If you’ve been contemplating entering the booming courier industry, now may be the time to do so. As a result of COVID-19, consumers have become more dependent on at-home deliveries and e-commerce than ever before, which means big bucks for those that own FedEx routes. Continue reading for the pros and cons of buying a FedEx route to determine if it’s the right investment decision for you.
The benefits and drawbacks of owning a FedEx route vary depending on whether you own a pickup and delivery route– also known as a P&D route– or a linehaul route.
P&D routes are the more popular of the two FedEx route options. With a P&D route, you drive a traditional FedEx box truck and manage package pickup and delivery within your territory for homes, businesses, hospitals, and schools. As of May 2020, owners are expected to offer both FedEx Home Delivery and FedEx Ground route. This requirement means owners will be expected to provide pickup and delivery services Monday through Saturday, with the home delivery route being available Tuesday through Saturday and the Ground route being available Monday through Friday.
In general, P&D routes tend to be less expensive because they generate less revenue than a linehaul route, and the box truck is far less costly and requires less maintenance than a semi-truck. In addition to being less expensive, P&D routes can be less demanding than linehaul routes because they cover fewer miles. If you’re looking for shorter, safer routes that enable you to get home at a reasonable hour, a FedEx P&D route may be right for you.
Linehaul routes require drivers to hold a commercial driver license (CDL) and transport packages hundreds, or even thousands, of miles via semi-truck between FedEx Ground hubs.
While the upfront costs of linehaul runs are more than that of a P&D route, they can generate significantly more revenue and cash flow over time due to the price per mile compensation. On the other hand, driving long distances in a semi-truck can be risky, and the vehicles require significantly more maintenance and fuel.
Choosing between the two types of FedEx routes for sale largely depends on your budget, lifestyle, and ability to be on the road for days at a time. If you plan to hire drivers and work as more of an absentee owner-operator, your concern will likely be revenue potential, but if you are the sole driver, consider time away and your family. Weigh the pros and cons of each before deciding if owning a FedEx route is right for you.
The asking price of a delivery route business can vary significantly depending on factors like the type of route, financial performance, and assets like the fleet of trucks. In addition, current and projected industry trends will also contribute to this figure. Asking prices for P&D runs on the lower end may begin around a couple hundred thousand dollars, whereas profitable, well-established linehaul routes pricing may be in the millions.
To ensure you’re getting a fair deal on a FedEx contractor business, be sure to conduct due diligence on your own and ask the FedEx route seller if the business received a third-party valuation. It’s also recommended that you work with a trusted advisor to negotiate and explore all financing options, like seller financing and SBA loans.
Ready to find your ideal courier business for sale? Get started with help from the professional business brokers at Sunbelt! We have years of experience connecting buyers with route owners that are preparing to sell. Contact your nearest Sunbelt Business Brokers office today to begin your journey towards becoming a small business owner!