest in the FedEx Route business as an owner and often times they are looking to hire managers to run their business. In that case, it makes sense to purchase existing routes.
In this scenario, FedEx Ground is not able to help since they do not facilitate the sale and purchase of an existing route business. In fact, many investors would show up at a terminal and come to find out that they are not allowed in to a FedEx facility at all. One needs to apply, be approved and be escorted, in order to enter the facility.
Fortunately, there are firms out there to help you navigate this purchase process and “wesellroutes.com” is one of those firms that have sold 100s of routes already! We have staffs that were previously FedEx contractors who can help you through every steps of the way in the purchase process, please visit us at www.wesellroutes.com!