Understanding FedEx Route Contracts

When you purchase your very own FedEx route, you are gaining the freedom that comes from partnering with a trusted brand in the logistics industry. You get to rely on their presence in the market, the business they have built, and the consistent results they deliver.

At the same time, you become a brand ambassador for FedEx. The work that you do, the work that your employees do, and the way you represent yourself all ties back to FedEx and the way that they do business. That is why contracts are so important.

As you enter into an agreement with FedEx to operate a route, here are some of the particulars that you need to consider – in order to get a better idea of what you are agreeing to, and what is expected of you moving forward…

Your Information

As an independent contractor, there are some things that need to be confirmed about who you are, and how you might be able to go about running a business. In particular, FedEx will want to get a better understanding of:

  • Your background and finances
  • Your approach to customer service
  • Your current resources
  • Your experience in safety
  • Your plans for dealing with pickups
  • Your loss and damage-avoidance plan
  • Your contingency (backup) situations
  • Your legal compliance

Keep in mind that when you enter into a contract with FedEx, you are gaining an advantage based on their place in the market. That is why they have such a vested interested in working with the best owners because they rely on them to maintain their commitment to service and results.

Contracting Standards

The following are some of the basic contracting standards that you need to agree to when you begin working with FedEx and running your very own FedEx route. They are as follows:

  • You must hire and train your own staff and drivers.
  • Wages, salaries, benefits, taxes, unemployment, workers’ compensation, and other fees determined by where you live fall on you.
  • Payroll, employment records, and complying with local (and federal laws) are all your responsibility.
  • You have to provide FedEx-brand uniforms for all of your employees.
  • Ownership (or lease) of your own fleet of vehicles to service your route.
  • In that same vein, it is your job to obtain insurance coverage for your vehicles in the event of an accident.
  • For routes involving pickup and delivery, you have to provide vehicles which are suited to day-to-day operations of servicing your route (step vans or cargo vans).

Negotiating Contracts

When you work with FedEx as an independent contractor, you are effectively charging the company each time that you do work for them. Think of FedEx as your client with whom you must uphold a certain level of service to retain their business. In turn, when you do the job and do it well, you charge FedEx for your (and your team’s) services.

The most typical contract charges that you will see for contractors with FedEx include:

  • Service Charge – Along the same lines as your base pay.
  • Stop Charge – A charge for every stop that one of your driver’s makes.
  • Surge Stop Charge – The same as above, for each stop that goes above the daily maximum. Think of it like going above and beyond and reaping the rewards.
  • Per Stop Fuel Surcharge – FedEx will help pay for gas and will do so as gas fluctuates in the market.
  • Package Charge – For every package delivered, you get to negotiate the amount that FedEx will pay for you doing the job right.

There are also incentives you need to consider, including:

  • Period Safety Incentive (PSI) – Paid every four weeks, this is to reward safety in the workplace (wherein no accidents take place).
  • Customer Service Incentive (CSI) – Paid every four weeks, as well, this is a charge that is based on exemplary customer service in the field.

Following that, there are a few more miscellaneous charges that we should note:

  • New Account Startup Charge – A charge associated with a business along with your route opening up a new account to receive deliveries or take pickups.
  • Apparel Brand Promo Charge – A charge for when your team is wearing FedEx-brand appropriate apparel.
  • Vehicle Brand Charge – If your vehicle has a FedEx logo on it, you get to reap the rewards of an additional charge.

Understanding Contracts and Contractors

The key that you need to know about your contract with FedEx is that your charges are negotiable. This will all come down to your previous experience with FedEx, your past performance, and the types of routes you are operating.

When you decide to invest in a FedEx route, you are investing in a lifestyle that allows your work ethic to bolster your business and propel you forward. FedEx lays the groundwork for what can be a super successful career in logistics – it all comes down to how you perform, what you negotiate, and how you deliver (literally and figuratively).