The Business of Independent Service Provider Contracting

Managing a FedEx P&D (Pickup and Delivery) operation as it transitions into Network 2.0 is quickly becoming more complex. With the addition of tight delivery deadlines, fluctuating stop and package volumes, and rising operational costs, contractors must constantly find ways to fine-tune their business practices. This is where the concept of dispatch yield becomes essential.

By tracking and optimizing dispatch yield, contractors have the key metric that directly determines their owner's benefit (profitability). But what exactly is dispatch yield? And how can it help you achieve improved financial results? 

In this post, we’ll explore what dispatch yield is, why it matters, and strategies to improve it. By the end, you’ll have actionable insights to better plan dispatches, monitor performance, and influence your driver culture to deliver results. 

What is Dispatch Yield and Why Does It Matter? 

Dispatch yield, in the context of FedEx P&D operations, measures the difference between the revenue generated and the cost of an individual dispatch. Simply put, it reflects how efficiently resources are being used to generate revenue. Results are impacted by route engineering, driver training and performance, and vehicle utilization. 

Why does dispatch yield matter? Because it impacts every facet of your business:

• Cost Efficiency: A higher dispatch yield means lower costs per stop, which makes negotiated Standard Budget assumptions more likely. 
• Resource Utilization: This is a measure of how effectively your business manages its limited resources to produce the maximum amount of margin from its operations.
• Per Dispatch Cash Flow & Profitability: Dispatch yield is the basic measure that ultimately determines a business's cumulative financial results. 

Tracking dispatch yield is essential for managing your business effectively. It’s more than numbers on a dashboard; it’s your roadmap to financial excellence. 

Watch the full webinar on Dispatch Profitability:

Factors That Influence Dispatch Yield 

Dispatch yield isn’t a fixed number. Several factors affect your performance, and understanding them can help you identify opportunities for improvement. 

1. Stops Per Dispatch 

The number of stops either loaded initially or loaded and later and shuttled to a dispatched vehicle greatly impacts the revenue side of the Dispatch Yield  equation.

2. Driver Productivity 

Drivers are the backbone of P&D operations. Training, tracking stops per hour, on-time performance, and overall accountability can uncover areas where performance efficiency is lacking. 

3. Volume Fluctuations 

Seasonal or unexpected surges or drops in delivery volumes can strain or create unused capacity. Whether it’s holiday peaks or irregular spikes, balancing resources is crucial. Old-school route planning and engineering will help in these situations.

4. Fuel Costs and Vehicle Efficiency 

Fuel is one of a contractor’s largest expenses. Maximizing vehicle fuel efficiency (and regularly maintaining your fleet) can help reduce costs significantly. 

5. Resource Utilization  Rates

Under-utilization of your resources is by far the largest determining factor of failing, achieving or surpassing your budgeted dispatch yields. Maximum utilization of your resources cannot happen when drivers are allowed to create their own performance standards. 

Effective Planning to Maximize Dispatch Yield 

The foundation of optimal dispatch yield lies in proactive planning. Here are some strategies to maximize your business operations. 

Balance Your Routes 

Unevenly distributed workloads lead to burnout for drivers and inefficiencies in your operation. Aim to balance routes in terms of both volume and mileage.  Use the FRO as intended.

Group Deliveries by Zones (Dynamic Anchors)

Time-Definite stops will need to be balanced by grouping stops geographically to reduce time spent driving between stops. Zone-based delivery planning not only saves time but also lowers fuel consumption. 

Align Driver Availability with Demand 

Staffing appropriately for peak delivery windows ensures that resources are allocated where and when they’re needed most.  Consider integrating part-time drivers in lieu of adding full dispatches to increase Dispatch Yield.

Leverage Data for Planning 

Analyze past performance data to identify patterns and inefficiencies. Did delivery volumes spike on specific days? Often historical data is a better starting point for route planning than FRO data.

 Monitoring and Analyzing Dispatch Yield

Creating a plan is only half the battle. To truly improve, you need to monitor its impact regularly.

Use The eTruckBiz Business Support System (ExpenseIQ)

Adopt measurable KPIs like these to track financial performance:

• Yield Per Dispatch: A key financial metric that shows how profitable or not each individual dispatch performed 
• Cost Per Stop: Helps you identify if cost-control measures are working
• Revenue Per Dispatch: Did a dispatch even have a chance to be profitable in the first place? 
  

  

Regularly Review Performance Reports 

With the help of your eTruckBiz ExpenseIQ financial manager, analyze daily, weekly or monthly reports to pinpoint trends, challenges, or areas for improvement. This ongoing habit builds accountability across your team and helps you stay agile when new issues arise. 

Driver Accountability as a Cornerstone 

Drivers directly influence dispatch performance, making accountability a vital aspect of yield management. Here’s how you can foster a culture of responsibility. 

Ensure Strong Leadership Is In Place 

People (drivers) want to be led. They want to have performance standards in place so they can strive to achieve their assigned goals. 

Strong leadership is crucial in fostering driver accountability. Your drivers look up to you as their leader and rely on you to set clear expectations and goals for them. As a leader, it is your responsibility to establish performance standards and hold your drivers accountable for meeting them.

When setting these standards, it's important to keep in mind that they should be achievable yet challenging. Unrealistic or unattainable goals will only lead to demotivation among your drivers. It's also essential to communicate these expectations clearly and consistently so that everyone understands what is expected of them.

Provide Regular Feedback 

Schedule performance reviews to highlight successes and areas for improvement. Armed with clear expectations, drivers are more likely to excel. They need constructive feedback on their achievements, whether positive or negative.

Promote Team Engagement 

Engaged drivers are more likely to take pride in their work. Create opportunities for team collaboration by hosting meetings or training sessions where drivers can share tips and insights. 

Take Control of Your Dispatch Yield Today 

For FedEx P&D contractors, dispatch yield isn’t just a metric; it’s a business-defining tool that can unlock profitability, efficiency, and growth. 

By focusing on strategic planning, data monitoring, driver engagement, and leveraging the right technology, you can improve operational performance and stay competitive in your industry. 

Now it’s time to act! Assess your current dispatch practices, set measurable goals, and start using the strategies we’ve discussed to maximize your yield. 

Need extra support? Reach out for personalized guidance or explore the tools designed to revolutionize your operations. The better your dispatch yield, the brighter your business’s future. 

Schedule a free Operating Budget and Expense Plan Consultation here!