Why Combining FedEx Ground Routes for Sale Increases Profits
Plus, Current Routes for Sale You Should Consider Combining
Businesses of all types benefit from economies of scale. FedEx Ground 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.
The first truck in your operation is the most expensive. You have to buy the truck, add insurance, hire a maintenance person/vendor, etc. However, with your next truck you are likely to get an insurance discount if you use the same provider. Similarly, you won’t need to hire a second maintenance person/vendor. You can use the same one for both trucks. Let’s say your monthly cost for Truck #1 was $1,000/month. When you add a second truck your monthly cost for Truck #1 and Truck #2 is $1,600/month or $800/month per truck. You decrease your per truck cost as you scale.
Many FedEx Ground route business expenses may benefit from scale such as advertising, insurance, equipment rentals, uniforms and laundry, legal, office supplies, maintenance, and more.
Our own team of Independent FedEx Ground Contractors scaled operations (to become one of the largest Independent FedEx Ground Contractors in the country) in order to take advantage of the benefits of scale. If this is an opportunity that appeals to you, our team of consultants can work with you to strategically plan for scale.
Once we scaled, we saw efficiencies in key areas, including:
Manager overhead. Smaller route portfolios make highly qualified and capable managers feel expensive, but these same managers are critical to successful, large FedEx Ground route operations.
Administrative support. As we scaled we were more effective and efficient with our advertising, recruiting, and human resource costs.
Purchasing. With larger operations we were able to save significantly by buying oil, fuel, and tires in bulk.
Contingency planning. With a larger operation we are able to have extra full-time drivers on our payroll to cover routes in case of illness, emergency, turnover, or overflow.
An Opportunity to Scale
We currently have three route listings on the market that offer substantial benefits of scale if purchased together.
Please note, when you combine route listings you have to pay attention to scale requirements. For example, the three opportunities we suggest below require a two or more individuals buyer group for compliance. Our team can help you understand scale requirements.