Pros and Cons of FedEx Ground Linehaul — Route Consultant (2024)

What You Need to Know Before Buying a FedEx Linehaul Route

There are two distinct types of FedEx Ground routes: pick-up and delivery (P&D) routes or linehaul runs.

Linehaul runs are a lucrative and risky business. Some contractors say linehaul runs are 90% boredom and 10% terror. But they can be an incredibly profitable investment for the right contractor.

Are you the right contractor for a linehaul run?

The basics of a linehaul run

While P&D operates exclusively during the day, linehaul often operates at night. Because linehaul runs are not tied to business or residential delivery, linehaul operators have the flexibility to drive during lower traffic times and in 24-hour team setups.

Runs are long-distance, ranging from several hundred to several thousand miles. Some linehaul runs will have specified start and end locations while others will have a known start location, but varying destinations.

Linehaul drivers must hold a valid CDL license and must meet specific driver experience requirements. Due to the nature of the linehaul driving profession, as well as a generational shift in job priorities, there is a mass shortage of CDL licensed drivers in the United States.

Linehaul runs require semi-trucks in your fleet. These 18-wheelers are expensive to buy and expensive to repair. It’s critical that new contractors budget for either long-term leases or the purchase of new trucks and significant repairs to existing semi-trucks.

Additionally, linehaul run contractors must consider the known risks of operating such large vehicles: semi-truck accidents may result in injuries or fatalities.

The structure of a linehaul run

A linehaul run structures their drivers as either solo drivers or team drivers.

Solo drivers cover shorter distances between each point and, typically, the driver returns to home base at the end of each shift. Driving teams usually consist of two drivers on cross-country runs, rotating behind the wheel. These drivers may be away from the home base for days at a time, but are guaranteed to be back at the end of the week.

Linehaul runs encompass three types of runs: dedicated, unassigned, and spots.

  • Dedicated runs have the same starting and stopping destination on each trip. For example, Nashville to Dallas. The tractor assigned to that run will travel from Nashville to Dallas and back every single time.

  • Unassigned runs have a defined starting location, but do not have a regularly assigned destination. They travel to varied destinations on an as-needed basis. Your driver may always start in Nashville, but he/she may travel to Denver, Los Angeles, New York, or Chicago (based on the business requirements).

  • Spot runs mimic P&D routes. Drivers have a small, designated coverage area and travel out of the home base daily. Unlike P&D routes, however, drivers operate semi-trucks with larger packages. Spot runs will deliver a trailer full of goods to and/or from a business such as a Target. These can be consistent throughout the year, but they are not contractually guaranteed.

Dedicated runs are highly desirable for both owners and drivers. These are guaranteed runs that allow route owners to forecast revenue. Further, drivers prefer the consistency of dedicated runs—they know when they’ll be leaving, where they’ll be going, and when they’ll be home.

Conversely, securing and paying drivers for unassigned runs can be difficult as the revenue on the unassigned runs is inconsistent and varies run to run. We always advise that operations guarantee a minimum number of miles per week for their drivers (including those that drive unassigned runs).

Spot runs do not always require additional trucks and drivers. FedEx operations may be able to assign linehaul drivers to complete spot runs before or after their longer runs—this increases efficiency in the overall business.

The risks and rewards of a linehaul run

The risks of linehaul runs relate to the size of everything.

The cost of linehaul runs is higher per run (as compared with a single P&D route). Your trucks are larger, and you inherit the known risks of a large vehicle on the road. Plus, these trucks are expensive to buy and expensive to repair. You need to have a healthy budget for capital projects.

You also have higher costs of business: insurance costs, employee salaries, maintenance costs, etc. And the penalties for late runs/deliveries are higher.

There's also a severe shortage of CDL drivers in the United States which means you might have difficulty putting drivers in the driver seat of your trucks.

All of that being said, the revenue is also bigger. Linehaul contracts operate based on miles. Thus, a run from New Jersey to California could bring in $10,000 of revenue for the week. One linehaul tractor-trailer may generate 5X the revenue that a P&D truck generates.

Linehaul operations may have profit margins between 20% and 45% of Total Revenue. Linehaul businesses with more solo runs will have margins closer to 20%-30% and those with mostly team runs may have margins upwards of 45%.

Team linehaul runs have the highest profit margins in all of the FedEx Ground portfolio.

Are you the right contractor for a linehaul run?

So, how do you know if you’re ready for the size of a linehaul run?

For many new contractors, it can be easier to begin with FedEx Ground P&D routes and then level up to linehaul runs. Owning and operating FedEx Ground P&D routes does not prevent you from adding linehaul runs later on. Rather, it’s a great way to learn the ins and outs of a FedEx Ground business with lower risk.

Additionally, linehaul runs are a great way to scale an existing business.

Businesses of all types benefit from increases in efficiency as they scale. For example, each truck you add to your operation decreases per truck costs since you’re able to share maintenance plans, insurance, and tools between trucks.

Many FedEx Ground route business expenses benefit from scale such as advertising, insurance, equipment rentals, uniforms and laundry, legal, office supplies, and maintenance.

Our team is composed of many former and current contractors. We have decades of combined experience in logistics operations and e-commerce investments. Our real-world contracting team can help you learn how to run your operations.

If you already own a FedEx Ground P&D route OR you think you can take on the larger risk and reward immediately, here are ways to know you are a right fit to be a linehaul contractor:

  • You have the ability to finance or purchase a linehaul run AND you have the ability to finance or cover high-cost operations

  • You have logistics experience and know-how to navigate serious risk in the industry

  • You have experience planning and executing for contingencies

  • You understand that you or an appointed manager will need to be available 24/7 to help solve problems

If you'd like to learn about the pros and cons of P&D as well, check out .

Want to Learn More?

Dive into the world of logistics and delivery routes with our complimentary FedEx Ground Routes 101 E-Course. This course will teach you the fundamentals of delivery routes so that you can decide if this is an industry worth pursuing further. Whether you’re interested in FedEx Ground routes, Amazon routes, Bread routes, or other logistics operations, we are here to help. Enroll now for free and take the first step towards entrepreneurship in the e-commerce space.

Pros and Cons of FedEx Ground Linehaul — Route Consultant (2024)

FAQs

Are FedEx linehaul routes worth it? ›

There are two distinct types of FedEx Ground routes: pick-up and delivery (P&D) routes or linehaul runs. Linehaul runs are a lucrative and risky business. Some contractors say linehaul runs are 90% boredom and 10% terror. But they can be an incredibly profitable investment for the right contractor.

What is the profit margin on FedEx linehaul? ›

Linehaul portfolios with mostly or all solo runs will have profit margins closer to the 15-25% range. Operations with a heavy composition of team runs have the potential for higher profit margins: up near 30%-35%. Team linehaul runs have the highest profit margin potential of the FedEx Ground portfolio.

How much money can you make owning a FedEx route? ›

All these factors in mind, the average annual profit for a FedEx route has been reported at between $30,000 – $40,000. While it might not seem like your on your way to becoming a millionaire, the best part about owning a FedEx route is that you don't have to own just one!

What are FedEx linehaul routes? ›

Linehaul — Transporting FedEx owned trailers over the road from station to hub, hub to hub, and hub to station — and, in some cases, between customer locations and stations or hubs (“spotted trailers” or “spots”)

How does FedEx choose routes? ›

FedEx leverages cutting-edge technology to stay ahead in the logistics game. They use advanced algorithms and machine learning models to predict the best delivery routes. These systems account for real-time traffic updates, road closures, and even historical data on delivery times.

Are routes a good investment? ›

Routes are an excellent first step into business ownership

With typical established businesses for sale you can see historical income which makes it less risky. However, the complexity and headaches can be tremendous.

How much profit does a FedEx Ground contractor make? ›

On average, FedEx routes demonstrate profit margins ranging from 10-35%, with potential annual earnings for contractors between $100,000 and $250,000. The key lies in aligning expectations, leveraging industry insights, and embracing the challenges of managing a dynamic business.

What is linehaul revenue? ›

Line Haul Revenue means all revenue – billed by COMPANY to shippers, consignees, brokers, logistics companies, freight forwarders, other carriers, or other customers (referred to together as "COMPANY's Customer" throughout this Exhibit and the Agreement) in connection with an ISR Shipment performed by COMPANY trucks or ...

Is owning a FedEx route passive income? ›

Buying a delivery route allows you to tap into this growing industry and establish a consistent and passive source of income. For example, a FedEx route can generate an average annual profit ranging from $30,000 to $40,000.

Can you own multiple FedEx routes? ›

Once purchase more than one FedEx route, you're going to need two things: vehicles and people. You are going to have to buy your own trucks and hire your own drivers. Those drivers must also be approved by FedEx even though they are your subcontractors.

Can you make a lot of money at FedEx? ›

The average FedEx salary ranges from approximately $31,668 per year for Customer Service Associate / Cashier to $129,071 per year for Principal. Average FedEx hourly pay ranges from approximately $13.10 per hour for Cashier to $35.84 per hour for Senior Vehicle Technician.

Are FedEx linehaul routes profitable? ›

Estimating FedEx Linehaul Profit Margins. When it comes to running a FedEx route, the profit margins usually stay around 20%, according to Rick Dunn, a seasoned FedEx contractor. To break it down, if a run is worth $100,000, $80,000 goes into covering operational expenses, and the route owner pockets $20,000.

What is the difference between linehaul and trucking? ›

The main difference between line haul truck driving a long-haul truck driving is the distance you drive. Long-haul drivers are on the road for a longer period and could be away from their homes for weeks at a time. Line haul truckers almost always head home after one shift.

What are the different types of linehaul? ›

Typical Vehicle Types
  • Auto Hauler.
  • Flatbed Trailer.
  • Livestock Hauler.
  • Tanker.
  • Bulk Hauler.
  • General Freight.

Why do people buy FedEx routes? ›

They provide reliable revenue

One of the most significant advantages of owning a FedEx route is that the business will have a reliable income.

What multiple do FedEx routes sell for? ›

Revenue (REV) Multiple: FedEx routes typically sell at an average REV multiple between 0.64x – 0.81x. This multiple represents the total revenue generated by a FedEx route and can help estimate the business's value.

Do FedEx drivers always have the same route? ›

Once orders are processed in the FedEx system, they are automatically assigned to a particular route by zip or postal code.

References

Top Articles
Latest Posts
Recommended Articles
Article information

Author: Gov. Deandrea McKenzie

Last Updated:

Views: 5597

Rating: 4.6 / 5 (66 voted)

Reviews: 89% of readers found this page helpful

Author information

Name: Gov. Deandrea McKenzie

Birthday: 2001-01-17

Address: Suite 769 2454 Marsha Coves, Debbieton, MS 95002

Phone: +813077629322

Job: Real-Estate Executive

Hobby: Archery, Metal detecting, Kitesurfing, Genealogy, Kitesurfing, Calligraphy, Roller skating

Introduction: My name is Gov. Deandrea McKenzie, I am a spotless, clean, glamorous, sparkling, adventurous, nice, brainy person who loves writing and wants to share my knowledge and understanding with you.