If you choose to finance the purchase of FedEx routes, your lending institution may ask you to sign a personal guarantee. A personal guarantee is a set of assets you are promising to surrender or liquidate to the bank if you are unable to make loan payments and you default.
Interest and competition for FedEx Ground routes increases year after year. A look at the details reveal that FedEx Ground routes are a fantastic bet! To best serve highly interested investors, we are offering this content-rich summit: a crash course in FedEx Ground routes.
One of the many ways FedEx Ground ISP contracts ensure sustainable operations is by subsidizing fuel costs. Further, these subsidies correlate with the price of diesel fuel in an operation’s market.
Keni Thomas is a distinguished Army veteran and former sergeant in Bravo Company of the 3rd Ranger Battalion. He was part of the special operations mission famously recounted in the book and movie Black Hawk Down.
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.
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.
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.
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.
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!
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.
Drones are sexy. We get it. The idea of drone delivery feels like the future. As fun to think about as drone delivery is, it’s not a realistic mode of transportation for the type of packages FedEx Ground delivers
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
You will often hear us (and others) note that FedEx route businesses are tax-friendly investments. What do we mean by that?
These businesses include substantial numbers of vehicles that you are able to depreciate over time. The vehicle depreciation in FedEx route businesses allows you to offset the revenue stream from the business.
When an investor chooses to purchase FedEx routes for sale at a terminal that is not close to the investor’s primary residence or place of business, we call the arrangement absentee ownership.
Based on industry averages and our experience in the logistics industry, this calculator helps you focus in on your target route price.
You can use it to explore your options based on down payment or based on your expected take-home pay.
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.
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.
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.
FedEx Ground routes have predictable revenues with few variables. It’s what makes these businesses such solid investments!
If your revenue is predictable with few variables to significantly change it, then how do you impact your Net Operating Income (or take-home pay)? You focus on Total Expenses.
Amazon Logistics is the hot story in logistics news this past year. However, most of the news isn’t actually informative for investors. How much does it cost to buy Amazon routes? Are they good investments? What’s it like to own/operate Amazon routes?
Without a doubt, Listing Percent of Revenue is the most reliable metric for comparing apples to apples when you are considering multiple FedEx Ground routes for sale.
Fundamentally, what you’re buying in this industry is the revenue because Net Operating Income will fluctuate based on how efficiently you operate.
These Answers to These Questions Can Make or Break Your FedEx Ground Investment:
How much business can I afford? How involved do I want to be with the day-to-day operations? What sort of returns do I expect from my investment? What are my long and short term goals with the business ?
When you like the looks of a route for sale: ask these questions next:
How comfortable am I with the presented financials? What is the Listing Multiple telling me? What is this business’s ISP compliance and overlap status? Does this business meet my involvement preferences? What is the current quality of the fleet and how will that impact future business revenue and expenses?
Need a quick refresher on FedEx Route financials in order to make the right purchase? Here’s the top financial terms and definitions you need to understand to review a FedEx Ground route for sale.
In September 2018, FedEx Ground announced its US operations would convert to a 6-days-per-week schedule following the holiday season.
That change is upon us now!
A couple new things to note as you work through the transition with your own FedEx Ground team.
Don’t be afraid of using debt/leverage to buy these businesses. These FedEx routes for sale can sustain a higher debt load than what some other businesses allow. Typically, your finance source will require a down payment of 20% or more. With a 20% down payment you lever your business 4:1. You have 1 part down payment and 4 parts debt.
From time to time we encounter route buyers who intend to use a loan from friends of family to cover the cost of their route purchase.
A couple things to keep in mind if you are considering this option…
When we say conventional financing we mean receiving a business loan from a local or national bank or credit union. This is opposed to buying a FedEx route for sale with an all cash offer or using a Small Business Association (SBA) loan.
Why should you consider conventional financing for your FedEx route purchase?