The Business of Independent Service Provider Contracting

We recently hosted a webinar that obviously struck a chord with many Contract Service Providers (CSP’s). Attendance for the webinar was sizable. The topic was Dynamic Route Optimization, more well known by its acronym, DRO, which has understandably created a generous amount of frustration.

Today's blog post is brought to you by our friends at Lytx.

Implementing new processes can be challenging. And when it comes to implementing a new process for your business, time is money.

FedEx Ground now is requiring Contractors to outfit their vehicles with dual-facing Video Event Data Recorders (VEDRs), to implement a driver safety program to meet industry standards, contractual obligations and to meet three out of four Key Indicators (KIs).

Don’t think it matters which MESO you choose when you negotiate?

Wanna bet?

We're sure you know you are gambling with the financial health of your biz when you pick a MESO based on:

• What other CSP's say is the best one to take on Facebook
• The one with the best incentive bonuses
• Thinking they hide the best one behind door #3
• No Research, No Analysis, No Data

This is what the other side hopes for, and knows many CSP's do.

It pays to do your homework and get some expert help to determine what the best offer is based on the unique characteristics of your CSA.

There's too much for you at stake to not give this issue the attention it deserves.

In today’s world with the latest AI (artificial intelligence) technology, we can use voice commands to control not only our devices,- “Alexa” / “Hey Google” “Play Crazy Train by Ozzy Osborne” (yes choice of song intended), but we can also control our lights (remember the clapper?), garage doors, air-conditioning, and appliances through apps from the palms of our hands.

One would think that a world class company like FedEx would be able to offer a highly sophisticated routing solution software as a tool to fine tune the routing for today’s exploding e-commerce market. You would be correct to hope for that to happen.

Delivering every day. That was the title FedEx chose for its announcement in May 2019 about moving to a seven-day residential delivery operation.

The press release stated, “We’re accelerating our process of integrating nearly two million SmartPost packages previously delivered through the U.S. Postal Service into FedEx Ground operations. By the end of 2020, all home deliveries will be sorted and delivered within the same ground network. Streamlining the home delivery network creates greater density, more efficiency, and potential cost savings for our shippers.”

That’s old news now, but here we are in May 2020. Is hindsight really 20/20? Maybe some folks suffer from 20/40 hindsight?

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.

Ground CSP's, generally, possess exceptional area knowledge for the areas they service. They can utilize this knowledge to plan routes and take into account all the intricacies of a particular area.

Now, however, CSP's are starting to see that the old process of developing static routes to cover a particular service area is going the way of the horse and buggy.

Routes now need to be planned dynamically. This means that with the transformation of stop characteristics (residential) along with an evolving FXG business model (heavy focus on eCommerce), route planning needs to change constantly.

In order to remain successful, today's CSP must adapt to this new demand as the business continues to change. The number of routes and the actual route "boarders" need to be engineered in such a way to be flexible based on work load characteristics. 

If we’re being honest with each other, where does safety rank in your business? You most likely thought, “Safety comes first. Or safety is our number one priority.”

It’s so predictable that Google Docs finished the sentence for me. Sorry to burst your bubble if you thought your safety culture was a differentiator. Everyone says it, but not everyone is being honest.

Do you feel like you’re in a thankless job? If so, you’re not alone. Most FedEx Ground CSP’s can provide daily evidence to support that conclusion. You work daily ensuring that packages are delivered (and picked up) safely to and from the correct addresses. Many times, you do this based on information that leaves something to be desired.

That’s why last week’s ceremony in front of the White House was so extraordinary. The President of the United States spent a few minutes recognizing truckers including a FedEx Ground Contractor.

Today's blog post is by our guest blogger, Brian Reeves, of Reeves Delivery Group.

By Brian Reeves, Reeves Delivery Group

MANAGERS WHO RUN ESSENTIAL BUSINESSES NEED TO BE RECRUITING HUGE NUMBERS OF NEW EMPLOYEES TODAY, JUST IN CASE THINGS GET 50 TIMES WORSE.

Here's a quote that correctly sums up today's blog post , "The past is in your head. The future is in your hands."

You'll recall that our last blog post dealt with the fact that today's FXG Contracting environment is very different than it was several years ago. More specifically we said what is being done has not changed as much as how it's being done differently.

What was once “wild speculation” has now obviously become reality. As most of you know, we were among the first and few trumpeting the change of your business from lifestyle to transportation company. Now that the transformation is at least halfway complete, it should now be obvious that “what worked in the past won’t work in the future”.

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.