How to Lower FedEx Route Overhead

One of the biggest expenses when you first purchase any business is the overhead, and since it can take a while to get profitable, you’ll need to have working capital to cover those costs. Fortunately, it usually doesn’t take long for a FedEx Route to be profitable, but sometimes a new route owner can be overly optimistic and get themselves in trouble. It’s important to take steps to lower route overhead when you buy a FedEx route.

Here are some tips on how to do just that.

Don’t Buy Brand New Equipment Right Away

There are all kinds of cool things you can buy that are useful when you own a FedEx route. From this cool dolly that turns into a cart to fans and radios for your truck. You could invest in new seats and other cool accessories. However, you don’t need any of those things to run a route efficiently.

There are alternatives. You can often buy used equipment from other route owners who have replaced some of theirs with that cool, new stuff. You can also find used equipment on eBay and other sites, and some things you can just do without when you’re first getting started.

Once you are profitable, you can always upgrade, but don’t spend your emergency contingency fund on something you don’t need right away.

Newer Trucks Can Lower FedEx Route Overhead

The exception to buying new equipment is the truck you will drive on the route. There are a lot of options, but it is good to remember that newer trucks can sometimes result in lower overhead. For some older trucks, the maintenance to keep them on the road is greater than the payments or potential lease on a newer truck might be.

  • Look at the service records of any truck offered with the route. Keep in mind not only the miles on the odometer, but fuel economy, the age and wear on the tires, and other factors.
  • Have a mechanic inspect any truck you intend to purchase if it is not new. Get a realistic idea of some potential problems and what it might cost to fix them.
  • Consider electric vehicles. They are not only an increasing trend in “last mile delivery” but some state regulations will soon mandate them. Also, long-term overhead costs will be much lower.

Join Fuel Rewards Programs

If you don’t go electric, one of the other larger costs associated with a route is fuel. But there are things you can do. Join fuel rewards programs like those offered by major gasoline companies or even truck stops. Your gas purchases will add up quickly, and you can save a lot of money in the long run.

Also consider rewards credit cards that offer cashback and other fuel discounts. Some business cards will offer this, and it can reduce your actual overall cost of fuel significantly. Just keep in mind you will need to give one of these cards to each of your drivers if you own more than one route unless you plan to be the only one to fuel up your vehicles.

Also, some business credit cards will offer other discounts on repairs and other business-related items. Check out the various options and consider some balance transfer cards that will offer you interest-free borrowing for a limited time.

Drive as Much as You are Able

If you purchase more than one FedEx route, you will have to hire drivers, as you can’t be two places at once. But route owners often choose to take time off and have substitute or extra drivers to cover them. However, you have to pay those drivers if you are not running the route yourself.

When you are first starting out, there are two reasons to drive as much as possible. First, you will know your route better, and that is always a benefit in the long run. Secondly, you will save money until you are profitable. It’s a win-win for any route owner.

Invest in Training

If you do hire drivers, invest time in training them. A well-trained driver will stay on a route longer, and you won’t have to incur the expense of replacing them. They will also make fewer delivery mistakes. Those mistakes can add up to big costs for route owners.

A little extra training can go a long way and should never be considered a waste of money. Good training will lower your overhead long term.

Intelligent Routing Lowers FedEx Route Overhead

Finally, learn about and teach your drivers about intelligent routing. The less you retrace your steps in a route, the more fuel and time you will save. There are a variety of ways to do this using FedEx tools or third-party applications.

Also, work on lowering your vehicle idle time. Try to schedule pickups and timed deliveries so that there is little downtime during working hours. Combined with efficient routing, this can save you a significant amount of money in fuel costs alone.

One of the keys to route success is efficiency and constantly watching and reducing overhead where you are able, but this is especially critical when you first purchase a route. Follow these tips and other cost-cutting measures to make sure your transition to route ownership is as smooth and painless as possible.

Ready to purchase your first FedEx route or add another one to your business. If you have questions or need help finding the right route for you in the right place and at a good price, contact us here at Route Advisors. We’re here to help every step of the way.

Share this post

Leave a comment

Your email address will not be published. Required fields are marked *