3 reasons there's a record number of FedEx routes for sale in 2023?
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- Опубліковано 5 сер 2024
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Video Overview:
There's been a record number of routes on the market in 2023. There's 3 main reasons I believe we're seeing this happen:
1) A Terminal Exodus,
2) Contractual changes are making many contractors paranoid (some rightfully so), and
3) Ineffective evaluation strategies used by buyers and sellers promoting the business in recent years as an absentee 'side hustle.'
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I've evaluated businesses, primarily FedEx / bread routes, for buyers for nearly 15 years now. I have managed FedEx and bread routes personally, worked with and coached large contractors. Own and manage RouteTycoon.com
Disclaimer:
I'm not endorsed, sponsored, approved or otherwise affiliated with FedEx or any other distribution routes.
No advice is given here.
Opinions are my own (but are awesome).
Not a CPA or lawyer.
Use your professional team however you feel is best for your unique situation.
I know a contractor that bought routes for 1.2m-1.4m. To sell a year later for 600k I believe
Ups for 10years, Express for 20. You can only find so many stooges that will work for free. The ISP's invest their money. Realize they are screwed and get milked along because they don't want to file for bankruptcy. In the meantime Fred gets one step away from free labor, free truck. The company has been in a tailspin since 2012.
Facts 💯💯💯
Ive put up woth Ground for 8 years as a driver. Started and enjoyed it. Every year the job has become less enjoyable, far more demanding and LESS financially viable.
I understand this guy's entire model is to pull you into contracting.
Just know: those few "massive upside" contracts rarely are for sale. Most of them out there are so lopsided you will be underwater for the entire term.
Everyone sees "own my own business!" and many are just naive.
Fedex is an old ship listing heavily to port and shes 5000mi away from land and/or rescue. One day this company will be studied in business classes for the wrong reasons.
Couldn't agree more on the "I wanna have my own business!" sentiment people have. I don't blame you for thinking my model is to entice people into routes (since that's literally what everyone else in this space does) - it's quite the opposite for me, I encourage people to cautiously approach this opportunity and have convinced far more people to avoid FedEx than to get into it. FedEx can have some great aspects to it, but not all the contracts are the same and even the 'good' contracts aren't suitable for everyone. Out of curiosity, are you a contractor now or currently still a driver?
It's because FedEx is shedding Express Packages onto the Ground division, which means now ground has real commit times that they are required to hit, or be penalized. Newer contracts have more stringent requirement with more 'rules' requiring more investment(more drivers, more trucks) but still with the same compensation.
For sure - the commits are a headache for sure. I was talking to a contractor just the other day that was complaining about them - meanwhile he's still doing super well financially, but the additional headache is starting to take up more of his time dealing with all the issues that result from these new requirements coming out. He'll probably eventually sell in a few years to a buyer that is focused on a business with solid income and doesn't mind the headaches. Appreciate the insight - sounds like you're either a contractor or a manager for someone's routes.
Around 2:20 you mention FedEx valuing some tasks different than others and that can make some route groups have more upside potential than other route groups. Can you get more into the specifics of that? Ie: what does FedEx value and what would make you think a route group would have positive potential value versus not as much long-term value?
would say in my area is owners that were there for a long time getting ready or looking to retire. Everyone in my hub before I got in either been there for 15 years or more or and also around 60 years old as well.
To much pressure from fedex on contractors. It's your trucks your people that work for you. But fedex controls every aspect of your business
Wow - 15 years is kinda an eternity in the route world! I've definitely seen some terminals like that. Interestingly, they're mostly rural terminals that have the old schoolers without a lot of burn and churn that more urban terminals get (usually due to that 3rd reason I mention in the video of brokers pushing these as absentee).
A lot of people are deciding that now's the time to retire as well since as @bigd2646 mentions, there's a lot more pressure than there was 15 years ago. While it's still lucrative as hell for a lot of contractors, that money comes w/ a lot of pressure these days and people are just deciding to move on for sure.
My goal is to just help buyers understand that there's no free lunch and you gotta pick what matters to you. You want something stress free, easy, absentee? This ain't it. ;) Want to hustle, handle some serious stress, and evaluate these deals VERY carefully with the chance to make some serious cash? Then, and only then, routes are worth a look.
Anyway, appreciate the comment! It's always cool to hear what's going on in different terminals and all! What other business did you think of buying before you landed on routes?
Well fedex ground for one doesn't pay the same to contractors nationwide!! Nor does the vendor get paid what they should because fedex doesn't regulate what the vendor are paid so most of the time the vendor for contractors are screwed while the contractors make great money ...
Where can you buy routes ?
Give me a bit and I'll show you how I'd look for routes on the market to buy. I'll post a link when I get the video done for you!
AB-5! Hmmm?
How are FedEx ground and Landstar still operating in California?
Do you see risk to FedEx ground linehaul and Landstar business models in the near future?
You can’t find quality drivers for the pay contractors are able to pay in most regions
It’s not like the requirements are crazy for van drivers.
Contractors shouldn't exist at all. The money that should go to drivers is instead it split up between drivers and contractors. Drivers could get paid what we deserve but we don't. Contractors saying " FedEx doesn't pay us enough to pay drivers. We only make enough to pay ourselves a few hundred thousand per year. Boohoo poor us." Is hilarious to me. Contractors shouldn't exist at all.
@@johnnyripple8972 FedEx ground works almost as hard as UPs with a fraction of the pay. Shut your mouth
@StackBundle I've heard that same old lie, too. At the end of the day, FedEx, as well as the contractors, get what they pay for.
Simple....There's just no damn money in it. As a contractor you're only as good as the strength of the economy of the area you service and that varies widely. Made worse by the fact that fewer and fewer contractors can fulfill the most basic requirement...Getting somebody to work for nothing.
I 100% agree that the area of your territory is important for which routes are solid. I'm not sure I'd say it's 100% due to the economy though. I've seen good economic times and contractors get screwed in their contract, and I've seen bad times delivering to the the lower income sections of inner cities and those contractors make boat loads of cash. Keeps everyone on their toes?! It defintiely depends on a lot of things, but I feel like the bad contracts are getting worse and the good contracts are getting better.
It’s a rigged game - no one wants to play a rigged game - but most people don’t realize until it’s too late and they’re already heavily invested.
A rigged game sounds like a game where everyone loses. I believe there's definitely some losing contracts out there for sure, for a variety of reasons. I think most of the pain is due to a poor match up with the contract and the contractor (eg a broke contractor w/ no working capital that has a contract that requires tremendous working capital...this is going to feel rigged for sure). But there's definitely some big winners (financially) in the contracting world too. Either way, routes aren't for everyone for sure.
You forgot to mention... if you arent willing to climb into a truck and make 130 to 200 delivery stops yourself... then you have no business buying these routes. Thats the real issues here, these routes are for sale because they cant find underpaid workers to literally do all tge work for them.
I agree that if you're not willing to jump in a truck yourself (as an owner) on occasion, this business is going to be very unpleasant in general. But most route territories will have over 1000 stops to be delivered in a day, an owner doing the work can only stick their finger in the dam a very small amount. I personally like contractors that are a bit of a hybrid manager - they know how to manage people, pay them well enough to stay, manage their staff well enough so that they don't NEED to get on a truck all the time, but also aren't afraid of getting dirty themselves on those routes to see what the drivers go through in a day.
What if you have managers in place and extra drivers who can jump in if needed? Can you still be a remote owner?
I agree! My husband was a driver and now is in operation management through FedEx. Thinking about buying our own routes in FL.
These routes have equity that’s why.
I would like to know what experience this commentator has. The business model has issues. I am a contractor and have issues. Some are self induced, but the pure lack of experience of what FedEx calls engineers and negotiator makes me wonder if there is intelligent life out there. These people have no real world experience. There are no 2 routes that are the same. So, based on this someone needs to do a ride along and look, listen, and learn. It might be enlightening.
What are the first steps to buying a already established contract through FedEx? How do you get qualified for a loan if you don’t have the cash to buy, etc. thank you for making these videos! Really helpful 🩵