The Business of Independent Service Provider Contracting

Here we are, finally  on the eve of what will promise to be the really big visible push into Network 2.0 for CSPs.

Many things, mostly unseen, have been underway for years now. Some things, like the transition to the current ISP operating agreement, from the old legacy contract, have been going on for 8 or more years. By the way, make no mistake, it was this transition to the ISP agreement, which forced the relinquishment of proprietary interest in contractor work areas, that paved the way for Network 2.0 to become a reality.

So it could be said that the transition to Network 2.0 has really been in the works for more than 10 years now.

Let’s take a shot at predicting some of what promises to be many significant changes that Network 2.0 will bestow on CSPs as they adapt and survive into the new era:

Topics: Business Outlook, Driver Recruiting, ISP Negotiation, Business, Network 2.0, Margins, low cost model, time definite, transportation business

As eTruckBiz wraps up its 12th year, we take a moment to reflect on the journey so far and the exciting path that lies ahead. It's been a time of significant challenges and changes, not just for us but for the entire FedEx Contractor community. Despite the turbulence caused by ongoing changes within FedEx and the broader economic landscape, we've navigated these waters with resilience and innovation.

Topics: FedEx, Ground, ISP, FedEx Ground, Business, Contract, contractor, Profit, settlement, Cash flow, Network 2.0, Margins, fxg, CSP, time definite

Looking for our newest blog post? Click here to read Embracing Change and Innovation in 2024

In our last blog post, we released a legal summary of the most recent lawsuit making the rounds in the transportation business industry. Our goal was to provide contractors with the facts  and a summary along with our best industry recommendations. Our advice is always based on past experience and what we believe is best for contractors, but ultimately we want to empower contractors to make their own choices based on their unique business situations.

Topics: FedEx, Ground, ISP, FedEx Ground, Business, Contract, contractor, Profit, settlement, Cash flow, Costs, Network 2.0, Margins, time definate, low cost model, fxg, CSP

We've got some news that's making waves in our circle. A new lawsuit has popped up concerning contractor status. It's stirring quite a bit of chatter, and we at eTruckBiz think it's crucial to chat about it, especially since it touches on the heart of our operations – the independent contractor model.

Topics: FedEx, ISP, FedEx Ground, Business, Contract, Negotiation, contractor, Financial, Network 2.0, Margins, fedex legal issues, low cost model, fedex ground contractors, fedex ground legal advice, fxg, fedex lawsuit, Spencer patton, Patton Logistics, CSP

It has been a long time since economic conditions were favorable for a package rate war between UPS & FedEx.

In fact, because of generally good economic conditions, until a couple of years ago, there was little need for our two favorite competitors to try to steal each other’s business. A rising tide had been raising all boats, even including regional package carriers. Most indicators were signaling that there would never be another true price “war” like there was in the early 90’s, the early 2000’s or the period from 2008 - 2010.

Everything was stable in “pricing-land”...

Until it wasn’t.

Topics: FedEx, FedEx Ground, Business, Negotiation, contractor, Financial, Margins

Running a FedEx Ground contracting business has never been more challenging. As we navigate through the implementation of Network 2.0, contend with record inflation, and face labor market challenges, many CSPs find themselves pulled in various directions. The landscape is shifting, and margins are tighter than ever, making it essential to find a way to not just survive but thrive.

Topics: Driver Recruiting, Timekeeping, FedEx, Payroll, FedEx Ground, Business, DRO, vedr

Topics: Business Structure, FedEx, Ground, FedEx Ground, Business, Contract, contractor, linehaul, Network 2.0, transformation

So your operation has been awarded Bronze, or Silver Trending Bronze Medal status. Should you be concerned?

If you're not, you should be. The majority of Bronze or Silver Trending Bronze-rated ISPs will need and want to shed this rating before the discussion is finalized to not offer a contract renewal.

As you embark on the journey to improve your status, it’s important to remember that Inbound Local Service is no longer, on its own, the best and most immediate way to ensure the happiness of your customer (FXG). The sooner Bronze rated ISPs get comfortable with and embrace a sense of urgency about ALL the metrics that make up their status, the sooner they can make meaningful changes that impact the situation.

Topics: Business Results, Business Metrics, Business, Contract, Agreement, Medal, Bronze

By now, most of us have seen or heard the news that FedEx is rolling out a new system for rating contractor performance. 

Initial indications are that there will be three tiers (Gold, Silver & Bronze) and your operation will be classified as one tier or another based on several safety, service and customer experience metrics, on a monthly basis. Word out there is that some operating efficiency data will also be included, so productivity will be a part of this too.

It appears that the days of simply meeting contractually accepted service & safety performance standards to assure continued contracting participation are about to be gone.

So the question being asked is, what does this really mean for contractors?

Topics: Business Outlook, FedEx, Management, Business Metrics, FedEx Ground, Business, Dashboard

By any measure, it’s been, and continues to be, a challenging time to be running a transportation business. However, as we often see, there are many opportunities that present themselves during challenging times.

As we look ahead to better times in 2023, it’s important to take a look at where we are currently at and how we got here so that we avoid mistakes of the past.

Our current situation is rooted in the events of 2019. This period introduced the density-stop / ecommerce push from FedEx Ground. As ecommerce deliveries gained traction and increased in number, they fueled the deterioration of contractor per-stop operating margins.

As you know, ecommerce stops are paid at a lower rate and typically include fewer packages per stop vs. commercial stops, resulting in a stealthy revenue per stop decrease across your entire business.

Topics: Business Planning, Bookeeping, Management, Business Metrics, ISP, Business, Money, Cash flow, Inflation, Costs, Financial, Margins

At eTruckBiz, our mission is simple- to help contractors run the easiest and most profitable business possible. Recently we’ve become aware of a potentially growing problem found within several contractors’ operating agreements. In each case, these were recently negotiated contracts done by popular brokers in the FXG space.

Topics: Business Results, ISP Negotiation, FedEx, FedEx Ground, Business, Contract, Negotiation, contractor, Profit, Agreement, consulting, settlement, Cash flow, brokerage, brokers

Can anything good come from a grim FedEx earnings pre-announcement?

While the announcement and the withdrawal of next fiscal year’s guidance are ominous signs of storminess to come, there may be a silver lining. In recent months, eTruckBiz has seen a 70% increase in renegotiation requests for its clients being granted, signaling that FedEx may be more willing than ever to work with struggling contractors.

As many of you know from attending our many informational sessions over the years, the contractor model affords FedEx Ground the lowest cost provider of last mile transportation services in the industry.

It appears that now may be the time to unleash the power of this competitive advantage.

Topics: Business Results, ISP Negotiation, FedEx, FedEx Ground, Business, Contract, Negotiation, contractor, Profit, Agreement, consulting, settlement, Cash flow, recession, Rates

So as you might imagine, there is a considerable amount of chatter out there about some recent, controversial events.

Many want to know what we think about the whole situation.

We’re going to give you some thoughts, but I’d like to point out our perspective on the matter first.

 

Topics: Law, Management, FedEx Ground, Business, Investment, Agreement, consulting, Money, settlement, renegotiation, Financial

Well, the time has finally come.

FedEx has officially announced the big move that we had known was coming for a long time.

The announcement that they will be combining most of the operating components of their networks will trigger significant operational changes. The plan does include utilizing mostly contractors, even though some are currently struggling.

Many will recall that we have been signaling for more than 5 years that a change was coming. By far the largest issue will be that the demands of the new network will force contractors who operate Lifestyle Businesses into operating Transportation Companies.

The time has come to put old habits behind and embrace change, or get left behind. 

Topics: FedEx, Management, Ground, Business, Contract, model, Money, Cash flow, renegotiation, Network 2.0, transformation

So it’s not the 2008 financial crisis, but in the FXG Contracted Service Provider world, it could ultimately prove to be worse.

A combination of events has spawned a crisis that we foreshadowed back in August of 2021 in our post:  the Dark Side Of Density.

What we described in that post has ultimately proven to be true, and is now exacerbated by the quickly deteriorating economic conditions.

As business owners, solving problems is a daily occurance. This one however is going to need full attention, for an extended period of time.

Let's begin our look at what to do about all this by analyzing the root causes of why the issues now exist...

Topics: Business Results, ISP Negotiation, Payroll, Business, Contract, Profit, consulting, Money, Inflation, Costs, Holiday Season