The Business of Independent Service Provider Contracting

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

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.

Topics: Business Structure, Payroll, Ground, FedEx Ground, overtime, leadership, Money

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.

Topics: Business Structure, Payroll, Ground, FedEx Ground, overtime, leadership, Money

 

Any investment made into a business should be measured by its return. Simply put, when businesses invest in a product or an initiative, they expect that the profits created by the investment will outweigh the cost of the investment.

This is no different in the transportation industry.

If you take a minute to think about what options you could invest in, that could provide you substantial returns, what is it that comes to mind? New trucks? The latest software package that promises the world? Some other shiny object?

There is one thing, that may not be obvious, that will no doubt provide you with a lasting return on your investment. Most larger companies understand that investing in this one thing provides big time returns, and don’t mind the investment it takes.

And now, this type of investment is available to you…

Topics: Classes, Training, Ground, FedEx Ground, leadership, Money

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. 

Topics: Business Planning, Business Outlook, Compliance, Ground, FedEx Ground, Business, Regulation, Co-employee, change

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 ...

Topics: FedEx, Ground, ISP, FedEx Ground, Business, Contract, Investment, model, Agreement

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. 

Topics: Business Tools, Business Planning, Business Results, FedEx, Ground, FedEx Ground, vendor

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.

Topics: Business Outlook, FedEx, Ground, FedEx Ground, vendor

Are your drivers forced to comply with safety rules?

Or do they want to comply?

If you prefer the latter, maybe you should consider Ashiq Mizan’s unique approach.

Do Your Drivers See the Big Picture?

Ashiq Mizan is a CSP in Philadelphia, PA, who had grown increasingly frustrated with his drivers’ lack of safety training compliance.

Despite the safety training lessons being super-easy, compliance in October was around 5%. Not only did his drivers' indifference put his money at risk, but it also showed that they were missing the bigger picture.

Topics: Compliance, FedEx, Ground, ISP, FedEx Ground, Business, Contract, Selling, contractor, Purchase, safety

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.

Topics: Business Structure, Business Outlook, FedEx, Ground, ISP, FedEx Ground, Business, Contract, Selling, contractor, Purchase

It's a simple question with a simple answer. If you're a FedEx CSP, you may think - of course FedEx decides how much I'll earn because they decide what to pay for my services.

But it's not the right answer.

Focus instead on two key words, "decides" and "earn."

FedEx offers, or negotiates, estimated fixed and variable revenues, but they don't decide how much of that you'll keep.

You will make decisions during the course of the contract  determining how much you'll earn.

Don't confuse income with earnings.

Topics: Business Structure, Business Outlook, FedEx, Training, Ground, FedEx Ground, Negotiation, Profit

Wayne Gretsky, Isiah Thomas, Magic Johnson, and Pete Rose. Each was phenomenally successful at scoring goals, points, or runs in their respective sports. Coaching others to do the same? Not so successful.

Bill Belichick, Pat Riley, Bobby Cox and Tony La Russa. Polar opposites to the previous four athletes.

"What's your point?" you ask.

Business people, like athletes, don't have to be great players to be great coaches and vice versa. However, great coaches can bring out the best in others.

Topics: Business Structure, Business Outlook, FedEx, Training, Ground, FedEx Ground, Negotiation, Profit

Some of you reading this have already negotiated your first ISP agreement.

Maybe more than one. Others, still have not gone through the process yet, and are wondering what to expect.

Whether you are a veteran, or going to be a rookie, we thought we'd take this opportunity to share with you what we have learned from helping more than 800 of you (as of August of 2017) successfully get through the process.

Topics: Business Tools, ISP Negotiation, Ground, ISP, FedEx Ground, Business, Contract, Negotiation, contractor

Once again, you've spoken...and we've listened!

Today, we'd like to announce that we have a new service available for you, that we
think, will REALLY change the way you operate and enable you to soar to a new level of productivity and profitability.

It's the "Cure" for what's been draining your time, and limiting your success.

Topics: Compliance, Ground, Business

It's been a while.

Yes, we know that it has been a while since we released anything new and exciting to help you run your business.

But good things come to those who wait!

We want to give you a sneak peak at the new "Contractor Business Intelligence Dashboard"....

Topics: Business Tools, Compliance, FedEx, Intelligence, Ground, Business, Metrics, Dashboard