The Business of Independent Service Provider Contracting

Network 2.0 is changing what happens after your trucks leave the building. FedEx describes the model as a move toward one driver on each route handling a mix of shipments, with consolidated pickups and deliveries (FedEx's Network 2.0 overview). For a contractor, that raises a practical management question: once the morning plan meets the actual day, how do you know what needs attention while there is still time to act?

A truck leaving the terminal tells you the route has started. It does not tell you whether the driver understands the day's priorities, whether a developing problem has an owner, or whether a change has been handled. That is the difference I want to examine this week: getting dispatched versus maintaining operational control.

I'm talking with David Belle of Belle Logistics in Destin, Florida, about how he manages that responsibility. David uses the eTruckBiz OPTIX app as his primary operational monitoring tool and also works with us on payroll. I want to get past “I watch the operation” and into the details: what he checks, what makes him act, who does the work, and how he knows the issue is actually resolved.

Operational control is more than seeing a problem

My working definition of operational control is simple: know what should be happening, see where the day is moving away from that plan, assign a response, and confirm the result. Visibility is part of it, but visibility alone is not management. A screen can show you something that needs attention; somebody still has to decide what to do and follow through.

Consider a pickup added after dispatch. FedEx offers same-day on-call pickups for expedited parcel shipments, so the work to be managed is not necessarily fixed when a driver leaves the building (FedEx pickup scheduling). The management questions are straightforward: who sees the request, who confirms the driver knows about it, and who checks that it was completed within the applicable window?

I would ask the same kind of questions about a time-definite delivery at risk. What information do you need before deciding whether to call the driver, change the plan, or send help? How do you protect the commitment without creating an unnecessary second trip or putting pressure on somebody to drive unsafely?

That is where service and financial discipline belong in the same conversation. A rescue may be necessary, but it still deserves a cost review afterward. I want David to explain how he distinguishes a reasonable response to an unusual day from a recurring operating problem that needs a different plan.

Where OPTIX fits, and what the owner still has to do

OPTIX's published capabilities include monitoring delivery and pickup status, viewing P&D productivity, tracking critical exceptions, and tracking time-definite stops and packages (P&D OPTIX product listing). Those capabilities give us a starting point for the discussion, not an answer to how David runs his company. The useful part of this interview will be hearing which information he relies on and what he does with it.

I also want to understand the division of responsibility. What does David check personally, what does his manager handle, and what happens when either person is unavailable? If the routine only works when one particular person is watching, that is a dependency worth identifying before a busy day exposes it.

Payroll belongs in the conversation for a different reason. David uses eTruckBiz for that work, and I want to ask what remains on his desk, what is handled by our team, and whether that arrangement changes the time he can spend managing operations. We should hear the actual workflow before claiming it saves time or money.

The goal is not a software testimonial with the difficult parts left out. It is a practical look at how one contractor works to gain and maintain control: the checks, decisions, conversations, and follow-through behind the screen. David's examples will supply the substance of the interview that follows.

A year ago, Chad Barnes was covering about 60% of his Contracted Service Area, losing half his drivers every month, and getting phone calls from the terminal every hour telling him to fix it. He had paid millions of dollars for the contract. He was, in his own words, ready to sell.

This week he joined our Weekly Business Update and told the story of what happened next.

The day before we talked, GoGo Drop delivered 716 of 717 time-definite packages on time. His operation has climbed from what he calls "a color below bronze" to the edge of gold. His margin is close to 20% and he's working toward 25%. And he had just returned from a two-week leadership trip to South Africa during which, by his account, the business ran better without him in the building.

I've reproduced the heart of our conversation below, lightly cleaned up for readability, with our own commentary between the questions. I asked Chad to be candid about what went wrong before it went right, and he was.

If you're a FedEx CSP who is struggling right now, or if you're about to buy a contract and think FedEx is going to show you how to run it, this one is for you.

Most entrepreneurs spend the first several years of their journey in a desperate, uphill battle. They are consumed by the "Big Three" of traditional business: Marketing (finding customers), Sales (convincing customers to buy), and Inventory/Supply Chain (managing the physical goods). It is an exhausting, capital-intensive process where failure to master just one of these pillars usually means the end of the venture.

FedEx Service Providers (ISPs) enter a completely different world. In this space, the heavy lifting of traditional business growth is effectively "pre-solved." FedEx provides the global brand recognition, the consistent flow of customers (revenue) , the pricing structures, and the daily volume. You don’t need a marketing department to generate leads, and you don’t need a sales team to close deals. The packages are already at the terminal, waiting for you.

On the surface, it looks like the ultimate "turnkey" business.

Expanding your FedEx operation into a new terminal is a significant undertaking. It’s an opportunity for massive growth, but it also comes with a unique set of challenges. From securing trucks and drivers to engineering new routes, the process can feel overwhelming. However, with the right strategy and support, you can turn this complex venture into a major success.

Recently, eTruckBiz had the chance to speak with Dan Barry and Vince Stempien of Dan Barry Enterprises, two service providers from the Detroit area who just stood up a new operation in the Ann Arbor terminal. Their experience provides a valuable roadmap for any contractor considering a similar expansion. They grew from five trucks in 2017 to running 17 on their busiest days in Detroit. Their consistent performance, including achieving "Entrepreneur of the Year" two years in a row, earned them the opportunity to expand.

However, the new opportunity was different. The Ann Arbor service area was more rural, with a 45-50 minute drive from the terminal to the CSA. When the previous contractor walked away unexpectedly, Dan and Vince were asked to start the very next day—a full month ahead of schedule. They stepped up, but the sudden start created immense pressure.

Expanding your business by operating out of multiple FedEx locations is clearly the future for those willing and able to open the door to significant growth. This move allows you to access new markets, improve business efficiencies, and enhance your overall revenue and profitability. However, such growth doesn’t come without its challenges. Managing operations across multiple locations requires thoughtful planning, robust systems, and the right tools to stay organized and profitable.

Whether you're exploring this opportunity for the first time or refining your current expansion strategy, this guide (and successive parts) will walk you through actionable steps to grow. It will also cover the benefits of leveraging powerful cost-reducing and business simplification tools like eTruckBiz's AdminIQ, PerformanceIQ, and BudgetIQ to streamline administration, maximize operations and manage finances effectively over multiple facilities.

Managing a FedEx contracting business requires more than meeting delivery deadlines. Behind every successful operation is a business owner juggling multiple responsibilities—from vehicle maintenance to regulatory compliance. While the opportunity for profit is significant, the financial challenges contractors face can lead to overwhelming stress, especially without proper preparation or planning.

This week, it was announced that all Canada Ground operations are going to eventually be converted to FedEx Express Canada over the next year and a half, as part of the larger Network 2.0 operational transformation.

While we don’t know what the plans are exactly for the U.S. network, we can make some logical assumptions about what the move probably means and doesn’t mean for current CSPs.

This post is the second in a two-part series.

In my last blog post, I shared that people often ask me, “Should I pay my drivers by the day or by the hour?”  My answer is based on comparing both methods, and I'll tell you why I recommend paying drivers by the hour.

Paying by the day is still most common because it’s a holdover from when delivery volume was consistent and only 5-days per work week.

As a result of adding residential service and e-commerce, package volume swings now vary widely on a daily basis. Paying drivers by the day has made business owner profitability more challenging.

This post is the first in a series on choosing to pay drivers by the hour, or by the day.

Almost every week, another new Contractor will ask me an old question.  Should I pay my drivers hourly, or by the day? There’s truly one right answer, but complex dynamics cause many new CSP’s to believe that the old ways of paying drivers are acceptable.

Many new Contractors do not bring transportation industry experience with them. Although it’s likely they achieved significant success in their previous ventures. That success can lead to a variety of ways they address driver compensation.

New Contractors typically choose to either keep the same practices as the previous owner, or they make drastic changes. If they choose the latter, it’s because they recognize the existing compensation method is not financially feasible.

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?

We recently caught up with two guys heavily involved with building successful transportation companies to ask for their insights into 2021.

The first expert is a long-time CSP from the Midwest, Tracy Taylor. The second is the founder and CEO of eTruckBiz, Jeff Walczak. Both have spent the better part of their careers in the FedEx Ground arena. We engaged in a fast-paced conversation to produce our most recent Truck Talk podcast episode.

Some of the insights may surprise you.

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.

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.

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.

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.