The past three months have seen FedEx shares increase 50% while the S&P has risen 14%. What’s going on? Investors have seen the same thing FedEx route owners are seeing. “Unprecedented” growth in home delivery heading toward a new normal driven by e-commerce and an increasing “shop from home” culture.
FedEx Ground has seen 20% growth, and 72% of overall revenue in the division came from home delivery compared to 58% last year. What does this mean to FedEx route owners?
First, revenue on the average route will increase. Not every route will experience the same growth, but overall route owners can expect more deliveries, especially residential ones. That’s good news, as more deliveries equal more money.
Route owners are paid per delivery and per package (as well as pickups) according to a specific FedEx formula. There are of course other factors like zip code, average route mileage, and others. However, a fuller truck at the start of the day means greater income.
Ask any FedEx route which goes faster, residential deliveries vs. business ones and they’ll have a ready answer for you. Residential deliveries go much quicker and can be more profitable. Although there are fewer pickups, deliveries tend to be closer together and easier to route, as things like business hours and other factors are not a concern.
The more deliveries a driver has in any given area, the faster those deliveries go, the less fuel they spend getting from one to the other, and usually the greater the profits the contractor receives.
For a business that’s already profitable, that’s good news.
Possible New Home Delivery Routes
Most routes grow at an exponential rate. As more people move into any given area, the route adds new deliveries. With the suburbs becoming even more popular as people work from home and don’t have to worry about commuting, those communities will grow even faster.
Add to that the increased “shop from home” culture the current situation has started, and routes are growing faster than ever.
Any driver can only handle so many deliveries in a day, and once a route reaches a tipping point, there are a couple of options. The route owner can “split” the route geographically and hire another driver to cover that part of the route either full or part-time, depending on the size of the split route. Or they can sell off the split route as a new one to a new contractor, and that new route owner inherits an already growing route.
Imagine inheriting a business that is already multiplying its revenue year over year? That’s what owners who purchase split routes can end up with.
More routes equal new opportunities for everyone, including new route owners or drivers.
More FedEx Ground Business Traffic
If more people are shopping and buying from home, that means businesses are shipping more goods. As retail locations become less popular, those same companies will be sending goods directly to customers. While residential deliveries increase on the residential end, shipments and pick-ups will increase on the business side of things.
That means FedEx route owners with both kinds of routes: business, and residential will see even more increases and route opportunities. Those who focus on the business side will see growth, increase revenue, and profits as well.
While the percentages of residential deliveries are up, business with FedEx overall is on the rise, and route owners can capitalize on it no matter what the size and shape of their routes.
Buying a FedEx Route
There’s more good news. More revenue, more profits, more deliveries, and more routes mean the number of routes for sale is going up too. If you’re looking to buy a route, now is a great time for you.
Not only are routes for sale that make profitable businesses, but interest rates are at an all-time low, so if you do have to borrow money to purchase a route, the historic situation offers you significant advantages.
In addition, the employment market is changing, and jobs that were secure are no longer assured. The peace of mind in owning your own business and one that partners you with a well-established international brand is a great choice.
Want to find a route that is right for you? Do you have more questions about what it means to purchase and own your own FedEx route? Contact us today. We look forward to helping you take this next exciting step in your life.