The Business of Independent Service Provider Contracting

What If Someone Buys FDX?

Posted by Jeff Walczak on 1/2/20 1:20 PM

Is FedEx about to be purchased?Stock Market 2

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.

Those of us who weathered the RPS > Caliber Systems > FedEx Ground series of events know that when a denial is issued one day, it doesn't mean the opposite won't be true the next.

Experience has taught us to think about and prepare for changes no matter what may or may not happen.

Transportation Companies & Lifestyle Businesses

It's important to understand the differences between Transportation Companies and Lifestyle Businesses (aka: Contractors) in a potential purchase.

Being a Transportation Company means utilizing systems and processes - not feelings - to run your operations. It means diversifying your customer base and revenue streams (not deriving all your revenue from FXG).transformation2

Transportation Companies will be marketable (able to be sold) in the event a new owner decides (unwisely) to abandon the independent contractor model. If you choose not to sell, you'll be able to sustain your company no matter what happens beyond your control.

If a new owner decides to convert the transportation model to something that does not include independent contractors, then your Lifestyle Business might be obsolete overnight.

This possibility is among the many reasons we are setting out to guide and coach those who desire to transform their current Lifestyle Business into a Transportation Company.

FXG has already been pushing you stealthily toward the transformation. If this cyclical talk of a sale once again produces nothing, you still need to continue your transformation to a Transportation Company. It's prudent to continue this course of action to ensure you have something at your journey's end, no matter when it occurs.

Under New Ownership

A new owner who purchases FDX would likely eliminate widely discussed weaknesses such as:

  • Express’ cost structure
  • Services with decent margins being cannibalized by Ground overnight and eventual “same-day”
  • A struggling European acquisition
  • Duplicated services

Interestingly, the fix is already underway for several of these general problems.

Under New MgtMelding the many services offerings of FDX under the Ground model to the extent it makes logistical sense is and has been taking shape for years.

Speaking of the Ground model, it is this model that will give FDX a competitive (cost) advantage. It would be highly likely that a new owner would do nothing more than keep the transformation under way. In fact, they would probably accelerate it.

So what does this mean for a CSP?

As of now, it appears that you're in pretty good shape.


What if a new owner, like Wal-Mart, wanted to "alter" the model to suit their current needs?

Well, this would mean there's more adapting to do in addition to your current transformation to a Transportation Company. There are a number of speculative models about how this would look. Any of which may, or may not, favor the way you currently conduct business.

Again, if you position your business to become independent of a single contract (the transportation model), then you'll be well positioned to sell or simply adapt.

Don't Ignore The Possibility

Diversifying your customer base will allow you to weather future storms.

Head In Sand

More than ever before - it's important not to bury your head in the sand and think that changes will not be thrust upon you.  

Your business has been undergoing significant changes already. This has been constant. What makes you think there are not more to come?

Running a business is about changing and adapting. Those who can do that well have the best chances of success.

Considering what might happen and reasonably preparing for it is just smart business.

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

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