For many FedEx contractors, the news of the impending ISP transition has likely been at the forefront of your mind – particularly if your routes fall below the imposed ISP minimums. As most contractors know by now, FedEx has implemented a nationwide ISP rollout that is slated to transition all states to ISP by 2020. For those contractors whose routes fall below the 5 PSA/500 stop minimum, this announcement is even more significant – and perhaps a little unsettling. It should be noted that certain states and terminals have minimums that take exception to this rule. However, the majority of contractors around the country are faced with a very important question to ask: What do I do if my routes aren’t ISP compliant?
As nationwide brokers of FedEx routes, our #1 priority is to properly prepare and sell FedEx routes to qualified buyers for a great price. However, more and more contractors are finding themselves below the ISP minimums and looking for answers. Here are some things to consider:
- Assess just how far below the minimums you actually are. You will likely want to focus on your stop count and weigh that against the deadline for your ISP conversion. Your FedEx colleagues should be able to give you some insight as to how your stop count is calculated under the “ISP lens”. For contractors who are reasonably close to the ISP threshold and growing at a good rate, you may be able to reach your ISP minimum simply through organic growth, so long as the deadline is far enough out. If it does not look like organic growth will get you there, it may be time to take a different course of action sooner than later.
- Take inventory of the contractors around you. Try and get a sense for which contractors have routes near yours, and determine whether their routes meet the ISP minimums. As we know, FedEx ultimately wants the contractors’ routes to be reasonably contiguous, and ideally have the ground and home delivery routes overlap. In the event your service areas are next to another contractor who falls below the ISP minimums, you may need to talk about combining forces. In this scenario, you and your neighboring contractor may need to discuss the possibility of merging your routes, or jointly selling them to an outside buyer.
- Get a sense for which contractors in your terminal are above the ISP minimums. If your neighboring contractor is unable or unwilling to merge with your routes, a sale to an ISP compliant contractor may be your best (or only) option. As the deadline for ISP conversion draws closer, however, your negotiating leverage may decrease as the prospective buyer knows you are in a position where you must sell. This is all the reason to start sooner and understand what your options are.
- Consider growth by acquisition. If you’re a growth-minded contractor, this may be a great opportunity for you to expand by purchasing routes in nearby service areas. Don’t rule this option out simply because you may not have the liquid cash to purchase your neighbor’s routes – financing IS available. Having sold over $40 million in FedEx routes, our firm has scoured the country and identified very viable financing sources. If you’d like to learn more about these options, please contact us.
Bottom line: We’re here to help. Regardless of whether you’re ISP compliant or not, our goal is to help you understand your options today and ultimately sell your routes for a great price when the time is right. Don’t wait until the last minute. If you’d like to schedule a no-cost consultation to discuss your options, please contact us.