Linehaul Runs

Before You Buy a FedEx Linehaul Route: Get the Details and Understand the Pros and Cons

Photo by Sid Verma

Photo by Sid Verma

What You Need to Know Before Buying a FedEx Linehaul Route

There are two distinct types of FedEx businesses: pick-up and delivery (P&D) routes or a linehaul run.

Linehaul runs are a lucrative and risky business. Some contractors say linehaul runs are 90% boredom and 10% terror. But they can be an incredibly profitable investment for the right contractor. 

Are you the right contractor for a linehaul run?

The basics of a linehaul run

While P&D runs exclusively during the day, linehaul often operates at night. Because linehaul routes are not tied to business or residential delivery, linehaul operators have the flexibility to drive during lower traffic time and in 24 hour team setups.

Runs are long distance, ranging from several hundred to several thousand miles. Some linehaul runs will have specified start and end locations while others will have a known start location, but varying destinations.

Linehaul drivers must hold a valid CDL license and, unfortunately, there is a shortage of CDL licensed drivers in the United States. 

Linehaul runs require semi-trucks in your fleet. These 18-wheelers are expensive to buy and expensive to repair. It’s critical that new contractors budget for the purchase of new trucks or significant repairs to existing semi-trucks. 

Additionally, linehaul run contractors must consider the known risks of operating such large vehicles: semi-truck accidents may result in injuries or fatalities. 

The structure of a linehaul run

A linehaul run structures their drivers as either solo drivers or team drivers. 

Solo drivers cover shorter distances between each point and, typically, the driver returns to home base at the end of each shift. Driving teams usually consist of two drivers on cross-country runs, rotating behind the wheel. These drivers may be away from the home base for days at a time.

Linehaul runs encompass three types of runs: dedicated, unassigned, and spots. 

  • Dedicated runs have the same starting and stopping destination on each trip. For example, Nashville to Dallas. Your run remains Nashville to Dallas and back.

  • Unassigned runs have a defined starting location, but do not have a regularly assigned destination. They travel to varied destinations on an as-needed basis. Your driver may always start in Nashville, but he/she may travel to Denver, Los Angeles, New York, or Chicago (based on the business requirements).

  • Spot runs mimic P&D routes. Drivers have a small, designated coverage area and travel out of home base daily. Unlike P&D routes, however, drivers operate semi-trucks with larger packages.

The risks and rewards of a linehaul route

The risks of linehaul runs relate to the size of everything. 

The cost of linehaul routes is higher per run (as compared with a single P&D route). Your trucks are larger, and you inherit the known risks of a large vehicle on the road. Plus, these trucks are expensive to buy and expensive to repair. You need to have a healthy budget for capital projects.

You also have higher costs of business: insurance costs, employee salaries, maintenance costs, etc. And the penalties for late runs/deliveries are higher. 

There's also a severe shortage of CDL drivers in the United States. Which means you might have difficulty putting drivers in the driver seat of your trucks.

All of that being said, the money is also bigger. Linehaul contracts operate based on miles. Thus, a run from New Jersey to California could bring in $10,000 of revenue for the week. One linehaul tractor trailer may generate 5X the revenue that a P&D truck generates.

Are you the right contractor for a linehaul run?

So, how do you know if you’re ready for the size of a linehaul route? 

For many new contractors, it can be easier to begin with FedEx P&D routes and then level up to linehaul runs. Owning and operating FedEx P&D routes does not prevent you from adding linehaul runs later on. Rather, it’s a great way to learn the ins and outs of a FedEx business with lower risk. 

If you already own a FedEx P&D route OR you think you can take on the larger risk and reward immediately, here are ways to know you are a right fit contractor for a linehaul route:

  • You have the ability to finance or purchase a linehaul run AND you have the ability to finance or cover high cost operations

  • You have logistics experience and know how to navigate serious risk in the industry

  • You have experience planning and executing for contingencies

  • You understand that you or an appointed manager will need to be available 24/7 to help solve problems

How to Buy a FedEx Linehaul Run

Our team can walk you through pieces of the puzzle for buying a FedEx linehaul run, such as:

  • Optimizing Operations

  • Fleet Management

  • Business Valuation

  • Terminal Relationship Management

  • Driver Recruitment/Training

 

Current Linehaul Listings

If you are interested in buying a FedEx linehaul run, check out our FedEx routes for sale.

Buying a FedEx Route? Here's the Details on FedEx Bonuses

Photo by Adam Grabek

Photo by Adam Grabek

How does FedEx use bonuses to incentivize customer service and safety among contractors?

For Independent Service Providers (ISPs), Independent Contractors (ICs), and linehaul operations, FedEx offers bonuses to contractors that go above and beyond. 

Bonuses can add a substantial amount to your overall revenue each year. Whether you are an existing FedEx contractor or looking to buy a FedEx route, obtaining contractor bonuses should absolutely be part of your financial goals and strategies. 

ISP Bonuses

FedEx established an Independent Service Provider (ISP) model for all FedEx P&D routes and the transition to this ISP model will complete by May 2020. 

The ISP model incorporates two types of bonuses: Customer Service Incentives (CSI) and Period Safety Incentives (PSI). 

FedEx uses CSIs to incentivize above high quality service among contractors. All contractors receive CSIs on a regular schedule (based on a negotiated rate in their contract). The CSI bonus decreases in a given period if there were CSI complaints against that contractor. For example, late deliveries or customer complaints. 

PSIs recognize contractors that operate their routes without safety violations or incidents in a specific period of time. Similar to CSIs, contractors negotiate a rate for regular PSI payments. These payouts decrease for every safety violation within the payout period. Safety violations may include accidents with the FedEx truck, a delivery person injured on the job, or damage to a customer’s property. 

Both the CSI and PSI bonuses are ways in which FedEx influences contractor team behaviors without mandating behaviors. 

More about ISP bonuses:

  • CSIs and PSIs pay out every 4 weeks, or 13 times a year.

  • Contractors negotiate incentive rates with their contracts and these rates may change from year to year.

  • FedEx calculates incentives at 100% minus deductions. Deductions indicate CSI or PSI violations. If there are no deductions, a contractor will retain the full incentive. If there is one deduction, the percentage goes down an increment; with two deductions, another increment. So on and so forth.

IC Bonuses

The Independent Contractor (IC) model* also has a bonus structure: monthly and quarterly. 

Monthly bonuses award contractors $970 per ground Primary Service Area (PSA) and $600 per home delivery PSA. These are given 12 times a year.

Similar to ISP bonuses, the percentage of the incentive received goes down with every complaint, missed delivery, etc. 

Contractors receive quarterly bonuses four times per year and the amount is based on the number of PSAs in the contractor’s territory.

*Note: FedEx plans to transition all IC model businesses to ISP business by May 2020. 

Linehaul Bonuses

Linehaul contractors receive a monthly bonus 12 times per year. They receive a  $0.037 per mile bonus unless there is a safety or service incident. If there are a safety or service incidents, the bonus amount per mile decreases per incident. 

When we talked about big risks and big rewards in linehaul runs, these bonuses per mile are a large part of that puzzle. 

WHAT'S NEXT IF YOU WANT TO LEARN MORE?

If you need more help with the details and navigating contract negotiations, contact us for consulting.

We can walk you through pieces of the puzzle for buying a FedEx route, such as:

  • IC vs. ISP Business Models

  • Overlap Requirements

  • Understanding Contract Terms

  • Optimizing Operations

  • Fleet Management

  • Business Valuation

  • Terminal Relationship Management

  • Driver Recruitment/Training

And, as always, give us a call and we can help point you in the right direction. 

If you are interested in buying a FedEx route, check out our listing page for operations currently on the market.

What's the Difference Between a Buying a FedEx P&D Route and a Linehaul Run?

Photo by Jake Blucker

Photo by Jake Blucker

Understand the Pros and Cons of FedEx Route Types and Find the Right Business for You

There are two distinct types of FedEx routes, and if you are considering buying a FedEx route, it’s important to figure out if you want to purchase pick-up and delivery (P&D) routes or a linehaul run.

There are important and significant difference between FedEx P&D routes and FedEx linehaul runs. 

What is a FedEx P&D route?

In our experience as contractors, pickup and delivery is a great place to enter the FedEx space for the first time. As a routine business, P&D is easy to learn and simple to operate.

P&D operations deliver to local homes and businesses in a designated territory. 

There are two sides to the P&D coin: home delivery routes and ground routes. Historically, contractors could have either home delivery routes, grounds routes, or both. Along with the FedEx transition to all Independent Service Providers (ISPs), FedEx will require a contractor to operate both home delivery routes and ground routes within a given area by May 2020. 

The P&D home delivery routes:

  • Primarily deliver to residential households.

  • Operate Tuesday through Saturday.

  • Have smaller to medium trucks and boxes.

  • Have high seasonal variability (with businesses often making a large part of annual revenue in the four weeks leading up to Christmas).

Ground routes are the other side of P&D routes.

Ground routes feature:

  • Deliveries primarily to commercial businesses.

  • Heavier packages and larger trucks.

  • Routes that run Monday through Friday.

  • Less seasonal variability than home delivery routes.

What is a FedEx linehaul run?

You can think of FedEx P&D routes as the box trucks you see out and about in your community. Conversely, you can think of the FedEx linehaul runs as the semi-trucks you see on the highway.

Linehaul runs feature:

  • Long distance transport, ranging from several hundred to several thousand miles.

  • Strenuous driver requirements, including a valid CDL license.

  • Semi-trucks: 18-wheelers that are expensive to buy and expensive to repair.

  • Varied types of linehaul runs, including solo, team, designated, and unassigned.

  • Known risks: semi-truck accidents in linehaul runs may result in significant injuries or fatalities.

What's the right FedEx business for you?

For many new contractors, it can be easier to begin with FedEx P&D routes and then level up to linehaul runs.

Linehaul is both a lucrative and risky business. Some contractors say linehaul runs are 90% boredom and 10% terror. But they can be an incredibly profitable investment for the right contractor. 

If you want to talk to contractors who run both P&D routes and linehaul runs about which type of FedEx business is right for you contact us and we are happy to help. 

Maybe you have a pretty good handle on all this, but an extra check wouldn't hurt? Download our free New Contractor Startup Checklist.

Check out our listing page for both P&D routes and linehaul runs currently on the market.