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Linehaul Peak Season 2026: Drivers, Equipment, Incentives, and Points — Transcript

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0:33Welcome back to Industry Insights Live.
0:36Uh, for those of you who may be here for the first time or, or don't know
0:39us well, my name's Josh Gregory.
0:41I'm the Vice President of Operations here at Route Consultant.
0:44If you're not familiar with us, uh, our team ran hundreds of routes across
0:48the country in both pickup and delivery and linehaul in the FedEx space.
0:51And today we're here for a couple of reasons.
0:54Uh, one is to help new buyers that are looking to get into the space or any of
0:58these industries for the first time and really help you go in eyes wide open.
1:02And then on the other side of the coin, uh, helping current contractors
1:05that are trying to find efficiencies in their business, additional
1:08profitability, and sometimes just navigating whatever new craziness
1:11is hitting the industry this week.
1:13So, uh, I'm not alone here today.
1:15Uh, I, I also have Alex Frum here, and many of you may know him already.
1:19He's been on here before.
1:21Uh, but Alex is a linehaul contractor with tons of experience
1:24that operates across the country.
1:26So it is always a pleasure for me to have Alex on here.
1:29Alex, if you wanna go ahead and say hello.
1:31Hello, everyone.
1:32And, uh, Josh, thank you for the invite.
1:33It's always great being down here in Nashville with you.
1:36Yeah, it's always… It's nice when I get to see people in person
1:38instead of just talking into a video screen with no one around.
1:43Yes, it is.
1:44Uh, and so just a couple of quick notes before we get started for anybody.
1:47A- as we're talking today, you can ask questions at any time.
1:50Uh, we're gonna have time at the end where, you know, if there are
1:53questions that are still left, we're gonna go through them.
1:55But if there are questions that come up as we're talking, feel free to go ahead
1:58and type them in so we can get to them.
2:00Uh, the… Importantly, though, if you put it in the chat, I might miss it.
2:04So ideally put it in the Q&A button, uh, at the bottom of the window.
2:08If you don't see it, you might have to click More with the little
2:10three dots and then click Q&A.
2:12But ideally type those questions into the Q&A.
2:15If they come through the chat, I'll still try to find them, still
2:17try to make sure that we ask those questions, but Q&A will guarantee it.
2:21So, uh, also, just as a, as a heads-up for anybody who is a new investor who's
2:27still trying to figure out if this is the right space for them, we do events
2:31just about every month here at our office, and our next one coming up is,
2:35uh, almost exactly a month from today.
2:37So October 23rd is our next one in our office here in Nashville.
2:41So if you are a new investor still trying to evaluate, you
2:44know, "Is this the space for me?
2:45Do I like P&D?
2:46Do I like linehaul?
2:48Do I like none of them?" Uh, our team here will answer all of those
2:51questions and really try to give you as much information as you can in a day.
2:55It's free.
2:56We'll give you food, and we'll give you drink, and hopefully give you a good
2:58time as well and make sure that coming out of it, you have as many questions
3:01answered as, as humanly possible.
3:04Uh, so October 23rd is our next one, but we continue to
3:06have those throughout the year.
3:07So if you're looking for those, you just go to our Events page on our
3:10website, and you can see our, our whole list for this year and our,
3:13our list for next year coming soon.
3:15So, uh, for today though, time of year it is, uh, we are heading rapidly towards
3:21peak season, which is the busiest, most exciting, most stressful in a lot of
3:25ways, time of year in any delivery space.
3:28We're talking FedEx in particular though today.
3:31So, um, if you were here about a month ago, maybe something similar to that, we
3:35did one of these where we were focused on preparing and talking about peak
3:38season for the pickup and delivery space.
3:41But today we're focused on the linehaul space, which is
3:43why we've got Alex on here.
3:44So, um, Alex, it, it probably just is kind of the, the easiest way,
3:49in particular if you're new and are not currently a contractor
3:52where this is hopefully something you're thinking about all the time.
3:54If you could just give everybody a quick overview of kind of what the peak
3:58season looks like in terms of dates to, to kind of help them visualize
4:03what this looks like for contractors.
4:06Yeah, sure.
4:06So, uh, peak is a little bit different for linehaul contractors compared to P&D.
4:10P&D, it's an extraordinarily stressful event.
4:14Um, you're doubling the size, maybe even tripling the size of your operation.
4:20Uh, you're running pickup vans.
4:22You have a quota that you need to meet.
4:25You have a responsibility to hit certain levels of delivery packages in your CSA.
4:31Um, I really don't know much about P&D other than that it's a very
4:35stressful time for P&D contractors.
4:37Uh, for linehaul, it's a different story, okay?
4:40You… There is no requirement to take on additional work if you don't want it.
4:44Um, there are a lot of opportunities to take on additional, um, uh, work.
4:49Uh, there is a lot of incentives that FedEx, uh, pr- promotes and gives
4:53you, whether it's, uh, straight cash, whether it's cents per mile, or, uh,
4:59uh, points that you can use to bid on, uh, future, uh, assigned runs.
5:04But in general, peak is a different story for Fe- uh, on the linehaul side.
5:08So peak for us generally runs from about- The first or second
5:12week of November through the s- first or second week of January.
5:16Um, it is stressful, uh, but definitely not as stressful as what it is
5:21on the, uh, on the linehaul side.
5:23We're much more, um… You know, you can't go out and double the size of your fleet.
5:29You can't go out and triple the size of your fleet.
5:31There's just not that kind of volume or that availability of inventory out there.
5:36Um, there are organizations that rent tractors just like they do to P&D.
5:40You can go to Ryder or go to Penske.
5:43But we have a lot more requirements, and it's, it's a much more finite workforce,
5:48so it's harder to really expand.
5:51Um, for me, peak planning starts after peak ends.
5:55We do an after action review and look at what we've done wrong, what we did right.
6:00You know, what could we have done better?
6:01How could we have made better utilization of our operations and
6:04our, the tractors we have in a fleet?
6:06You know, I happen to have 45 tractors.
6:09Of those 45 tractors, 36 of them are assigned.
6:12So that means I have the ability to incr- ex- you know, pick up an additional
6:17nine runs just using my spares.
6:19Now, do I want to use all my spares?
6:21You know, so we're doing analysis of that.
6:23Like, does it make sense for us to use 100% of our spares or do we wanna have,
6:28you know, one or two spare tractors available in each of my locations to
6:31make sure that if a tractor goes down, we can still meet the needs of FedEx?
6:35Um, and then we're looking at, okay, you know, which drivers do we wanna keep
6:39that we hired, you know, for peak, and which drivers do, you know, we, you know,
6:43unfortunately just don't have a job for?
6:45Um, because after peak you're gonna go back into your normal run, um, operation.
6:51And then we're looking at, okay, what runs did we like that we
6:53did and what runs did we didn't?
6:55Because- Um, during peak you have the ability to pick up other lanes
7:01potentially that you don't normally do.
7:03Um, and so, you know, that might be an opportunity for
7:06you to say, "You know what?
7:07I really like doing Cedar Rapids.
7:09We wanna do it again next year." Or, "I really dislike going to Portland, Oregon.
7:13I don't ever wanna do that again."
7:15So, and nothing against Portland, Oregon or, and nothing about Cedar Rapids.
7:19It's just the, you know, where my runs originate and, you know, the routes I'm
7:24taking and what are the weather conditions along those routes have a lot to do
7:28with how successful you can be at peak.
7:30Um, but yeah.
7:31So I mean, so that's what we're doing.
7:32So right now we're in constant conversations with FedEx about what
7:36are their needs and what can we, um, do to provide additional power
7:42and additional resources to FedEx.
7:44Um, as opposed to like the P&D side, I don't ever rent tractors.
7:49Um, I just u- utilize my spare capacity.
7:53Uh, sometimes I will buy tractors now, um, with the plan that I'm
7:57going to rep- uh, retire older tractors once the new year ends.
8:02And so there's, you know, there's the logistics of understanding how
8:05that works, and how do I get out of my contract with Motive or with
8:09Lytx to be able to make that work?
8:12Um, given the Motive… uh, the situation with Motive now, I am not
8:15gonna be doing that because Motive ties you into a three-year contract.
8:19So I'm just gonna utilize my spare capacity to, um, to provide
8:24additional power to FedEx.
8:26Can you talk for everybody a little bit about what FedEx, like what kind of is the
8:32mindset from FedEx that you're going into?
8:34So, so just for, for people who are thinking P&D, just like you're saying,
8:37you know, you own a territory with P&D where all of the volume that comes
8:41to the territory is yours, and what FedEx really needs you to understand
8:45is that there's a lot of volume coming.
8:47You have to have the resources to be ready for it, and they need you to understand
8:51what's expected and know that you're capable of keeping up with that volume.
8:55But like you said with linehaul, since it's not just automatic growth, how does
9:00FedEx come into these conversations?
9:01Are they saying, "You have to grow, and if you say no, you're in trouble"?
9:05Like, what, what does that back and forth look like?
9:07Well, no, I mean, there i- there is no requirement.
9:09You don't have to grow.
9:10Um, now there's opportunities to grow, and there's opportunities to build
9:14goodwill within the network by picking up additional rut lanes, and obviously
9:18there's additional revenue component.
9:20So your most profitable months are gonna be that November and December timeframe,
9:25even with the holidays that you have.
9:27So November's a short month, December's a long month.
9:31Um, you have a holiday in November, you have a holi- you have two
9:34holidays in December, but you're still picking up additional volume.
9:38Um, so what happens is, depending on the location and how many tractors you
9:42have, you'll have a conversation starting in September and then making finalized
9:46plans usually the first week of October about how many tractors you're gonna…
9:50or how much more additional power.
9:52So it can go from any number of different ways.
9:54So the first conversation you might have is that they'll say, "Hey,
9:59Black Friday is November," whatever it is, 28th, I think this year.
10:03It's a really, really late peak.
10:05Um, so think about the busiest part of peak is that period from Thanksgiving to
10:10about three or four days before Christmas.
10:13When Thanksgiving falls as late it as, as it is this year because it's the
10:18last Thursday in the year, that means that peak gets compressed, and so it's
10:22gonna be really, really busy for one or two weeks, um, because all the shippers
10:27are trying to get their packages out to their distribution centers and then,
10:31you know, from the distribution centers to FedEx, and then from FedEx to the
10:34actual customer, um, whether it's a business or whether it's an individual.
10:39So th- it's gonna be a compressed timeframe.
10:41But, like, this year FedEx reached out to me and said, "Hey, that, that
10:45Sunday and that Monday right after Thanksgiving, we need all hands on deck.
10:49How many additional tractors can you provide?" And so I looked at my staffing,
10:54and even with I wanted to, you know… And I looked at, you know, how many
10:56tractors I have, and they're like, "Hey, we wanna be able to run every single
11:00tractor, every single one of your lanes."
11:02And I was-- I turned around and said, "You know what?
11:04I can pick up everything except for three." And they're
11:07like, "Okay, no big deal.
11:08We appreciate it.
11:09No harm, no foul." You know, I just don't have the hours of service capabilities
11:13to be able to pick up additional. Have you r- ever had a situation where
11:17they say, "We need all hands on deck.
11:19How many additional can you provide?" And you say, "Zero." Like, have
11:22you had that conversation ever?
11:24No, I've never turned around and said zero because it's… There's… I
11:28mean, your drivers wanna make extra money, you wanna make extra money.
11:31So, um, in generally what happens is your runs are typically five-day runs,
11:37and they might expand to a six-day run or they might even expand to a
11:39seven-day run during that time period.
11:43And they're gonna try to c- encourage you to do it.
11:45You know, they, they have incentives with more money or they have
11:48incentives with more points.
11:50Um, and we can talk a little bit about the different programs that
11:53they utilize and the different ways you can do that in a second.
11:56But they're never gonna say, "No, you have to run," because it's impossible.
12:01With hours of service, you can't legally, you know, have a driver,
12:05you know, working seven days a week.
12:07You know, I don't know what the hours of service rules are in P&D, but I'm
12:10sure that they can probably do a lot different things with a d- a delivery
12:15driver that we can't do on the linehaul side, and that's because of the safety
12:19requirements embedded in the hours of service through the FMCSA and, and DOT.
12:24Yeah.
12:24A- and I think, you know, obviously that's something you should always
12:27be aware of when you're, when you have drivers, but this is the time of
12:30year where you need to be hyper-aware of hours of service and make sure
12:34there's not anything to be- Yeah.
12:35And, you know, one of the conversations I had just today, like, one of my senior
12:38managers turned around and said, "Hey, can you run this run six da- you know,
12:43can you do this run actually in six days?"
12:45And I said, "No, I cannot." I said, "You know, if you turned it into a bump, and we
12:50totally change the way the run runs, I can do six days worth of this run and probably
12:55meet the hour of service requirements.
12:57But if you actually make me go through," and it was a Memphis to Lehigh run,
13:01Lehigh, Pennsylvania from Memphis, Tennessee, which is a little bit over
13:051,000 miles, so it's 16 hours of driving.
13:08I can't turn it enough times to be able to do, you know, three through runs.
13:13So the, the issue there was, you know, how can we look and get, you
13:18know, achieve the result that FedEx is looking for in a different format.
13:22Yeah.
13:22And so that's the kind of… It's, it's a lot more give and take with FedEx, uh, in
13:26this kind of environment because you have to be conscious that your driver can only
13:29operate 70 hours in any eight-day period.
13:33Otherwise… And then he has to take a 34-hour reset, and FedEx is recognizes
13:36that they have to take that 34-hour reset so they can be able to run again.
13:41Yeah, and I think it's really important at this time of year to understand
13:45how important communication is.
13:46Mm-hmm.
13:47And know when you say no, that you have a reason for it.
13:49And when you say yes, so like o- on that flip side, do you say yes to
13:53everything that you can put a driver on?
13:56Or are there runs that you turn down for other reasons?
13:59Yeah, I mean, uh, you know, I turn down runs all the time.
14:02I don't wanna go on I-80 across Wyoming.
14:04Yeah.
14:05You know?
14:05I have no desire to go, you know, go through, you know, I-80
14:08in Wyoming during the winter.
14:10It's just a dangerous stretch of road.
14:12So, like, I'll volunteer.
14:13Like, I had a conversation.
14:15So I'm in, happened to be in Cincinnati in that market there, and they turn
14:19around and were like, "Hey, we would really like you to go to Pennsylvania."
14:21And I said, "How about I go to St. Louis instead?" And we met in the middle.
14:25I'm picking up a St. Louis run, and I'm picking up a Pennsylvania run.
14:28I'd rather go to St. Louis because it's below the snow
14:31line, typically, in Illinois.
14:34And so I, I know that I'm gonna be able to run that run.
14:37It might get rain, but I'm not gonna get any freezing rain or any snow.
14:40Whereas FedEx really wants me to go to Pennsylvania, and I know that I
14:43really don't want to because there's a lot more inclement weather there.
14:47But, you know, we met in the middle.
14:50I picked up one Pennsylvania, they gave me one St. Louis, and we're all good.
14:54But I generally try to, you know- Well, I, you know, if, if the only thing they
14:59offer me is going north, I'll take it.
15:01Mm-hmm.
15:02But I prefer to go south or go east, west from Cincinnati-
15:06Yeah … as much as possible.
15:07And I'll try to take, you know, depending on my f- you know, which
15:11drivers I'm looking to hire, you know, I'll, I'll talk to them ahead of time
15:15and be like, "Hey, I got this St. Louis run." "Oh, I love St. Louis.
15:18I'll do that." You know, a lot of my guys don't want to go to Chicago in the
15:21winter, and so I, I, you know, don't want to pick up add- additional Chicagos.
15:26You know, you have to know your workforce and what you're gonna be able to achieve.
15:29Yeah.
15:29That's what I was gonna say.
15:30You have to know your personnel this time of year, and your trucks.
15:33Make sure you don't send your, your truck that you're already worried about on your,
15:36uh- Yeah … most dangerous northern run.
15:38So just, I, I do think that's a really important consideration this time of
15:42year is that it's not just say yes to everything you have the resources for,
15:46it is there are important decisions to make around not just saying yes to
15:49everything because you're not required to.
15:51So you do have the ability to choose- Yeah
15:53the revenue that makes the s- most sense for your business.
15:55And then you wanna y- you wanna be able to c- uh, be careful and be thoughtful
15:59on what you're picking up, okay?
16:01So there's many different programs that FedEx is gonna utilize during peak.
16:05You have flex ups, you have temp runs, you have, uh, Schedule J, you have,
16:12um, Quad S, which is this new program that they haven't kind of, you know,
16:17really come out with yet, and then you have a program where you're able to
16:20turn in a run and pick up a new run just for that small period of time.
16:25So FedEx will look at, you know, what is the most efficient way that c-
16:29they can utilize the assets within their fleet, and they might s- come
16:33to you and say, "Hey, you know what?
16:35We know that you run Memphis to California every week.
16:38Well, we don't want you to run to California because we're gonna
16:40rail everything out of California.
16:42What we'd like you to do instead is do Cal- you know, Memphis to Cedar Rapids."
16:46Well, I'll pick that up because Memphis to Cedar Rapids is f- you know, 5,200
16:50miles a week, whereas my Memphis to California run is 4,700 m- miles a week.
16:55So I'm picking up an extra 500 miles.
16:56I wouldn't mind doing that.
16:58Schedule J, you know, is a, is an incentive program where you're
17:02guaranteeing a driver and a tractor is gonna be available six days a week.
17:07And then depending on the location, they're gonna say, "Okay, I want you
17:10to do whatever this run is." You know, for me, I picked up a Schedule J that's
17:14doing Hatties- Memphis to Hattiesburg.
17:16That's a great run.
17:17It's 600 miles each day.
17:19I'm heading south from Memphis.
17:21I don't really have to worry about weather, weather in that
17:23situation, so I like that one.
17:26You know, in NoKey I turned down all the Schedule J opportunities because I run
17:30a, a fleet that's all AM drivers, and most ScheduleJs are at the, are at night.
17:35So instead in that program I took a flex ups- So which means that, you
17:40know, I happen to have a lane that goes from Memphis to, say, St. Louis.
17:44I volunteer to pick up an additional Memphis to St.
17:47Louis.
17:48So that's a flex-up where I already have a tractor in the lane.
17:50They came back to me and said, "Hey, do you want to take on an additional
17:53one?" Just like they said, "Hey, you have a tractor in the lane
17:56that goes from Mem- uh, goes from Cincinnati to P- uh, Pennsylvania.
18:00Do you want to pick up an additional one?"
18:02So that's a flex-up.
18:03Temp runs are where you might have a tractor that's on the unassigned run
18:07rotation, um, so it can go anywhere, and they come around and say, "Hey, you
18:12know, you can continue to stay on the unassigned run rotation if you want.
18:15But for the six-week period during peak, we can say, you know, we're
18:19gonna guarantee you that you're gonna go, you know, Monday through Saturday.
18:23You know, if you're willing to pick up an extra day of work, we'll send you
18:26from Memphis to St. Louis every day." And so you know, your driver knows what
18:30he's gonna be doing, what… knows what time he's gonna be dispatching every day.
18:33You're picking up an extra day or whatever the incentive FedEx is using you to
18:38do a temp run, and then you pick up a temp run for that s- that tiny period.
18:42So instead of, like, taking a roll of the dice, you might get a short run, you
18:46might get a long run, now you know exactly how many miles you're getting on that.
18:49And then Quad S is a program, uh, that FedEx just started where
18:53they're, uh, they want to incentivize contractors to put on spare teams.
18:58And so for…
19:00We don't know all the details about it, but it's, in essence, is that tractor,
19:04that spare team that you're adding to the network, every mile that they, uh, they
19:08run, they're gonna get incentive pay for.
19:10Yeah.
19:11What that incentive pay is, we haven't heard the details yet,
19:14but you know, you can sign up for s- uh, Quad S tractors now.
19:18Okay.
19:18So there's… I, I, I do think that's important to understand with linehaul
19:23that's different is that there are a bunch of different types of additional
19:25reven- revenue opportunities, which again, gives you the flexibility to make choices
19:30around what's best for your business.
19:31But you have to kind of understand what each piece is and, and know what
19:35actually is best for your business to be able to make those decisions.
19:38Yeah.
19:38And then the last point, part of peak is that you, you get… Sometime
19:42in October, they're gonna announce what your peak threshold points are.
19:45And so what they do is they t- they look at a two to four-week
19:49period during the year and said, you averaged, say, 100,000 miles.
19:54And if you go over 110,000 miles during a week, you get 100 points per a
20:01tractor assigned to your, uh, your A1.
20:03If you go over 115,000 miles a week for that period, if you go up
20:08ab- 15% ab- above your threshold, you're gonna get 150 points.
20:12If you go over 20% of your threshold, you're gonna get 200 points per tractor.
20:16And so for every single week you can get more points, and then when the,
20:22uh, peak is over, you can assign those points to whatever tractor you want, and
20:26then you use those points obviously to bid on growth opport- or dedicated runs
20:31when, uh, dedicated runs get posted.
20:33Okay.
20:34Okay.
20:35Yeah.
20:36Um, how… A- and I don't know if, how much strategy there is now
20:41around that, but h- I know peak or, uh, points have changed a lot-
20:45Yeah … over the last year or so.
20:46So how are you thinking about your kind of peak point strategy for next
20:50year or for the, you know, for peak, and then where you distribute them?
20:53So there's been a lot of growth going through the FedEx network right
20:56now, a tremendous amount of growth.
20:58We went through, uh, obviously COVID, everybody grew a tremendous amount,
21:02then it's kind of like consolidation.
21:04And then with Network 2.0 there's been a lot more growth opportunities.
21:07So I went from 37 tractors to last year, now I'm up to 45 tractors now because
21:14of all those growth opportunities.
21:16And so what I use my points for is, the first thing I do is make sure all my
21:20tractors have a minimum of 365 points on them, because that is a minimum
21:24requirement that your tractor needs to have to be able to bid on a run.
21:27And then I really don't care where the points go because now you can pool
21:32all your points together, and you can use those points to bid on any run.
21:37So if I happen to have a tractor in Memphis, I can use points from Noke to
21:41bid on a run in Memphis, and vice versa.
21:45I… If I happen to have points in Memphis, I can use those points in
21:49Memphis to bid on a run in Noke.
21:50So in general, I just kind of distribute them across all my low-point tractors
21:54because you never know when FedEx might change the program again.
21:58Yeah.
21:58But the first thing I do is make sure all my tractors have 365 points, and then from
22:03there I allocate any additional points that I have to my unassigned runs and
22:08try to get them up as high as possible.
22:10I don't need-- I don't have any desire to add points to, you know, my, my
22:14dedicated runs because I already spent all the time and effort previously
22:19acquiring those dedicated runs.
22:21Yeah, that makes sense.
22:22So that's, that's the revenue side.
22:25So let's talk about some of the, the difficult ramp-up part of this.
22:29Yeah.
22:29So drivers in particular, you know, what's realistic for this time of
22:32year for hiring and onboarding?
22:34And, and do you view those people that you bring on as seasonal drivers?
22:38Or is it, you know, somebody that you're evaluating for a more permanent role?
22:41How do you think about this kind of process?
22:43So I mean, every year you lose drivers, okay?
22:46I mean, even, you know, I consider myself a really good contractor.
22:49I have drivers that have been with me for eight or nine years.
22:53Even in that situation, I'm still turning over the bottom 10% of my, my drivers.
22:57You have drivers who get burned out.
23:00You have drivers that fail drug tests.
23:02You have drivers that have marital issues.
23:03You have drivers who decide they want to move to some other location.
23:07They don't want to live in Memphis anymore.
23:09They want to live in Dallas.
23:10So you're always losing drivers.
23:12So for me, I tell all the drivers that I'm hiring during peak like,
23:16"Hey, this is a temporary job."
23:18You know, I make… I put it in writing and tell them that you have a job
23:21from November 8th to January 16th.
23:24Um, but, you know, if something opens up, I will give you the opportunity
23:29to, um, interview for that job and take that job if I have something open up.
23:34So for me, it's an evaluation period where I'm looking at these drivers and how they
23:37perform during this period, and I make…
23:40I have very clear criteria of what we're evaluating our drivers on during peak.
23:46You know, safe operation, doing your pre-trip and post-trip, showing up to
23:50work, not calling off, um, being, you know, most importantly being safe and
23:55making the right weather decisions because weather is very dangerous during peak.
23:59Um, so we're evaluating our drivers and, you know, if we happen to find some
24:03great drivers during peak, then we're gonna bring them on, uh, full time.
24:07Yeah.
24:08Do you find it's difficult to convince people to do seasonal, or do you
24:12find there's always people kind of looking for this seasonal job?
24:15You know, it depends on the market really.
24:17Um- Yeah … Memphis and Olive Branch seem to be a lot easier
24:20to find seasonal employees.
24:22Um, Noke is hit or miss.
24:23Um, you know, we usually have to, you know, work a little bit
24:26harder, but we can find them.
24:28Okay.
24:28Um, you know, there's always drivers looking for work.
24:33Um, they're always looking for quality contractors to work for.
24:37So if you're a quality contractor, if you're upfront and honest with them
24:40of what your expectations are and what the job is that is seasonal, you
24:44know, you're gonna find these guys who want to make, you know, additional
24:47money just to be able to, you know, buy more presents for their families.
24:51Yeah.
24:53Can you talk a little bit about what you do during peak season
24:55to try to keep people motivated?
24:57To, you know- Yeah … if you're working longer hours, more days, what do you do?
25:00So we, uh, so in Alpha Kilo we do a, uh, a couple things.
25:04Um, so, um, I, I, I don't allow any of my drivers to use PTO during
25:09peak, so I buy back all their PTO.
25:12Um, I do have incentive pay for them if they have to work on Thanksgiving.
25:16Um, and then I give out bonuses for, on top of Thanksgiving, Christmas, and New
25:21Year's, I have a, a year-end bonus that's tied to their performance during peak.
25:25So for me, um, it's tied to the number of call-offs that they have.
25:29So guys who don't call off at all will get a larger bonus than guys who do call off.
25:33Um, drivers who have no safety violations during peak will have
25:37a larger bonus than drivers who have safety violations during peak.
25:40So everything is wrapped around avail- uh, safety and availability during peak.
25:46Um, and then on top of that, um, uh, we do a year-end party after peak.
25:52Um, I do some weird stuff as well.
25:54I buy all my drivers steaks to celebrate, and I ship them directly to their house,
25:59so they usually get two pounds of sirloin and about four pounds of burger meat,
26:04or two to four pounds of burger meat.
26:05Some years I've changed up and did prime rib and New York strips.
26:10Somet- you know.
26:11Yeah.
26:11I talk, talk to my drivers and try to figure out what they do, but
26:14it's my way of saying thank you.
26:16Um, and then, you know, I'm reminding them when I give them swag throughout the year.
26:21Uh, right now, you know, in past years I've done hoodies, I've done
26:24jackets, I've done, uh, sweatshirts.
26:27Um- I do Carhartt jackets.
26:30You know, remind them that, you know, all of this is to build up that goodwill
26:34and to remind them of, like, you know, where we shine dur- is during peak.
26:38You know?
26:39So, you know, we work throughout the year.
26:42I don't ask a whole lot.
26:43I don't ask my drivers to work extra days.
26:45But during peak, I'm asking everybody to, you know, add an extra day to
26:49their workload if they have the hours of service available to be able to,
26:52to achieve that kind of, um, you know, to achieve the, the, the end goal
26:57that I'm trying to, uh, accomplish.
27:00Yeah.
27:01Yeah, and sometimes it's, it's the, not the monetary things.
27:04Oftentimes it's the steak or the, the hoodie- Uh-huh … that they
27:07remember more than the money and, and the- My drivers love the steaks.
27:10Yeah.
27:10You know.
27:11They, they… You know, I get, I get more pictures of steak
27:13than I get of anything else.
27:15You know.
27:16Yeah.
27:16Uh, they always look forward to it.
27:17They always want… You know, they're always wondering when, you
27:20know, when it's gonna get delivered.
27:21Um, I do some other things, like, uh, I announce the drivers of the
27:25year, uh, midway through the year.
27:27Um, and for those drivers, I give them, um, um, embroidered jackets
27:32from Carhartt that they really like.
27:34That's awesome.
27:34Um, so just little things like that.
27:36I mean, I know other contracts give out, uh, other contractors give
27:39out, you know, challenge coins.
27:41They'll give out, um, gift cards.
27:45Um, you know, I go with the, the clothing, you know.
27:48Yeah.
27:49Uh, the drivers seem to appreciate it, and they like clothing that represents
27:52the company that they work for.
27:53They take pride in it.
27:54Uh, they take pride in their vehicle, stuff like that.
27:57Yeah.
27:58A, a quick question that came through- Um … on the, from Travis
28:01that I missed, um, that tied back to what we were just talking about.
28:04So on the points side, when you're talking about how you get to allocate all of
28:08your points to whatever tractor you want, can those be allocated to any tractor?
28:13He's asking in particular does that include spares that
28:15aren't tied to an AR or URP.
28:16No.
28:17It only goes to tractors that are on your A1.
28:19Yeah.
28:19So it can go to unassigneds.
28:21It can go to assigns.
28:24Um, I've never actually tried to allocate points to a temp assign tractor.
28:29I, I don't know if that works or not.
28:32Um, but you cannot allocate points to a spare tractor.
28:35And in general, you know, with the way points are now, assuming they don't
28:39change anything, there's, uh, you know, there's not really a huge… I wouldn't
28:43say it would m- make sense to risk putting points on a temp when you can
28:46just Yeah … I… So like I said, I mean, I allo- I mean, the first thing
28:49I do is I go through all my tractors, my assigneds and my unassigned, and I
28:53bring every tractor up to 365 points.
28:56And then from there, I take my points and I allocate them to my unassigneds.
28:59Yeah.
29:01You know, the reason why for the unassi- you know, for your assigned, you, you
29:05know, you might have bid on a run and you realize after the fact that you
29:08really don't like that run- … or your drivers really don't like that run.
29:11I have a run right now that I kind of regret that I picked up, and
29:15so that tractor, I, you know, when I get 365 points on it, I, I'm
29:20gonna take a hard look at maybe trading that in for a different run.
29:24Yeah.
29:25So we've been talking about drivers, but on the equipment side, is there
29:29anything additional that you do or think about with the equipment?
29:31Yeah.
29:31So there's, there's a lot of prep work that we do for our tractors.
29:34So the, you know, the first thing that we do is all my managers
29:36go through all the tractors.
29:38They measure all the tires.
29:39So, um, they're looking at the tread depth on the tires, looking at the
29:42wear patterns on the tire, making sure that all our tractors look good.
29:46We get a mechanic to come out and check all the tractors' brakes.
29:49So this is what we're doing in October.
29:51At the same time, um, you know, we might, you know, bring forward a PM that's
29:58po- that we are projecting to be due in November or Dece- uh, in November,
30:02not in December, but in November.
30:03We'll proj- you know, we might pull some PMs due early, and then we're making
30:08sure that all our tractors are equipped with the things that we are, are, are
30:12required for an Alpha Kilo tractor.
30:14So we're making sure every tractor has a fifth wheel puller, every tractor has
30:17gloves, um, a headlamp so they can be able to see at night because remember,
30:22we're in, we're in the winter, so it gets darker earlier in the day, and
30:27it stays darker later in the morning.
30:29Um, making sure every vehicle has an up-to-date binder.
30:33All the vehicles have their safety equipment.
30:35You know, no issues with fire extinguishers, no
30:38issues with safety vests.
30:40Um, the tractors that are in the north where it gets below freezing,
30:44we're making sure all those have heater ports in them so they can plug
30:47into, um, the heater blocks, uh, to keep the engines warm overnight so
30:52that the, the diesel doesn't freeze.
30:54All our tractors are, uh… we're making sure all our tractors
30:57are equipped with their fluids.
30:58So, um, before we dispatch in the, in, starting in October, every tractor
31:03has to have, um, a couple gallons of oil in it, a couple gallons of
31:07antifreeze, and a couple, uh, gallons of windshield wiper, uh, fluid in them.
31:12Uh, so we're just double-checking to make sure everything looks good there.
31:14And then, you know, there are contractors who'll be like, "Oh, I'm
31:18just gonna, you know, allocate all my tractors." We like to keep one or two
31:23tractors in each location as a spare, depending on the number of tractors.
31:27So I don't ever go say I'm gonna say 45 tractors and give 45 tractors to
31:32FedEx because you have maintenance issues during this time period.
31:35Um, or the maintenance shops get overwhelmed, and they might not be able
31:39to turn around a truck in 24 hours, and so you don't wanna lose a run or lose
31:43miles 'cause you don't have any tractors.
31:46Um, so I'll keep one or two tractors in each location as a spare, generally
31:51one tractor, so that in the event that, um, you know, I have a maintenance
31:57issue, I have something to fall back on.
31:59And definitely team tractors.
32:01You know, your teams are running really hard during peak.
32:03They're running 5,500 miles, you know, a week or more.
32:07They're running through inclement weather.
32:09They might be going up to the northeast.
32:10They might be going up to the northwest.
32:11So I definitely always keep a, a, a tractor that I can use for teams
32:16in the event that I need to take a, um, a dedicated team tractor offline
32:20for a night so I can do a PM on it or do some other maintenance on it.
32:25Got it.
32:27It, you know, this is also the time of year, like you said, we're running
32:30a bunch more tractors, we're running more people, and sometimes new people.
32:33Do you do anything different from a safety perspective than what you do the
32:36rest of the year to try to just- No, I mean, we do- … Every single one of
32:40my drivers, whether they're hired in, you know, March or hired in September,
32:44go through our orientation program.
32:46So no driver ever gets on the road without spending at least one day
32:50with a manager Um, a lot of my drivers spend three or four days on the road
32:55with a manager, and we're making sure that they know how to do everything.
32:58Um, and so that's one reason why I try, you know, I try to have my full-
33:02I'm trying to be fully staffed by the end of October so they've already
33:05gone through all their training.
33:07Because in peak, my managers are driving as well.
33:10So, you know, they pick up a couple runs themselves or they'll be, uh, s- uh,
33:17filling in for call-offs, and so it's a really tight timeframe during that period.
33:21Um, you know, I, you know, you really as an AO, there's not a whole lot
33:26you can do as a, as a, as an owner during peak because you can't…
33:30Well, unless you have your own CDL and can drive, you're pretty much sitting
33:34there making sure and, you know, helping your managers make decisions and
33:38figure out what you're gonna wanna do.
33:39And there's gonna be something that comes up.
33:41You'll have, you know… For example, today I had a driver fail a drug
33:45test, and so my manager called me up.
33:48I mean, so think about during peak how much more stressful your manager is.
33:51You're, you're helping him solve those kind of questions and how to, you know,
33:55find, you know, how to come up with the right solution for your business.
34:00Not for FedEx, for your business, to achieve the goals
34:03that you're trying to achieve.
34:05Yeah.
34:05So, I mean, do you spend much time at the terminal during peak season?
34:08Like, what does, what does a typical week look like for you during peak?
34:11Um, I know I, I don't, I don't ever travel to the, to the terminals during peak.
34:16They don't wanna see you.
34:18I mean, FedEx is very stressed out themselves.
34:21They don't have time.
34:22You know, they're getting, they're getting customer orders, they're
34:24getting blown up by, you know, PGH where they're, they're coming in saying,
34:28"Hey, why didn't… You know, you were supposed to be sending seven tractors
34:31to McCutcheon. Why'd you only send six?" You know, so they're, they're
34:35dri- trying to put out their own fires.
34:37You know, I'm generally available throughout the day.
34:40You know, my… If I know my manager's driving at night,
34:42I'm answering phones at night.
34:44If I know my managers are driving during the day, I'm
34:46answering phones during the day.
34:47I make myself available.
34:49I'm reminding my drivers, I'm sending out messages on a regular basis to
34:52my drivers, giving them attaboys, telling them they're doing a great
34:55job, reminding them to be safe.
34:58The biggest thing that you're doing is just, you know, hoping that you don't
35:01have an accident or a safety event.
35:03Um, and if you do, then you're, you know, you're triaging that event.
35:08Do you find… I, I know you mentioned that, you know,
35:10profitability-wise, you, you find November and December are the best.
35:13Is that, is that the case for everybody?
35:14Can you just, you know, always guarantee that peak is your most profitable
35:18time of year, the best for cashflow?
35:20Or, or what are your- No, it, I mean, it's, it's gonna be the best
35:23for your reve- I mean, in general it's gonna be the best for revenue.
35:27Yeah.
35:27Um, runs don't get cut during pe- or very rarely get cut during peak.
35:32Um, but you have to be careful because if you take out rentals, you know, that's an
35:36unexpected expense that you just took on, and so you have to have a plan to make
35:41sure that you're utilizing that rental because that's a much more expensive
35:44truck payment that you're making.
35:46Whether or not you're renting, you know, a camera and the ELD as well,
35:51I mean, you have a lot more, um, cash that's outflowing during that situation.
35:55So there are, there are contractors who take on too many rentals, can't find
36:00enough drivers, or can't find enough work because you haven't planned in
36:04advance and you haven't coordinated with FedEx to say, "Hey, I'm gonna
36:08bring on six rentals, you know, do you have needs for six?" You know?
36:13The, the, the, the big thing to make sure that you have in place
36:16is communication with FedEx.
36:18You know, so I'm talking to FedEx now.
36:20I'm nailing down exactly what runs I'm gonna do and when I'm gonna
36:25do them, uh, to make sure that I'm meeting the exact needs that FedEx
36:29has and that FedEx is actually telling me exactly what I'm gonna do.
36:33The last thing I wanna do is bring on a tractor and a driver and they say,
36:36"Well, we weren- we didn't plan for this.
36:38We got outside power," or we give it to another contractor.
36:42And then you're s- you're sitting there with a driver that you've promised
36:45to pay, or you're sitting there with a truck payment that you can't make.
36:50Yeah.
36:51Yeah, I mean, I, I think we, we've mentioned it, but just the name of the
36:55game here is con- is being communicative and when there are problems, try to
37:00address those quickly or be on top of it.
37:02Be able to speak to them even if you're not the person who caused the problem.
37:05It's your business and, and being able to talk to them on the front
37:09end to project revenue and being able to- Mm-hmm … handle those
37:11problems as they come up is gonna keep everybody happy during peak season.
37:16Definitely.
37:17Um, so before we…
37:19Uh, I've seen a few questions come in.
37:20We'll get to questions in just a second.
37:22Uh, just kind of as a, a last question here for you from me at least, um,
37:26i- for if it's somebody's first peak season or maybe they're about to close
37:29on, on a linehaul business, maybe they closed in January and so they're
37:33thinking about peak for the first time, any advice or any kind of piece of
37:36evidence or p- you know, comfort you might be able to give somebody in the-
37:40as they head into their first peak?
37:41Um, I mean the biggest thing is that it's, it's scary.
37:45Okay?
37:45You don't know what to expect.
37:48It's okay to say no.
37:50FedEx is gonna demand a lot from you.
37:52Okay?
37:52It's okay to say no.
37:54It's okay to turn down FedEx.
37:56You're not gonna hurt anybody's feelings.
37:58You're not gonna ruin your business relationship for the next 20 years
38:01and you need to sell immediately.
38:02Okay?
38:03Mm-hmm.
38:03Figure out what's best for your company.
38:06Okay, have a plan, stick with your plan.
38:09The, the thing that makes peak very stressful or makes thing- uh, peak
38:13unsuccessful for, for contractors is when they come up with a plan and
38:18then they decide to change the plan, and then they're flying blind and
38:22trying to, you know, put the plan back together with sticky tape- Mm-hmm
38:25and, you know, chewing gum and it just goes out the window.
38:29So figure out, okay, I have seven tractors, I have four assigned
38:33runs, I'm going to, I'm gonna, you know, commit and give FedEx two more
38:38tractors and I'm gonna keep a spare.
38:40Yeah.
38:40Then stay with that plan.
38:42Okay?
38:42Because the last thing you wanna do is like, you know, commit all three tractors
38:47and then you have seven tractors, and then you have a tractor have a major…
38:49I mean, I'll tell you a story.
38:52My first peak I had s- I was four tractors, okay?
38:56My first peak going in.
38:58I picked up an additional team run.
39:00Okay?
39:00I didn't have an additional spare team tractor.
39:03That steam tractor was driving up, uh, you know, I-95 going to Metuchen, and it blew
39:09a, uh, blew a piston through the engine.
39:11I mean, literally shot it out like a cannon.
39:14You know, put a hole through the roof.
39:16Um, and now I had a team and a tractor stuck, and I'm getting blown up by
39:20FedEx like, "Hey, what's your plan?" You know, "When, uh, how are you… When
39:24are you getting your team back?" And I'm sitting there like, "I don't have a plan.
39:27I don't know what I'm doing."
39:29Yeah.
39:29I wasn't expecting a tractor to blow an engine.
39:32Um, so, you know, stick with your plan.
39:36You know, be prepared for the worst case scenario.
39:38Okay, what happens if I have a solo to run, a solo tractor breakdown?
39:42What happens if I have a team tractor breakdown?
39:44You know, come up with a plan, think about the worst case scenarios and
39:47how you're gonna solve it, okay?
39:50Um, I have a… You know, I added three drivers.
39:53You know, one of the drivers is not working out.
39:55He's unsafe.
39:56He doesn't show up to work on time, whatever.
39:58Well, then what is your plan to solve that issue?
40:01Uh, uh, I have a manager.
40:02I can make my manager drive.
40:04Mm. Well, my manager doesn't drive.
40:05Well, then you gotta figure out how you're gonna have a spare driver.
40:08And, and don't forget, don't ever stop recruiting.
40:11Even during peak, you're still recruiting.
40:13You know, always be recruiting.
40:15Always remember your ABRs.
40:18Yeah.
40:19Perfect.
40:19Yeah.
40:19Okay.
40:20So we're- No perks … we've got a few questions that have come in.
40:22Hot pockets for closers.
40:24Yes, correct.
40:27Um, okay, so first question here for you from Joe, Alex.
40:30So, uh, he's in the final stage of a linehaul acquisition on the West Coast.
40:35All of his routes are over the road, um, but it is gonna have some spares,
40:39and he wants to really immediately come in and show that he's available for
40:43local stuff or on a signs from day one.
40:45How is the best way to communicate that with the terminal in a way that, that,
40:49you know, they'll actually give it to him?
40:51Well, so it's, it's, it's… It matters whether or not you're going
40:54into a hub or a station, okay?
40:56So if you're going into a st- hub, it's much harder to break into the spot market
41:00than if you're going into a station.
41:01You know, if you think about it, you know, the hub, you have a P&D
41:05area, then you have a linehaul area, area, then you have a hub manager
41:09area, and your daily interaction is gonna be with that hub manager.
41:14Um, so you're not gonna know anybody in the P&D side that manages the spots.
41:18Now, if you're going into a station, it's usually one guy who's managing both
41:21linehaul and spots in that, in that area.
41:24So it's a lot easier to pick up spots, um, in a station because you might
41:28be one of only three contractors.
41:30If you go into a hub, you're gonna be one of 30 contractors.
41:33I think there's 37 contractors in Memphis.
41:36So, you know, and you're dealing with a… You have a full-blown P&D
41:41area, and they might have their own linehaul contractors already there.
41:45So there might even be more contractors on the P&D side.
41:48So it's much harder to, um- To pick up spots in a hub
41:52area than it is in a station.
41:54Now, if you're in a-- and if you're in the hub, you, you stand up, you go in
41:58and you start saying, "Hey, you know, I'm available. I got extra tractors, I got
42:02extra drivers, you know, do you have any needs?" Now, that's gonna cost you money
42:06because you have extra tractors and extra drivers that are not making any money,
42:09but you're showing that you're available.
42:11And now remember- Linehaul runs you can take a decline on.
42:16It's no- It's you have 35 declines or 36 declines in a year that
42:20you can take a decline in before they'll take away that run.
42:23Spots, it's a different story, okay?
42:24You're picking up customer freight.
42:27You cannot decline a spot.
42:29You know, that's the way to get yourself into bad graces with FedEx.
42:32You turn down a spot because you don't have a driver and a tractor,
42:35FedEx is gonna… You know, the P&D manager is gonna say, "Okay, I'm gonna
42:38go. You know, Josh, you were option number one, now I'm going to option
42:42number two, which is Maverick, and Maverick's gonna do that spot." And
42:46then you have to spend a lot of time and effort trying to get back into it.
42:50Um, so just remember that.
42:52Now, during peak, there's gonna be more needs but, you know, always be available
42:57to be the guy that's, you know, "Hey, you know, it's 2:00 in the afternoon, we
43:02have a breakdown in Kalamazoo, Michigan.
43:05You know, can you go pick up that trailer and bring it back?" You know, if you're
43:09the, if you're Johnny-on-the-spot, always willing to, to rescue trailers and, you
43:14know, put out fires, and, and handle emergencies, FedEx is gonna remember you
43:17for that and they're, they're not gonna give you more runs, but you're gonna
43:21build up more, you know, more goodwill.
43:23Now, remember, FedEx doesn't do anything nowadays without… You know, on the
43:27spot side, you know, Josh likes me.
43:30You know, he knows Alex is a good guy.
43:32He's gonna give me some spots.
43:33On the linehaul side, everything's done through request for information, so
43:36an RFI, or you're bidding on the run.
43:39So there is thresholds.
43:41So you wanna grow your business, you have to be a good operator.
43:44You have to be silver or gold.
43:47You cannot be, you know, below tier three safety, and you
43:50can't be a bronze contractor.
43:52So as long as you maintain silver or gold and you're tier three or above in
43:55safety, then you're gonna get a chance for to interview for that unassigned
43:59growth opportunity, and then it's all…
44:02and then it comes down to that FedEx contractor.
44:04Does… or that FedEx linehaul manager.
44:05Does he like you?
44:07Are you the guy who turns in his MMRs, you know, on time?
44:11Are you the guy who turns in his IVMRs on time?
44:14Or are you the guy that FedEx is constantly chasing to get their paperwork
44:18to make sure that they're not putting your business or your con- or your
44:21tractors out of f- uh, out of service?
44:23FedEx doesn't wanna have to chase a contractor for the stuff that they're
44:27required to provide on a regular basis.
44:29We all know that we have to turn in our IVMRs on a weekly basis, we have
44:32to turn our M- MMRs on a monthly basis.
44:35We have to do our quarterly vehicle inspections.
44:37We have to do our federal annual inspections.
44:39You know, you're always on the ball, not being chased on that stuff,
44:43then FedEx is gonna say, "You know what? I like Josh. I'm gonna give
44:45him another run." You know, because apples to apples, everybody's silver.
44:49Apples to apples, everybody's tier three.
44:51I happen to like Josh more than him Yeah.
44:54I mean, if right now they're having to chase you down for 10 tractors
44:58to get that info, they're not super excited about chasing you down for 12.
45:01Yeah.
45:01So yeah.
45:03Um, okay, the next question here from Tony.
45:06So what are you seeing in terms of rates for drivers on teams?
45:11He was saying, is 45 cents appropriate?
45:13He sees some paying as much as 97 cents a mile before payroll tax and benefits.
45:19So, you know, is it a s- that sounds high to me as well.
45:22Yeah, so, um- Sounds extraordinarily high
45:25so tell me what you think.
45:25Yeah I don't know what market you're in.
45:27Um, it's market to market dependent.
45:30Okay?
45:30There's a reason why Memphis and Olive Branch are paid at the
45:34rate they are versus Nashville versus Cincinnati versus Chicago.
45:39So every market is paid at a different rate by FedEx.
45:44Okay?
45:44And it's dependent on…
45:46It's pretty close to the cost of living, um, that the federal government
45:50publishes as well as if there is a de- tremendous amount of demand
45:54for drivers in that market or not.
45:57So, like, uh, the Denver market, I don't… You know, there's not a lot
46:01of truck drivers that, uh, qualify to drive because it's… it was the
46:05first state to legalize marijuana.
46:08So they o- they… FedEx tends to pay a higher rate in Denver because they know
46:12that it's hard to find drivers there.
46:14Same thing in Oregon.
46:16Oregon's maybe not has a high… doesn't maybe have a very high cost of
46:20living, but it's hard to find drivers.
46:22Now, California and New Jersey or Chicago, high cost of living, so they'll
46:26pay a higher settlement rate to those drivers, and then vice versa, then
46:30you pay a higher rate to the driver, or they pay a higher settlement rate
46:33to you, and then vice versa, you pay a higher rate to those drivers.
46:37Now, remember- Um, one, I don't pay any of my teams 90 cents a mile.
46:44Um, I don't pay anywhere near 90 cents a mile.
46:48Um, but I'm also in markets where you don't need to hire
46:51teams at 90 cents a mile.
46:53Um, but remember your percentages, okay?
46:56If you're paying more than, say, 33% or 34% as a p- a percentage of, of, of
47:01gross revenue, now teams are a little bit higher because you have two drivers.
47:04So if you're paying more than about 38% as a percentage of gross revenue,
47:09then you're putting… You're robbing Peter to pay Paul, okay?
47:13So don't chase the market.
47:16You know, like there is, there's a contractor right now in Memphis that is
47:20paying 10 cents a mile more than I am.
47:23I have no problems hiring drivers.
47:25You know?
47:26The drivers like me because I happen to put them all in
47:28brand-new trucks or newer trucks.
47:31Um, I pay all the time.
47:33You know, when I tell them that they're gonna get paid on a
47:35Friday, they get paid on a Friday.
47:37Um, I don't monkey around with them.
47:39I don't move their runs.
47:40I base everything off of seniority.
47:42You know, everybody moves up the scale, and then they gets to, they get to
47:45get, you know, choo- When I have an opening, they get to choose a new run.
47:49You know, I go around and I, I listen to my drivers and I try to
47:52treat them with, uh, with respect, and that happens to do well.
47:55Now- The other thing I do is I have a lot of benefits, right?
48:00So I might be paying a driver, say, 60 cents a mile, but I pay
48:05a $300 monthly safety bonus.
48:07Well, if you add that $300 monthly safety bonus, that's about three cents a mile.
48:10So, oh, I'm actually paying, you know, 63 cents a mile.
48:15Oh, I cover the first $290, uh, dollars a month on healthcare benefits.
48:20Oh, that's another three cents a mile, so I'm actually paying 66 cents a mile.
48:24You know, so it, it also… You know, you can't compare apples to apples.
48:28That drive- that contractor that might be offering 90 cents a mile
48:31or 90 cents a mile might be not offering any benefits to the drivers.
48:36Yeah.
48:37Yeah.
48:37And, and Tony too, if you, if you wanna share the part of the country you're
48:41in, we can, we can comment a little bit on that too, and see if that's,
48:45uh, what we would expect or not.
48:47Um, the, the next question here is from Brad.
48:50So he said he's starting soon.
48:51Mm-hmm.
48:52And the terminal said not to expect a whole lot from peak season, but they
48:56don't have any spares yet, and he's kind of wondering, should he expect to be
49:00adding additional days to the dedicateds?
49:02Would you advise him getting spares?
49:04Like, what's, what's kind of the priority?
49:06So, I mean, I always think that you need to have at least one spare
49:10tractor in your fleet just in the event of a maintenance breakdown.
49:14You know, you dispatch four tractors out a day, you should have one spare tractor.
49:18It shouldn't, and it shouldn't be a brand-new tractor.
49:20It should be a used tractor.
49:21Mm-hmm.
49:22Okay?
49:22Yeah.
49:23Um, you know, to keep your cost.
49:25Remember, you don't wanna have a very expensive paperweight.
49:28Um, and a brand-new tractor that's not getting, you know… If it's a day cab,
49:31it's not getting 25… 2,400 miles a week, or if it's not a, a, a team tractor doing
49:354,200 miles a week, then it becomes a very expensive, um, paperweight, and the last
49:41thing you want is a expensive paperweight.
49:43Yeah.
49:43It's really pretty, but it's not earning you any money, and we're
49:46in this business to earn money.
49:48Now, during peak, you can expect… You should expect at least to go from your
49:53five-day runs to your six-day runs, okay?
49:56The unassigned will stay f- on a five-day rotation unless FedEx asks
50:00you to flex up an additional day.
50:03Um, but have those conversations with your terminal manager and say, "Hey, do
50:07you… are you gonna need me to run… If you're already running five days a week,
50:10are you gonna need me to run six days a week?" Now, where it gets difficult,
50:14you know, most drivers can do their runs, can do six days' worth of work.
50:18There are some runs that you can't.
50:19If you're doing a 3,000 per mile week solo run, you cannot
50:23really add an additional day.
50:25Uh, if you're doing 600 miles a day, you really can add… you
50:28cannot add a sixth day and get that driver to do 3,600 miles a week.
50:32Um, if you're doing 5,500 miles as a team, you cannot ask a
50:36team to do 7,000 miles a week.
50:38There's just- You're gonna violate the hours of service.
50:41But if you have a guy who's running 2,000 to, say, 2,600 miles a week or…
50:46You can ask them to pick up a sixth day.
50:48Now, where it gets challenging is if you have to pick up a seventh day.
50:52So I have a bunch of runs, um, that are six-days-a-week schedules, okay?
50:56I don't have a driver covering that run six days a week during the year.
51:00Um, I kind of carve it in half and I have one driver do three days or maybe I have
51:04a driver do four days and do two days.
51:07Um, but if you pick up that seventh day, then you have to make a plan
51:10of like, okay, where am I getting this extra driver to be able to
51:13cover this run seven days a week?
51:15Mm. I have, I happen to have a couple seven-day w- uh, runs, and
51:19so I have, you know, on those I ha- I happen to have a driver who does,
51:24he does a different run every day.
51:26He might do a, um, a Cincinnati to Chicago on day one, then he does
51:30a Cincinnati to Toledo on day two.
51:32He does a Cincinnati to Champaign on day three.
51:34He does a Cincinnati to Nashville on day four, and then he does a Cincinnati
51:39to, you know, wherever on day five.
51:43You know.
51:44And so, like I have drivers like that, and then, you know, based on the number
51:48of miles, I might be able to say, "Okay, you can pick up a sixth day."
51:50And so then I'll have that conversation.
51:53You know, say, "Hey, you know, we'd love you to be able to pick up a sixth day.
51:56You know what?
51:57I'll make, I'll make you a deal.
51:58You pick up a sixth day, I'll give you two consecutive days off of during the
52:01week." You know, figure out something.
52:03Figure out what his, um, his motivation is and find that
52:07and, you know, and motivate him.
52:10Okay.
52:11Tony chimed back in and said Midwest was the area, so 97
52:15cents seems expensive for that.
52:16Yes.
52:17It seems very expensive.
52:18Yeah.
52:19Uh, unless you're, like, in the Chi- I mean, even in the Chicago market, I
52:22c- I, I honestly, I don't know of any teams getting paid anywhere that high.
52:27I mean, I think the Houston market might be mid-80s.
52:32Uh, California might be that high.
52:34I'm a touchin'.
52:34I don't know many team contractors out there.
52:37Um, you know, most of my- I don't, yeah, I just don't know
52:42a lot of contractors out there.
52:44I know that's higher than where Binghamton and Syracuse are paying,
52:46so this seems- Yeah … really high, and those are expensive markets.
52:50Okay.
52:50Um.
52:51Uh, next question here from Kevin.
52:53So- I would, I would say this to Tony.
52:55Yeah.
52:56If you don't know and you're, you're being, y- you're really
52:58questioning what the appropriate rate is, then talk to a recruiter.
53:02Mm. Reach out to Bright Flag, reach out to Square One, reach out to,
53:07uh, whatever, one of the other recruiters is and say, "Hey, you know,
53:11can you give me what is the going rate for a team in this location?"
53:16Yeah.
53:16You know, that's what they're there for
53:20Uh, yeah, they're, they have that information, they have that data,
53:22and they're always happy to share it.
53:24Um, okay, next question here from Kevin.
53:27And I mean, you know, answer, I guess, as, as concretely as you can here, which
53:31is I know it's a bigger discussion, but, uh, do you buy new or used tractors,
53:35and when do you try to retire them?
53:37Which is- So I buy new tractors- It depends, I'm sure.
53:39I buy used tractors, and I lease tractors.
53:42Okay.
53:42There is a time and place for everything.
53:45Um, so I plan out my tractors purchases about a year in advance.
53:50So right now I am planning on buying eight tractors in 2026, okay, or 2027.
53:56I came into 2026 saying I was gonna buy Um, six tractors.
54:03I've ended up buying nine tractors, and I've ended up… I'm, and I'm actually
54:07adding a lease tractor right now.
54:09Why?
54:10Because I have unexpected growth.
54:12Mm-hmm.
54:12Okay?
54:13So I always pref- when I'm planning on buying tractors, you know,
54:17a year in advance or two years in advance, I buy new tractors.
54:21Okay?
54:21I know I have good relationships with my dealership.
54:24I know I can get that tractor.
54:26I know it's when it's gonna get… I know within about two-week period
54:29when it's gonna get delivered.
54:31You know, so it's planned out well in advance about, and I know
54:34what tractor it's replacing, okay?
54:37When I have unexpected growth, when FedEx says, "Hey, we're posting, you
54:41know, growth opportunities in Olive Branch," and I win a growth opportunity,
54:44that's where I have to come up and say, "Okay, can I buy a new tractor?
54:48No.
54:49I don't either have, one, I don't have the cash, or two, I don't have
54:51the bank line, or three, I can't find a tractor." So then I make a
54:56decision whether or not I wanna lease a tractor or I wanna buy a used tractor.
55:01Uh, um, now, I typically run my team tractors for two
55:04and a half to three years.
55:06I put on a five-year, 700,000-mile warranty on them.
55:10I run them till about 450 to 500,000 miles, and then I trade them in,
55:15or I rotate them into a solo run.
55:18I buy my new tract- my new solo day cab tractors, I'll buy those, and I
55:24plan… I, I do the same warranty.
55:26I'll do a five-year, 700,000-mile warranty on them.
55:29I do a five-year f- uh, financing agreement with my bank, and I'll
55:32plan on running that tractor until it gets to about anywhere
55:36between 750 and 850,000 miles.
55:39Okay.
55:39Um, and then used tractors, if I'm, if I get awarded an unexpected
55:45growth opportunity that's a solo, I'm buying a used tractor.
55:48If I get awarded an unexpected growth opportunity that's a team, I'm usually
55:53leasing that team tractor, and I'll, I'll do a two-year lease, and then I'll look to
55:58replace it with a tractor that I'm buying.
56:01And then at the end of that two-year lease, I have one of two options.
56:04I either can turn it back in to whoever I leased it from, Ryder,
56:07Penske, or, or REL, or I'll buy that tractor and turn it into a solo truck.
56:14Okay.
56:15And, and Tony actually had a follow-up here to this of- Mm-hmm … you
56:18know, he's, he's trying to run the numbers, and for him, it seems like
56:22new tractors are just too expensive.
56:24What is it about the calculus for you for new tractors that makes them
56:27attractive for you when you go- So when you look at your, it's your
56:30cost to operate that vehicle, okay?
56:33So you take that new tractor, $160,000 for a day cab, right?
56:39Um, or 108, you know, whatever the number is.
56:42For me, it's $160,000.
56:44If I'm gonna put that on a solo run, I know how many miles, give or take a
56:48couple thousand miles, it's gonna get.
56:50So I'll divide it by the number of miles that it's gonna be on that run.
56:53You know, the nice thing about FedEx, especially dedicated mu- runs, but even
56:57unassigned you can come pretty close.
56:59Like I can tell you, your unassigned team tractors are
57:02gonna average 4,200 miles a week.
57:05Your unassigned solo tractors, depending on the market, are gonna
57:08average either 2,000 or 2,500 miles a week, give or take a couple miles.
57:13Okay?
57:14Um, so I know if I'm buying a tractor that's gonna be doing 2,000 miles
57:19a week, okay, and I'm putting it on that run, I'm gonna take that number
57:24of miles, which is 104,000 miles, and I'm gonna amorti- or I'm gonna look
57:29at how many years I'm gonna run it.
57:30So I know that tractor I'm planning on getting is gonna be
57:34running 102,000 miles a week.
57:35That means I can get, I can run it for eight years and get
57:39800,000 miles out of that tractor.
57:41So I'm gonna take that 800,000 miles, and I'm, that's gonna
57:45be my de- my, uh, my divisor.
57:47And I'm gonna take that cost of $160,000 and divide it by 800,000,
57:53and I know that that cost to own that tractor is 20 cents a mile.
57:57So I'm paying 20 cents a mile to own that tractor.
58:00And then it's a brand-new tractor that I'm gonna be doing the preventative
58:04maintenance on, and it's under warranty for the first five years.
58:07So I have a pretty good idea of what that costs to maintain that tractor.
58:11Because if you own that tractor and it's under warranty, then you're
58:15just paying for PMs and tires.
58:18Now, there are more than just doing oil changes.
58:20You gotta do the overhead adjustment.
58:22You gotta do the differential and transmission flush.
58:24You gotta do, you know, change the belts.
58:27There's a little bit more, but you can pretty much say, "I'm
58:30gonna pay about three or four cents a mile for maintenance."
58:33So my total cost of ownership on that tractor might be 24 cents.
58:37Now, you buy a used tractor.
58:38Hey, it's, it's really cheap.
58:40You're buying a used tractor at 400,000 miles.
58:42You're paying $60,000.
58:44Oh, that's a really cheap tractor.
58:46I'm paying, you know… But you're only running it for three
58:51years, maybe four if you're lucky.
58:53Like if you, if you were a really good mechanic, maybe you
58:56can run it for 400,000 miles.
58:58So you're buying that tractor at, say, $60,000.
59:01You're paying for, you know, you're paying, you know, s- uh, you're
59:05running it for, let's do the math.
59:07You're running it 400,000 miles
59:13Divided by, uh, $60,000, or sorry, $60,000 Divided by 40,000 miles, 400,000 miles.
59:22You know, that cost to own that tractor is 15 cents, but the
59:25maintenance is higher, right?
59:26You're not getting it with a warranty or it's an older tractor.
59:29So, uh, on top of… Versus a new tractor you might have to worry
59:33about paying a, uh, for a DPF system.
59:36You might have to pay for a one box, a SAM chassis.
59:39Uh, you might have to replace, you know, I mean, headlamp assemblies.
59:43Headlamp assemblies are like $5,000 a pop now.
59:46You know, you might have to replace a radar.
59:48That's 2,500 bucks.
59:49You might have to replace, um… You might have to replace the injectors, the turbo.
59:54Uh, you might have to do the, the leaf springs.
59:56You have no idea because you're buying a used tractor.
59:59Yeah.
1:00:00So that cost to own, while the tractor itself might only be 15 cents a mile,
1:00:06the cost to maintain that might be 10 cents, 12 cents a mile because
1:00:11you're buying that used tractor.
1:00:12So there's a math to do all these kind of things, and then it's a
1:00:16question of what makes the most sense.
1:00:18The one thing I won't do, I won't put a used tractor on a team run because the
1:00:23last thing I want to happen to me is have that tractor in Tucumcari, New Mexico
1:00:29down for maintenance, and then I'm trying to find somebody who can do maintenance
1:00:34on it that's not gonna be… You know, 'cause it's not under warranty, so I
1:00:37can't go to the Freightliner dealership.
1:00:38Or if I do go to the Freightliner dealership, you know, they're gonna
1:00:42go… You know, they don't know me from Paul, so they're gonna charge me the, the
1:00:46door rates, which is $250 an hour, and they're gonna upcharge me on the parts.
1:00:51Whereas if I have a tractor that's under warranty, Freightliner stands behind
1:00:54it and is gonna do all the work on it.
1:00:57Yeah.
1:00:57I, I think the other part that we didn't even talk about, and is a whole other
1:01:01discussion that we've talked about before though, is that these newer
1:01:03tractors also have often materially better, uh, fuel efficiency- Oh,
1:01:08yeah … that, that, you know, from a- I mean, the big- … cost savings.
1:01:10Yeah.
1:01:11Yeah.
1:01:11The, I mean, the big thing to understand right now is how
1:01:15advantageous it is to have newer tractors on the, on, um, on the road.
1:01:20So right now diesel's averaging, what?
1:01:23It's like 6.62 a mi- uh, a gallon right now.
1:01:27Okay?
1:01:27So if you tr- FedEx reimburses us at seven miles to the gallon.
1:01:32Okay?
1:01:33I, I look at my fleet fuel efficiency.
1:01:35I actually showed it to you this morn- uh, this morning- Yeah … today, Josh.
1:01:38I looked at my fuel eff- my fleet efficiency.
1:01:40I'm averaging 8.14 miles to the gallon right now.
1:01:44That means for every mile that I'm driving down the road, I'm making money off of
1:01:49FedEx 'cause I'm getting reimbursed at seven miles to the gallon but my fleet
1:01:54is averaging 8.14 miles to the gallon.
1:01:57You know, that adds up at, especially the higher you go up in gas prices.
1:02:02It makes a bigger and bigger difference.
1:02:04Right now I'm clipping, you know, anywhere from 5 to $8,000 extra a
1:02:07week because I'm more fuel efficient than where FedEx is reimbursing me.
1:02:11And I can tell you the tractors that are the most fuel efficient
1:02:15are the newest tractors.
1:02:17They have better engines, you have newer tires, they're more aerodynamic.
1:02:21Um, you know, the dealerships or the, the OEMs have really worked to
1:02:25try to improve the fuel efficiency.
1:02:27My worst tractors are my old tractors.
1:02:29You know, it's one of the reasons why I'm getting rid of all my 2019s, you know?
1:02:34I don't… Like I said, I mean, one, I don't run tractors beyond about seven
1:02:37or eight years, but I also don't wanna run an old engine that's gonna get
1:02:42less than seven miles to the gallon because then I'm paying FedEx the
1:02:46privilege of having me run their miles.
1:02:49Yeah.
1:02:50Yeah, exactly.
1:02:51Yeah.
1:02:51There's a lot that goes into it, Tony, and, and, you know, sometimes it's…
1:02:54Some- sometimes there's individual math you have to do, but I think that's the
1:02:58calculus that, um, everything that Alex laid out that you almost have to do
1:03:01every single time, and it's more than just this truck looks very expensive.
1:03:06It is, but there's a lot of underlying math behind it that justifies it.
1:03:10Yeah.
1:03:10Um, but I- I'm gonna go ahead and call it here.
1:03:13We're, we're a little bit over time already.
1:03:15So everybody had a ton of questions.
1:03:16I know this is a, uh, the time of year where it's the time to ask questions.
1:03:20But if anybody has more questions, anything that, um, we didn't get
1:03:24to today, if you wanna go ahead and, and send it to us, um, we're
1:03:27always happy to answer those.
1:03:29Uh, otherwise also if you're looking to still learn and you're still trying to
1:03:33get into the space, our next event's in October in our offices here in Nashville.
1:03:37But other than that, uh, Alex, thank you so much for being here, and
1:03:40thanks for everybody being online.
1:03:41Yeah, definitely.
1:03:42And I hope to see everybody in Orlando in two weeks for the FedEx Summit.
1:03:45Oh, yes.
1:03:45Yeah.
1:03:45If not, then I hope to see you after peak is over.
1:03:48Yeah.
1:03:49All right.
1:03:49Thanks, everybody.
1:03:50See you.
1:03:50Thanks, guys.

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