In October 2019, James Sheban, an FXG Contractor, reached out to eTruckBiz about an urgent problem. His company, Sheban Express, had recently failed its VEDR audit. He needed expert guidance to correct the situation. And he knew that his company may lose its contract if the audit wasn't quickly addressed.
Did you pay attention to the CEO's quotes in last week's press release? Maybe the rhetoric sounded familiar.
"We demonstrated once again the power of our unrivaled network and our ability to provide solutions for our customers while growing package volumes during our peak period."
"We will continue to aggressively pursue opportunities to generate profitable revenues and drive greater operational efficiencies under our current structure..."
No, the above quotes weren't from FDX. In fact, those were quotes from the U.S. Postmaster General and CEO Megan J. Brennan last Thursday.
HOW A COMMUNITY COLLEGE DROPOUT FOUND ENTREPRENEURIAL SUCCESS
You think your market conditions are tough, what about Colorado? According to the latest Bureau of Labor Statistics (BLS) data, the Denver area's average weekly wages are $1,242. Think it's easy to find drivers? The BLS also lists the area unemployment rate at 2.4%. Way lower than the U.S. average.
What made a young guy from out of town who knew nothing about the logistics industry think that he could buy a Ground business to support his growing family? Sure he's smart, but he's so young.
"There's no selling, no advertising, no collecting money from past due accounts. I'm not saying it's easy, but it beats a lot of other options out there," Preston Wengert says.
As of 1/10/2020, it’s a new day for FXG CSP’s.
You may recall we’ve talked about TRANSFORMING your Lifestyle Business into a
FXG's announcement of the new Financial Health Assessment added a new, critically important component for how they keep score on your business performance, and your value to them.
Engaging a third party, RapidRatings, to examine your financial health, then reporting those findings to FXG will create a measurement (number) that will become just as important as your daily service - if not more so.
As a CSP, you should understand the significance of this announcement and the reasoning behind why it will be so crucial going forward.
Let’s take a look at what is going on here...
An Extra Set of Eyes
Dustin Franz bought an RPS route twenty years ago in Pasco, WA. Today, he's a successful FXG contractor with multiple routes. He's traveled an interesting path to profitability.
Buying a route was his first time owning a business. Much of how he learned to deliver packages came from his own experiences plus talking to contractors in his terminal.
Others taught him what they had learned from their own mistakes, and they really couldn't teach him how to be more profitable any faster. It was no fault of their own. They hadn't been trained themselves.
Dustin performed some online research and determined he needed outside assistance.
Are your drivers forced to comply with safety rules?
Or do they want to comply?
If you prefer the latter, maybe you should consider Ashiq Mizan’s unique approach.
Do Your Drivers See the Big Picture?
Ashiq Mizan is a CSP in Philadelphia, PA, who had grown increasingly frustrated with his drivers’ lack of safety training compliance.
Despite the safety training lessons being super-easy, compliance in October was around 5%. Not only did his drivers' indifference put his money at risk, but it also showed that they were missing the bigger picture.
YOU CAN'T LET DRIVERS RUN YOUR BUSINESS
Business owners (CSP's) are generally likable. Drivers want to work for them. People enjoy being on their team. Nothing wrong with that. It's a good thing.
However, it's a problem when CSP's are too nice. Tracy Taylor learned that lesson early in his career as a Contractor.
"I had 12 employees, 15 trucks and two operations hundreds of miles apart. My people needed me to make tough decisions instead of letting them manage themselves," he recalls.
Is FedEx about to be purchased?
The answer is probably not...maybe.
Truth is we'll never know for sure until it happens. But don't lose sleep over it because it's not under your control.
However, it's good business to think about and reasonably prepare for change. Focus on things you can control.
Let's take a look at what a sale of FDX might look like for CSP's.
RETAINING EMPLOYEES IN TIGHT LABOR MARKETS
Steve Ellis has been a contractor for almost twenty years. Many business owners who've been operating that long think their processes work because they've "always done it this way."
However, Steve's openness to studying and changing his processes make his operations exceptionally successful in a state with some of the lowest unemployment rates in the country.
THE PERILS OF BUSINESS OWNERSHIP
Marena and Ralph Markel bought their first FedEx Ground route in 2005.
Of course, they were inexperienced owners, but they were committed to their future and each other. Like many couples who work together, each spouse brought different skills and strengths to the business.
After experiencing significant growth, the pair were overwhelmed by the responsibilities of leading a large team of commercial drivers including:
Would the couple remain happily in business?
It's a simple question with a simple answer. If you're a FedEx CSP, you may think - of course FedEx decides how much I'll earn because they decide what to pay for my services.
But it's not the right answer.
Focus instead on two key words, "decides" and "earn."
FedEx offers, or negotiates, estimated fixed and variable revenues, but they don't decide how much of that you'll keep.
You will make decisions during the course of the contract determining how much you'll earn.Don't confuse income with earnings.
Wayne Gretsky, Isiah Thomas, Magic Johnson, and Pete Rose. Each was phenomenally successful at scoring goals, points, or runs in their respective sports. Coaching others to do the same? Not so successful.
"What's your point?" you ask.
Business people, like athletes, don't have to be great players to be great coaches and vice versa. However, great coaches can bring out the best in others.
We’ve established for quite some time that the Transformation is coming, and now we’ve seen that it’s here.
The entire transportation industry, especially the last-mile small package segment is undergoing swift transformation.
In order to compete and even survive, FXG, and you, are going to have to accept and embrace change as it sweeps through the industry.
But why change the business model, and what does changing the model mean?
We’ve been preaching it, to those who would listen, for years.
Recently, FXG finally admitted it.
You’ve been a part of it for years. But I bet a lot of you don’t even know what it is.
Now, you are actually living it.
It’s not being disguised anymore.
FXG has been telling you change is coming, but downplaying its severity in order to not upset the apple cart...too much.
So what is it?
"Eight Days a Week" is a popular song written by Paul McCartney and John Lennon in the 1960's about love. According to McCartney, the title was inspired not by love, but by work.
He has been quoted as saying when he asked his chauffeur how he was doing, the chauffeur replied, "Oh working hard, working eight days a week." (Wikipedia, May 22, 2019).
You and your drivers probably feel the same about FedEx' recent announcement to move FXG to a seven-day work week.