Learning the Lingo: What Do All Those FedEx Terms Mean?
If you are considering buying FedEx routes and becoming a FedEx contractor, you have likely spent some time online researching the different types of independent contractor opportunities that are available and what they involve. In doing so, you probably came across some words or acronyms that you were unfamiliar with—things like ISP, linehaul, P&D, and spot runs.
To help you understand some of the more common financial and route-related terminology associated with purchasing and owning FedEx routes, KR Capital has put together the following guide for prospective buyers.
ISP: ISP stands for independent service provider. You can learn more about the FedEx ISP model here.
C Corp, S Corp: FedEx requires its contractors to be incorporated as either a C corporation (C corp) or an S corporation (S corp). The “C” and the “S” refer to how each corporation is taxed under the Internal Revenue Code: Subchapter C and Subchapter S. You can learn more about that here.
FEIN: As part of the FedEx approval process, you will need to obtain a federal employer identification number, or FEIN.
RFI: Your RFI (request for information) is another term for the proposed business plan you will need to provide as a potential FedEx route buyer. You can view a sample RFI on our helpful Buyer Forms page.
Total revenue/total expenses: When purchasing FedEx routes, the “total revenue” refers to all income generated by the business for the year. “Total expenses” represents all outgoing money paid by the business (e.g., payroll, vehicle expenses, taxes).
Net operating income (NOI): Determined by subtracting the total expenses from the total revenue, the net operating income is the income that remains once the business has paid all the necessary expenses.
P&D: With pick-up and delivery (P&D) routes, contractors operate a fleet of vans or small trucks to pick up packages and transport them to commercial businesses and residential locations. Learn more here.
Linehaul: With linehaul routes, drivers are transporting semi trucks between FedEx Ground hubs all over the country, either individually or in teams. Learn more here.
Dedicated runs, unassigned runs, spot runs: These are the three types of runs on the linehaul side of the FedEx business. Dedicated runs operate continuously with the same origin and destination on each run. Unassigned runs will originate in the same place but the destination will vary depending on the needs of FedEx. Spot runs are a hybrid between P&D and linehaul runs; they utilize semi trucks to service regional pickup and deliveries for large companies (such as Walmart).
Fleet: This refers to the collection of vehicles you use to pick up and deliver packages (e.g., pickup trucks, vans, semi trucks).
P&L statement: A profit and loss (P&L) statement is a financial document that lists all revenue and expenses for a business during a specific time period. Read more here about how FedEx routes are valued.
1099: All FedEx route owners are paid as 1099 independent contractors. Form 1099 is an IRS tax form used to record the income you receive as an independent contractor. You can find out more about that here.
Ready to buy FedEx routes and become a FedEx ISP?
As a premier FedEx route brokerage firm, KR Capital has developed a robust inventory of resources and partnerships that is second to none. With more than $150 million in successful route sales to our credit, our team can provide detailed information on route pricing and valuation, the FedEx business model and approval process, and how to obtain financing to purchase your routes.