Is There a Limit on How Many FedEx Routes a Contractor Can Own?
If you have been considering starting your own business, partnering with a trusted brand like FedEx is a great place to start. Not only is the delivery industry incredibly lucrative, but the FedEx name represents a global leader in logistics with nearly half a century of growth and success to its name.
As you take the time to learn about FedEx contracting and how it works, you may have some questions about finding available routes and how to purchase those routes. In particular, how many routes can a contractor have? And is there a limit on the number of routes one can buy?
First, you will need to decide between P&D routes and linehaul routes.
New contractors will often choose to start with pickup and delivery (P&D) routes, which involves operating a fleet of vans or small trucks to pick up and transport packages to and from commercial businesses and residential locations.
Considered a good choice for someone trying to break into the business of owning FedEx routes, P&D routes typically require less capital to purchase and are less expensive to maintain over time. In addition, there are fewer driver requirements.
With linehaul routes, drivers are transporting semi trucks between FedEx Ground hubs all over the country, either individually or in teams. The runs are considerably longer (several hundred to several thousand miles) and drivers need to have a valid commercial driver’s license (CDL).
Though more expensive to purchase, linehaul route businesses typically offer larger revenues and cash flows when compared with P&D route businesses; contracts pay on a per-mile basis, meaning a single run may generate over four times more revenue than a P&D route.
Once you decide, there is no limit on how many routes you can own.
In fact, numerous FedEx Ground contractors own and operate upwards of 50 to 100 routes. But for those just starting out, 5 to 10 routes may be a more manageable number and enough to provide a solid return on your investment. Then, as you become more comfortable with route ownership, purchasing additional routes can help you grow and scale your business.
Keep in mind, however, that FedEx will sometimes apply restrictions to how large a contractor may become in a given terminal. These limitations help to guard against being overly reliant on any one contractor in a specific area, but there are sometimes exceptions to the rule.
Remember that more routes means more responsibility.
While a lucrative investment, purchasing multiple routes also means more vehicles, more drivers, and more responsibility. However, by implementing efficient business practices and utilizing technology where applicable, smart contractors can easily offset any risks and enjoy the additional profits.
Are you ready to purchase routes but not sure where to begin?
Partnering with an experienced FedEx brokerage firm is the first step toward building the delivery business you envision. For nearly a decade, KR Capital has been working with potential buyers to help them find delivery routes for sale, obtain financing, and successfully navigate the FedEx approval process. Call KR Capital today at (503) 664-0753 or fill out our online form to hear back from us shortly.