Within the United States, each state has extensive control over its own taxes, workers compensation rules, and labor laws. Further, each state has a different tolerance for employee-employer litigation. These variances make notable differences to a business.
Many new investors want to focus their search in on areas that also have high population growth. Population growth does contribute to package growth. However, as we cautioned before, beware of route businesses in cities where outsized growth contributes to low unemployment rates and upward wage pressure. These can be expensive markets with substantial hiring challenges.
If you serve a metropolitan CSA you have unique factors to consider. To start, we find that in a strong economy it is more difficult to hire drivers in cities where there are many employers and unemployment rates tend to be low. However, because of the higher wages and deeper pool of talent, route businesses in metropolitan areas have the opportunity to secure smarter, highly capable employees.
Every FedEx Ground terminal serves a defined geographic territory. FedEx Ground closely monitors—and prevents via scale requirements—any contractor/entity from growing too large or too small within a single terminal. They do so by prescribing the number of daily stops an entity can make as a percent of all terminal stops.
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.
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.
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.
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?
Fact: the person coming to your door driving a FedEx Ground truck and wearing a FedEx Ground uniform is NOT a FedEx Ground employee.
Businesses of all types benefit from economies of scale. FedEx route businesses are no different. As you increase the number of routes in your businesses you are able to spread out your expenses more efficiently.
For example: each truck you add to your operation decreases per truck costs.
Our current portfolio of Active and Under Contract routes have an average list price of approximately $760,000.
FedEx Ground routes run Monday through Friday. Ground routes deliver primarily to commercial businesses and the packages tend to be heavier than residential packages and require larger trucks. Because deliveries occur to commercial locations, there is less seasonal variability in FedEx Ground routes and that can make planning your staff and resources simpler.
You can buy, operate, and sell the routes that move FedEx packages from one location to the next. FedEx routes have a long history of solid profit margins and FedEx as a company continues to outpace performance expectations. There’s much to love about this type of investment!
We hope you’ll consider using Route Consultant as your consultant or broker in the process. We are FedEx brokers and consultants with actual FedEx contracting experience. We have experience in Home Delivery, Ground, and Linehaul routes. And our team has worked across the United States managing a fleet of over 250 trucks and a staff of over 200 drivers!
Are you having trouble getting a response from a route broker? Or, are you finding that every listing that peaks your interest is under contract before you ever even make contact with the broker? In this industry, there are 20 prospective buyers for every FedEx route for sale listing you see. As we noted previously, the market is hot!