The Business of Independent Service Provider Contracting

As you may know, FXG Contractors and their Managers have chosen eTruckBiz University for in depth training for almost a decade. Since our very first class in Huntsville, Alabama, we have received a tremendous response from those who understand the importance of continuous education. Thousands of hours have been spent updating, refreshing, and tweaking our curriculum. Why? Because it's critical to our customers' success.

Training your team is the same as putting fueling in your trucks. Without regularly filling up the tank, your people are running on fumes. 

In fact, FXG requires continuous safety lessons, right? That's because statistics prove when training stops, people assume it's no longer important. Hitting your Service Levels requires fuel in the trucks. Staying compliant with your Agreement requires completed safety lesson. And making your business profitable requires essential, off-site training for your key people.

However, some AO's still want to know why this type of training is important, and, is there a return on this investment? That's a great question.

Well, here are 9 reasons why the question shouldn't be if I should send my managers to the University, but how soon can we attend?

It happens every year.

As the package volume builds, so do CSP / TSP stress levels, as well as the risk of an operation getting out of hand.

We surveyed a large number of our "veteran" clients to find out which tasks cause the most stress. Then, followed that up by asking how they alleviate the pressure and stress.

The results were interesting.

The good news is that the actions needed to relieve the stressors are easily accomplished and readily available.

In this uncertain time, it seems like there was one thing that was certain.

It appeared that stops and volume were marching forward, with no regard for the turbulence and difficulty that we were told surrounds us. 

In a roughly 2+ year environment of growth, the rising revenue tide hid many tree stumps, and kept the good ship Contracted Service Provider sailing happily into the sunset.

All was well.

Until it wasn’t.

Recently, the volume has leveled off and in many cases, retreated.

This dip is not too much different from a “normal” summer, but this time, it hurts...bad. 

Let’s look at why.

What do you get when you combine:

• the current regulatory environment, 
• significant shifts in market demand resulting in large changes in CSA characteristics,
• the demand from Wall Street & investors for increased ROI,
• and a cult following of litigious regulators and attorneys looking for big paydays?

Let’s just say that it looks a lot like today.

All these forces are coming together to bring about what could be the largest, most sweeping change in FXG’s business model ever, which will in turn, drastically change how you monitor and run your businesses. 

For more than 8 years, we’ve been building products & services to help CSP’s transform the way they approach running their businesses.

Recently, the FXG model itself has been transforming in unprecedented ways. For most CSP’s , the days of being a “hands-on” operator are gone, and the need to provide leadership & management through systems, processes and people are quickly being implemented. The days where you or your BC’s could “jump in a truck” to fix things are gone.

July 20th, 2020, was the day that FXG announced via MGB that it would make significant changes to the way they will approach your End Of Agreement (EOA) process.

It is important to understand what’s going on here, as it will impact the way you think about contract renewals with FXG.

At first glance, it appears it’s just FXG flexing its muscles again, and in some respects that’s true.

However, when you study the process, it’s easy to see that it is really an attempt to ...

Okay, we know what many folks are going to say. The DRO is troublesome and may not work.

While it is true that learning to use it effectively is difficult, it actually works fine. It’s the theory and engineering principals behind it that are difficult to maneuver and grasp.

The move from static route creation and management to that of a very dynamic (always changing) way of route management is now at hand. Thanks to the virus, the premature push to unprecedented levels of eCommerce, and the need for 7 day service, all are being forced to transform quicker than originally planned.

The time to embrace Dynamic Route Optimization is at hand. The fundamental culture change to Dynamic vs. Static planning is now underway.

This week’s post comes with the following disclaimer:

There is a serious health issue (Pandemic) running its course and it should be given any and all attention and appropriate measures to curb the spread. Protocols need to be respected and followed. We are in no way attempting to downplay this issue or deny its existence. No attempt is being made to ignore or suggest that action contrary to any official recommendations be taken.

Keep in mind that anything we are about to say below is in the light of our disclaimer above.

Read on for some insight on how to deal with your two biggest issues right now.

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.

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.

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?

Changing market needs and growing industry demand are forcing FXG, and you, to change the way you operate.

It should now be clear to you that things like; 6-day & 7-day operations, two wave dispatches, 2-man delivery teams (for IC’s & bulk), and other new & different service offerings are going to become standard operating procedure.

These operational changes might seem like great ideas to meet the evolving market demand, but after you think about them a little, you’ll notice that in order to make them work, YOU are going to have to provide more of something that most CSP's struggle to manage.

Yes, in order for you to provide what FXG wants, you are going to need more people.

As outlined in the recent message from Henry Maier, it appears more change may quickly be approaching.

These changes, if and when implemented, will have a clear and significant impact, not only on your operation, but will definitely impact your costs, and resulting bottom line.

We are not trying to be alarmist, but the changes mentioned will fundamentally change the way you conduct your business.

Take a look around.

Do you see the number of contractors around you dwindling?

How many contractors do you see today, vs. how many there used to be 2, 5 and 10 years ago.

It's plain to see the number of contractors is shrinking, while the number of trucks grows

This results in fewer, but larger operations.

Think this is a coincidence?

It's not.

As you seek answers from FXG on how you will achieve scale, contiguous service areas and overlap, you are being told you need to "work it out" with those around you. Well that's great, but how are you supposed to do so if you have limited resources?

There is a way, but you'll need to ask yourself some questions first.