If 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.
Why do we recommend P&D routes first?
A Fedex Ground P&D route business allows for a higher margin of error starting out and requires slightly less contingency planning.
Let’s remember what’s great about P&D routes:
It is Easier to Find and Hire P&D Drivers
With P&D, it is easier to hire new drivers due to turnover or operational growth. P&D drivers do not need a CDL license to operate their trucks.
P&D operations deliver packages within a concentrated geographic territory. P&D drivers start and end their shift in the same terminal; this consistency is attractive to potential employees!
P&D Operations Require Fewer Capital Investments and Have Lower Ongoing Costs
P&D fleet vehicles are smaller. Because of this, they cost less to purchase and are cheaper to repair than linehaul tractors. A typical P&D fleet vehicle will cost your business $20,000-$50,000 to purchase new. Conversely, the average linehaul truck costs around $130,000.
Maintenance on a P&D fleet vehicle runs about $10,000 per year. A linehaul tractor-trailer requires maintenance work costing between $10,000 and $25,000 per year.
Your Risk of Loss is Lower With P&D Operations
P&D operations also require lower capital investments for contingency planning.
In general, linehaul contingency planning requires a business to have additional drivers. If one linehaul driver is unable to complete a run you need to have a backup on staff. This is expensive! Assigned linehaul runs have only 18 declines allowed within a calendar year before you could potentially lose your run.
With P&D, however, if a driver calls off unexpectedly there are more things you can do to solve the problem. For example, you may be able to reasonably distribute his or her packages to other drivers that day. There are more ways a P&D business owner can solve a problem before it escalates.
There are lower risks in P&D operations than with linehaul. For example, one P&D truck full of deliveries has less impact to your revenue stream than one linehaul truck.
Start With a P&D Operation and You Can Grow With Time
The ongoing rise of e-commerce means that P&D packages experience steady, organic growth year over year. With these businesses, you are purchasing a solid revenue stream.
You can start with smaller P&D operations and increase your business size as you learn and grown. The opportunities for scale are abundant in the P&D market!
Once your business accumulates a track record of success in the P&D space, you can hunt for the best linehaul opportunity to add to your entity.