FedEx Moves to 7-Day Delivery and Announces SmartPost Integration

Last week FedEx Ground announced 7-Day Residential Delivery for the entire year (not just during peak season). Along with that game-changing notice, FedEx Ground also revealed more about their plans to integrate SmartPost into Ground volume. Finally, the company also announced transformations in their large package or “incompatible package” capabilities.

We’ve been writing and following these updates for a long time and we are eager to get you more news now that the cat is out of the bag, so to speak.

Are FedEx Routes Good Investments?

Although it feels as if our world is already dominated by e-commerce, the market is not nearly done growing! We predict the e-commerce expansion to rise steadily for the next ten years. The total e-commerce volume will be so significant that we believe there will be enough business for all the current logistics players to sustain themselves and for new players to enter the market and thrive.

Looking to Buy a FedEx Route? Here’s Why You Should Start With P&D Routes

f you are considering investing in a FedEx Ground route for the first time we recommend starting with a pickup and delivery (P&D) FedEx Ground business. For many new contractors, it can be easier to begin with FedEx Ground P&D routes and then scale up so that your entity includes linehaul runs.

Is Amazon Logistics a Threat to FedEx Ground? What You Actually Need to Consider.

Amazon has its own last mile delivery trucks now. Amazon is starting its own delivery business. Amazon has a new fleet of planes. Amazon is investing in drones. Amazon is building a logistics hub in Kentucky. Amazon is a major threat to FedEx and USPS. Amazon is building the Death Star. Amazon hates Ewoks.

Every week we see some version of this story.

What is SmartPost? New Volume and Routes For FedEx Ground

Currently, USPS completes the last mile delivery of these SmartPost packages. However, USPS and FedEx Ground are modifying the agreement so that FedEx Ground will roll out SmartPost last mile delivery across the United States. Most FedEx Ground territories are going to see a significant volume increase—we predict a jump of 25-100% in most markets!

RSVP Now for the Contractor Expo + Party

Route Consultant, the industry’s top route broker, will host hundreds of FedEx Ground contractors from across the United States and Canada for a one-of-its-kind event in Nashville, TN. Route Consultant is paying every contractor that attends $300 cash to offset travel costs. In addition to industry panels and presentations, the event will feature a private concert in the heart of Music City and an open bar.

The Worst Case: FedEx Ground Contract Termination

Terminating a contract can provide serious service interruptions for FedEx Ground customers and is a critical issue. FedEx Ground aims to provide seamless delivery service for all areas of operation.

This being said, it is rare for a contractor to lose their FedEx Ground contract. Further, contractors almost always receive opportunities to resolve issues in advance of a contract termination

Financing FedEx Routes for Sale: How to Minimize Your Down Payment

The standard minimum down payment for a conventional bank loan is 25%. For an average priced route ($850,000), you would need a down payment around $212,500. This is a hefty amount of cash on hand. Plus, we recommend holding back approximately $50,000 of additional liquid funds as working capital.

If you are wondering about options to minimize or reduce your down payment requirements, you’re not alone.

How Route Businesses Pay FedEx Ground Drivers

In our experience, the salaries and wages (payroll) in a FedEx Ground route business cost between 40 and 50% of total business revenue. This is the largest line item expense in your profit and loss (P&L) statement. It’s no wonder then that many prospective business owners want more details about how drivers get paid.

How to Conduct Due Diligence on FedEx Routes for Sale

As you consider buying FedEx Ground routes for sale you need to know that these businesses are structurally simple and niche. What do we mean by that?

If you know what to look for, conducting due diligence on a FedEx Ground operation can be straightforward. However, if you approach due diligence with these routes as you would a more traditional business for sale you are going to miss key flags.