Much of "The Company's" success is due to the over 7,500 independent business owners who own the ground and home delivery routes, who delivery and pickup packages, serving as the primary point of customer contact for "The Company's" Package Delivery Systems, Inc. These entrepreneurs hire, train and develop delivery personnel, purchase and maintain vehicles and other equipment, and oversee the day-to-day operations of their Contracted Service Area (CSA).
You can find Routes for sale through "The Company's" and business brokerage sites, but probably the easiest way is by word of mouth. If you have contacts in the logistics or shipping industries, put out some feelers and find out if there are routes for sale in locations that are of interest to you. This is how most current owners came to know of the opportunity.
However, usually there are not many of the package delivery routes here as most of the internal sales transactions within the system are done between contractors generally at the same terminal.
Contrary to what you might think, most people who buy ISP routes don’t have commercial driving or trucking experience. You really don't need such experience to become an Independent Service Provider.
To own an ISP route, you will need to be an "approved" buyer and sign contract to become an Independent Service Provider. This means you are not an employee of "The Company" and will not receive health insurance, retirement plans, or other benefits from "The Company".
The main requirement for working with is that the company is that you will need to set up your business as a Corporation, and you will be responsible for the following:
Independent Service Providers (ISP), must comply with "The Company" it operating guidelines, which include and not limited to: customer facing employees are required to wear company uniforms, and delivery drivers will need meet/exceed minimum driver qualifications and safety standards.
Today, most ISPs are owner-operators, which means that in addition to owning the business, they also drive and deliver packages on a full-time basis or drive/delivery packages when one of their employees calls in sick or is on vacation. If you plan on driving, you will have to meet driving safety rules, which include at a minimum (see your contract for additional driving requirements):
The Independent Service Provider (ISP) contract is between 1 and 3 years and is renegotiated usually within 60-90 days prior to the end of the contract termination.
Before beginning the search for a ISP route, you should identify the type of delivery business you would like to purchase. There are two main types of independent contractor opportunities that exist today:
Ground - pickup and delivery (P&D) routes – Specifically the delivery to residential or commercial customers. These are protected Contracted Service Areas (CSA) to delivery and pick up packages on a daily basis. Independent Service Providers own and operate each CSA, they hire, train and develop their
employees to do the driving, delivering and pick up of packages under 150 lbs. to commercial and residential (home delivery) locations.
Line Haul routes – Independent Service Providers, using tractor trailers, delivery freight between FedEx terminals or hubs both intrastate and interstate depending on the specific line haul agreement. These routes are usually cost more to purchase but tend to me more profitable that the P&D routes.
Some Independent Service Providers (ISPs) choose to buy more than one CSA and are able to become more profitable my scaling resources across both areas. The new ISP agreement with which will become the norm across the country by 2020 requires that each ISP consist of a minimum of 5 routes and at least 500 stops each day.
The largest expense buckets for owning/operating a ground delivery business include:
The average contracted service area (CSA) or route sells between 2.5 - 4.0 times free cash flow or earnings before interest, tax, depreciation and amortization (EBITDA) which is a measure of Independent Service Providers operating performance. Pre-ISP or IC routes sell for on average $100K/route which includes the vehicle.
Other operating expenses include:
Owning and operating a delivery business can be very rewarding. However, this business is not for the faint of heart as there is demanding service standards and severe consequences for not meeting those service standards.
SMR Capital, LLC has partnered with several financial organizations who specialize in providing financing for new and existing Independent Service Providers.
Typical loan terms is financing up to 8 years and interest rate of 7.5 - 8 percent depending on the credit worthiness of the buyer, down payment and/or if there is any seller financing.