State of the FedEx P&D Industry - LIVE with Amy Buyers — Transcript

Full transcript

1. 0:00Welcome to Industry Insights with Route Consultant, your front row seat to the
2. 0:04fast-moving world of logistics and beyond.
3. 0:07Each week, we bring you game-changing insights, real-world strategies, and
4. 0:11fresh perspectives to fuel smarter investments and build stronger businesses.
5. 0:16Join us as we sit down with expert guests to explore emerging trends and pressing
6. 0:21topics across a wide range of industries.
7. 0:24This is Industry Insights.
8. 0:35All right See everybody filing in.
9. 0:40Yeah.
10. 0:40Um, so I will go ahead and get us started for everybody as
11. 0:45you're getting into the lobby.
12. 0:47Um, so f- uh, welcome back to Industry Insights Live.
13. 0:51Uh, we've only done a couple of these this year.
14. 0:53We've, we kind of moved away from just doing in-studio stuff and we've
15. 0:58started doing more of these live webinars again that we used to.
16. 1:00So, uh, for those of you who've, who've never been to these, you are here for
17. 1:04the first time, my name's Josh Gregory.
18. 1:06I'm the vice president of operations here at Route Consultant.
19. 1:09Uh, if you're not familiar with us, our team ran hundreds of routes across
20. 1:13the country in P&D and linehaul.
21. 1:14And today we're here to help new buyers looking to get into the space
22. 1:18for the first time, and to help current contractors to continue to
23. 1:21find efficiencies and additional profitability in their business.
24. 1:25Uh, before I get started, I do have a quick disclaimer to read, uh, as
25. 1:28I do every time I do one of these.
26. 1:29So, uh, Route Consultant is not endorsed by and is not recommended
27. 1:33by Federal Express Corporation, FedEx Ground, or Amazon.
28. 1:36Route Consultant is not sponsored by, is not approved by, is not
29. 1:38associated with, and has no connection whatsoever with Federal Express
30. 1:41Corporation, FedEx Ground, or Amazon.
31. 1:44So, uh, today I'm not here alone.
32. 1:46I'm also joined by Amy Byers.
33. 1:48So many of you may know Amy, but she is a P&D and linehaul contractor with routes
34. 1:52and runs across the country an- and a wealth of experience in the industry.
35. 1:55Uh, and she's here, uh, as always on these to help bring her knowledge.
36. 1:58So Amy, why don't you just say hi really quick before we jump into it.
37. 2:02Hi, everybody.
38. 2:03Um, I am Amy Byers, uh, chief operating officer of Slicker Trucking.
39. 2:08Uh, my husband is the AO.
40. 2:10Uh, we've been doing this for almost 20 years, like almost 20 years.
41. 2:14Um, and we did start with just one man, one van back in the, the P&D days.
42. 2:19Um, we now, I think the, the number was, um, close to 195, um, P&D employees and
43. 2:27close to 55 linehaul employees, plus then our support staff, which is our
44. 2:33maintenance shops, our mechanics, um, and some of our admin sta- uh, staff
45. 2:38as well as our, our management team.
46. 2:40Um, but yes, P&D, linehaul, custom critical.
47. 2:43We're kind of doing all the things.
48. 2:45Um, maintenance shops.
49. 2:46We have a gas shop for all the P&D trucks.
50. 2:48We have a diesel shop for our linehaul trucks.
51. 2:51Um, and you know, all the, all the good things that come along with that.
52. 2:54So, um, yeah, we're excited to jump in as always and, and answer some questions.
53. 3:01Perfect.
54. 3:01And, and that is really what the goal of today is going to be.
55. 3:04So there's a couple of things that we're going to talk about that Amy and
56. 3:05I are going to go through, and then we will have this completely open for Q&A.
57. 3:10Uh, now- Yeah … what, what I would say is important is, uh, if you don't see
58. 3:14it, so there, there should be a little Q&A button at the bottom of your window.
59. 3:18If you don't see it, you might have to click the little more
60. 3:20dots and make the Q&A appear.
61. 3:22Um, but that is the best place to put your questions.
62. 3:25If you put it in there, I will for sure see it.
63. 3:28I'll try to monitor the chat.
64. 3:29I know sometimes questions end up there.
65. 3:31If I see them, I'll try to ask them, but if you can put it in the Q&A, I'll
66. 3:34make sure that Amy and I address it.
67. 3:37Uh, and quickly before we get into the first topic, I do just quickly-
68. 3:41Mm … want to highlight if you, uh, are either new to the space or a current
69. 3:45contractor trying to learn more and, uh, be in person and connect with
70. 3:49others, we have two events next week.
71. 3:52So next Thursday, June 11th, we have a New Investor Summit in
72. 3:56our offices here in Nashville.
73. 3:58Uh, that's really designed around if you don't know yet, uh, if you're fully
74. 4:03invested or fully ready for the space and you're trying to ask those questions and,
75. 4:05and figure out if it's the right space for you, those New Investor Summits are
76. 4:09really designed to be a crash course, uh, and te- take you through everything around
77. 4:12FedEx, P&D, and linehaul, but also expose you to a couple of other industries if
78. 4:16that's what you're looking for, introduce you to the partners and vendors that
79. 4:19you'll need to work with, and kind of take you through a lot of the important
80. 4:22information to really be able to make a decision on what you want to invest in.
81. 4:26And then if you're here for that or if you're a current contractor
82. 4:30already, the, the next day we have a P&D Pro Series that's specifically
83. 4:34focused on P&D contractors that are in the space, handling topics and
84. 4:39some of the most important things.
85. 4:40And Amy will be there, so will Dave.
86. 4:42They'll be talking through a bunch of that, and they'll be,
87. 4:44they'll be speaking on those days.
88. 4:46Uh, and so if you're already a P&D contractor, you
89. 4:49should definitely be there.
90. 4:50If you're new to the space and, and you think P&D might be an option for
91. 4:53you, it's still worth being there.
92. 4:56Again, both of those events are free.
93. 4:57You can register on our site at routeconsultant.com on our Events page.
94. 5:01Um, but it, it is in our offices in Nashville, Tennessee,
95. 5:04and those are next week.
96. 5:05So if you haven't booked your plans already, you got a few more days to, to
97. 5:09go ahead and book it, and hopefully we will see you in person there next week.
98. 5:13It'll be great to see Amy in person, uh, as well.
99. 5:15Yeah, I'm excited.
100. 5:16Always love a trip to Nashville.
101. 5:18Yeah.
102. 5:18Yeah.
103. 5:19And if you're here Thursday and Friday, you might as well stay for the weekend.
104. 5:22I mean.
105. 5:22Yeah.
106. 5:24Okay, perfect.
107. 5:25So, Amy, I know we're gonna have questions, we're gonna have topics today.
108. 5:28Um, but I think, uh, an easy place to start is just if, if you want to give
109. 5:32a little bit of an update on where Express and 2.0 stands right now.
110. 5:36I know that's something people are always trying to get an update on.
111. 5:39Yeah, so for us, um, we're currently, um, we, we're provided,
112. 5:45um, kind of a standup, if you will.
113. 5:48Um, so Northeast Ohio is, is gonna go, uh, 2.0 here pretty quickly.
114. 5:53So we are in the middle of, um… And, and in all five contracts, right?
115. 5:57So we have five P&D contracts.
116. 5:59One is already Express, but that contract is actually changing quite
117. 6:03a bit as well, so that's changing.
118. 6:06The other four are going to go Express, so I mean, all at one time, right?
119. 6:11And within the same hub network.
120. 6:13Um, the information is so different in each one, and I think that's the,
121. 6:18the benefit of, of what Dave and I can bring to this network, is all five
122. 6:24contracts, it's… FedEx doesn't negotiate with us on the P&D side and say, "Oh,
123. 6:29well, you have almost 200 routes, so this is what we're gonna do for you."
124. 6:33We negotiate each contract, um, in that building as individuals, right?
125. 6:39So I have a 12-route contract.
126. 6:41I have 32-route contract.
127. 6:43I have a 22-route contract.
128. 6:44We have another 32-route contract.
129. 6:46We have a 17-route contract.
130. 6:47And all of those are being run and negotiated, and the changes are
131. 6:52happening, uh, the same as someone that only has one route or one
132. 6:56contract in, in that type, right?
133. 6:59So, you know, we have rural in one, but the other one
134. 7:01has nothing to do with rural.
135. 7:03So it allows us to kind of get this experience and this kind of breadth of
136. 7:06knowledge, because we are kind of coming alongside all the contractors that just
137. 7:11have one, one building or one contract.
138. 7:14Um, so it's really ex- exciting that we can share the information.
139. 7:17Um, right now- Again, we're kind of moving and, and shifting.
140. 7:21They've, they've given us our changes.
141. 7:23Um, we're growing in some areas.
142. 7:25We're, um, we actually shifted.
143. 7:27I thought, um, you know, we're losing some area, uh, but gaining stops.
144. 7:31Interesting.
145. 7:32Um, so that was a fun kind of mental note to think about.
146. 7:35I'm like, "You're cutting me down, but I'm growing.
147. 7:36Okay." Um, so I think that just the example is, um, each change type, um,
148. 7:44needed to be looked at differently.
149. 7:46Um, you know, and it wasn't just face value like, "Hey, you're
150. 7:48losing area." Like, at, at blank's, you know, point blank that kind
151. 7:53of looks like, "Wait a second.
152. 7:54What?
153. 7:54Like, we're 99.7 and you're taking stuff from us?
154. 7:57That makes no sense." There was a bigger plan behind it, and it just took a
155. 8:00little bit of review and things to kind of settle into what that looked like.
156. 8:05Another contract, we're over doubling.
157. 8:07Um, and I think where we are right now is we're going through, like,
158. 8:11what staff fits where, uh, because the truck sizes are moving, right?
159. 8:16So I think part of this transition for us, what we're really working on now is,
160. 8:21okay, that route used to be a 14-foot cutaway, but now moving in and taking
161. 8:26over some of this area, it's a P1000.
162. 8:28Okay, great.
163. 8:30I need to buy a truck, and I need to make sure that the guy that's
164. 8:33in the, uh, 14-foot cutaway is capable of driving that P1000.
165. 8:37And then what's the infrastructure behind that?
166. 8:40So it's an internal upsize road test and a capability test and then going on a route
167. 8:46with a guy that's running a P1000 route and allowing him to have some days behind
168. 8:51the wheel instead of just being like, "Oh, let's rip the Band-Aid off and make
169. 8:54our safety score go down to zero," right?
170. 8:57So there's all these things that we're kind of moving and shifting.
171. 9:00We're also moving into a totally different building, and we're going
172. 9:04through the challenge of some of the people in the current contract don't
173. 9:08live real close to that building.
174. 9:10So we are finding a home for them and routes for them in one of
175. 9:14our current contracts that are closer to them in the same area.
176. 9:17So we are going through, like, I mean, it is like people, trucks, hiring,
177. 9:23um- You know, and, and I think one point, um, if anybody is going through
178. 9:28this change, um, you know, FedEx is kind of, you know, keeping everything
179. 9:32very close to the vest and, and the big details we can't really share.
180. 9:37Um, but one of the things that you're allowed to do is talk to your c- your
181. 9:40co-contractors, right, in the building if there are changes that affect you or them.
182. 9:45Um, so we've been doing that, and my managers are like, "Well, hey, this, you
183. 9:49know, we're, we're gonna take over this area, and that guy runs three P1000s
184. 9:54and a 1200, and I think that's what we should do." And I'm like, "Well, that
185. 9:58guy's going out of business, so we're not gonna…" We're gonna put i- we're
186. 10:03gonna put all those stops in the sandbox, which is kind of an area in DRO that FedEx
187. 10:07allows you to kind of play with the stops.
188. 10:09Um, and we're gonna make a plan that's best for Slicker and how we would run
189. 10:13it because we know how we want to run things, not how that guy runs things.
190. 10:17Now, it's great to hear kind of what they're doing and how and why, but
191. 10:21then I'm gonna make my own decision.
192. 10:23I'm not just gonna adopt a philosophy or a structure because that's
193. 10:27how it was done before, right?
194. 10:29So I think long and short answer, that's where we're at.
195. 10:34Yeah.
196. 10:34And, and it definitely sounds like there's still a lot of kind of puzzle
197. 10:37pieces that you, you kind of have to- Oh, yeah … continually be
198. 10:40shifting and moving things around.
199. 10:41Uh, a- and, uh, we've talked about it before, but it still sounds
200. 10:44like people are one of the hardest challenges around that, about making
201. 10:48sure who's the right fit and where.
202. 10:50Do, do- Yeah … the people challenges still feel like, you know, one of the, the
203. 10:53biggest things affecting the space today?
204. 10:56Yeah.
205. 10:56So I think people challenges in general.
206. 10:58Um, you know, uh, right now we're in a stage, um, and I think I've
207. 11:03talked about this before, where you can bring in kind of, um, newer,
208. 11:07inexperienced people at a base wage.
209. 11:10You're gonna train 'em.
210. 11:12You're gonna have little hiccups with accidents maybe or safety.
211. 11:15Um, and the learning curve's gonna be a little bit longer.
212. 11:17Whereas these kind of tenured, um, even outside the network, tenured
213. 11:21drivers, safe, experienced, um, delivery or just trucking experience,
214. 11:27they're gonna cost a little bit more.
215. 11:29Um, and then the people in the middle are the ones that, you
216. 11:32know, try not to come to work.
217. 11:33It's, it's great.
218. 11:34Um, but I think this, you know, between the economic challenges, um,
219. 11:38you know, and just the workforce in general, it's changed so much, um,
220. 11:43that you just have to find a different way to structure benefits, and it's
221. 11:47not a cookie cutter anymore, right?
222. 11:49Like, before I'd be like, "Hey, we start our guys at 150 bucks a day,
223. 11:53and that's what it looks like." Like, that's not how it is today.
224. 11:56Um, it's really a negotiation and a conversation with each employee,
225. 12:00um, when you bring them on.
226. 12:02I mean, obviously you have a very base set of offerings, um, but that
227. 12:06offering needs to be able to address the needs of different people.
228. 12:11Yeah.
229. 12:12Uh, it, do you find that the employees are- Are they open to
230. 12:17being in kind of different boxes?
231. 12:19Like, you know, a, a lot of times employees talk.
232. 12:21Does that, is that a hard challenge where you've got one people on one plan and
233. 12:25different people on another that fits them, but, like, is there any, any of
234. 12:28that dynamic that's hard to navigate?
235. 12:30So no, because all of the plans are offered to everybody.
236. 12:34Mm. So the plans are, you know, like, we have three employ- um, medical
237. 12:38plans, and we have, you know, ancillary plans, um, short-term disability and
238. 12:44some retirement-type plans, 401, and, you know, all these different things.
239. 12:49Um, and we're kind of in this plan to meet people where they are, right?
240. 12:54So we have a community of, of younger generation kids that are not necessarily
241. 13:00into 401, even though I try to push them and let them know- Yeah … like, "Dude,
242. 13:04we match 100%. It's free money. Tax-free free money." Doesn't matter, right?
243. 13:10Yeah.
244. 13:10So what matters to them?
245. 13:12Or I have kids that are 26 and under, and they're still on their parents' insurance.
246. 13:16So medical benefits, though they're like, "Yeah, that's great, it makes you
247. 13:19a good company," they don't elect, right?
248. 13:22So then what is the draw to keep them here?
249. 13:26What's that retention program look like for them, right?
250. 13:29So is it career pathing?
251. 13:31Is it, is it, um, you know, uh, education or, you know, skill development?
252. 13:36Like, what does that look like?
253. 13:38Um, so we try to meet people, um, you know, where they
254. 13:40are and kind of understand.
255. 13:42Um, we have people that they're like, "Listen, I'm the provider for my entire
256. 13:46family. Um, I appreciate the PTO. We're not going on vacation, so I would like
257. 13:52to cash that out." We used to be a use it or lose it type of plan, and we had
258. 13:56to move to a s- you know, a program that allows them to cash out their PTO.
259. 14:02Um, and, and it's worked out, you know?
260. 14:04So just knowing your people, and I think, um- You know, from a retention standpoint,
261. 14:09just think about what your employees need.
262. 14:11Um, and don't offer what you think they need.
263. 14:14Offer what they're asking for, right?
264. 14:17And what, what they need.
265. 14:17It could be something super small.
266. 14:19Um, you know, we offer an EAP program, which is, um, employee
267. 14:24assistance program, and it's free critical and mental health as well
268. 14:28as wa- uh, work-life balance things.
269. 14:31So it's got like dietary and exercise and videos and, you know, career building.
270. 14:36Like, I want to be a manager, but I have a terrible temper.
271. 14:38How do I work on that?
272. 14:40And they can actually take some skill classes that better themselves.
273. 14:43Whether they're gonna stay with us or not, these are enriching the human, right?
274. 14:48And benefiting the human.
275. 14:50Um, so we have those types of programs.
276. 14:52The EAP also offers like free legal advice and financial advice and daycare advice.
277. 14:58All kinds of stuff.
278. 14:59Like, but it meets every single person where they are, and it's there
279. 15:02for them and th- and their family.
280. 15:04And that benefit is so valuable to us because when your driver shows
281. 15:10up with all this weight, right, this heaviness from home, um, it becomes
282. 15:15super difficult to come to work.
283. 15:17Um, and I tell people all the time, I'm like, like, use the program, right?
284. 15:21Educate on the program.
285. 15:23I tell my managers, point people to the program if they're stressing.
286. 15:26If you see them falling off a little bit, um, you know, offer them, you
287. 15:30know, that assistance to kind of, hey, we're recognizing this isn't really you.
288. 15:34What can we do about it?
289. 15:36Um, and then just from the financial standpoint, wages are
290. 15:38higher than they've ever been.
291. 15:40Um, and then the cost of training is higher than it's ever been, um,
292. 15:45especially with, you know, outside influences, contingency, um- contractors
293. 15:50losing their business and just kind of, you know, overpaying just to
294. 15:54kind of hold on to that last moment.
295. 15:56So, you know, staying in contact with your drivers and, and, uh, letting them know,
296. 16:00like, "Hey, we're secure. There's a reason I don't pay you $300 a day." Mm-hmm.
297. 16:03"Because we actually want to be here in two weeks." Um, so all
298. 16:07those conversations, like, we're not immune to that at our, at our size.
299. 16:10Uh, these are individual contract conversations that we're having.
300. 16:14And interestingly, again, five contracts in the same, right, two, two-hour radius,
301. 16:21um, the conversations are different.
302. 16:22Each contract needs something different.
303. 16:25Um, and I always try to tell my guys, like, find out what the love language
304. 16:28is, right, of, of that contract, right?
305. 16:31Where some of it's respect, some of it's, um, we have one contract where,
306. 16:35man, if somebody calls off, those guys want my managers in a truck
307. 16:40pulling as hard as they are, and if my managers are in a truck, they
308. 16:44will go to the ends of the earth.
309. 16:45They'll work to 8:00 at night.
310. 16:47But man, if my manager's like, "Sorry, dude, I gotta work on the schedule,"
311. 16:50they'll all bring their trucks back at the normal time without helping.
312. 16:53Like, that's the love language, right?
313. 16:55So just understanding kind of the needs and meeting your people where
314. 16:58they are, um, has been a huge shift.
315. 17:00It's, it's something that we've never had to do, um, but in the last
316. 17:04year has become really prevalent to how you, how you manage people.
317. 17:08And then, I mean, we can get into a whole nother side of that
318. 17:11with discipline and patterns of, you know, bad behavior as well.
319. 17:15Um, you know, it's, it's the, the pool of drivers of I
320. 17:20guess, careful drivers, right?
321. 17:22Um, and I always say that.
322. 17:23Like, this job is not difficult, right?
323. 17:27Take the box, deliver it to the house, right?
324. 17:30Don't hit stuff.
325. 17:31Like, it doesn't get super complex.
326. 17:34But, um, what you do need is a careful human, right?
327. 17:38And a caring human.
328. 17:39So you have to care about your team, you have to care about your attendance,
329. 17:41you have to care about driving.
330. 17:43You have to be aware, right?
331. 17:44Customer service is now top of, you know, ride scores and PPOD.
332. 17:49That's all part of customer service.
333. 17:51So it's a different caliber of employee.
334. 17:53So we may have to pay a little bit more, um, to get those
335. 17:56metrics met along the way, right?
336. 17:59Chew gum, jump up and down on one foot.
337. 18:01Like, you have to do all the things now, not just deliver boxes.
338. 18:05Yeah.
339. 18:05Yeah, and, you know, one of the things that you mention it often, but I think
340. 18:10sometimes, uh, is easy to forget is that, yes, a lot of it comes down to, you know,
341. 18:16meeting your drivers where they are, finding the right way to motivate them.
342. 18:18But you kind of have to start by asking and, and actually be willing
343. 18:22to listen, which sometimes that's…
344. 18:25Uh, it- it's really easy to get caught up in delivery metrics and safety
345. 18:28metrics and forgetting that these are people that have motivations.
346. 18:32And while, yes, you know, it's a deliver these packages, you can get
347. 18:35a lot of benefit to your business by understanding what motivates each
348. 18:39of your driver differently- Yeah
349. 18:41and how your managers can take advantage of that and make sure that everybody's
350. 18:45moving in the right direction.
351. 18:46But it, you do have to be intentional about asking those questions and
352. 18:49listening, and that, that can be- And I think they also, you know,
353. 18:53more so now than ever, I mean, we've always been very, um, acknowledging
354. 18:58of our employees and their successes.
355. 18:59But I think now more than ever, people need that.
356. 19:02Um- Mm-hmm … they need that good, right?
357. 19:04And if you liken your relationship with your employees to the relationship
358. 19:08that FedEx has with you, um, you'll recognize when you're kind of
359. 19:13in their, you know, kind of butt about service and safety, right?
360. 19:18You're just kind of coming at them like punch, punch, punch.
361. 19:20And you know how that feels, right?
362. 19:22When FedEx comes at you and they're like, "Yo, you know, your, your… This is down,
363. 19:25and this is down, and this is good, but you gotta improve here, you gotta improve
364. 19:28here." You're like, "Okay, but you're welcome for the 15,000 boxes, right?
365. 19:32But that one, I'll get ya." Um- Yeah … but that's, they're the customer, right?
366. 19:36And all of these things, we have to remember, isn't them
367. 19:39being big brother, right?
368. 19:41This is them arming their network with the best service, right,
369. 19:46and the best employees so that they can go out and sell that.
370. 19:50Mm-hmm.
371. 19:50So that the… right?
372. 19:51So we, we can maintain volume.
373. 19:54I mean, at the end of the day, don't you wanna be part of that?
374. 19:56It's, it's good.
375. 19:57It doesn't feel good all the time, but there is a bi- there is a
376. 20:00positive reason why we're doing this.
377. 20:03Um- Yeah … and no one comes to work every day and says, "I wanna do 96%
378. 20:07of, of what is expected of me," right?
379. 20:09So you wanna strive for the best and you wanna, you know, give your, your
380. 20:13customer the, the best service they can.
381. 20:14And when you do that with a group of people that are on board with
382. 20:17you, that's when growth opportunity and, you know, benefits will come.
383. 20:23Yeah.
384. 20:24So it all ties back, right?
385. 20:25Yeah.
386. 20:26So there, there's a couple of operational things that I, I, I want us to touch on
387. 20:30that I think are kind of top of mind for a lot of people, fuel and large package.
388. 20:35I think those are… I want to talk about managing them, but before we get
389. 20:38into actually, you know, kind of what it looks like today, I think we should kind
390. 20:41of set the foundation because sometimes people don't understand how both of
391. 20:46those two rates are actually calculated.
392. 20:48So- Yeah … can we start with fuel, and then we'll come to the large package and
393. 20:51just kind of talk through a little bit about how those fuel rates are calculated
394. 20:55and how they change week to week, uh, a- as this price of fuel keeps fluctuating.
395. 21:00Yeah.
396. 21:00So, um, so this is an interesting one, right?
397. 21:03We chose to be in trucking, right?
398. 21:05Yeah.
399. 21:06So fuel is a big piece of that, and when fuel rises, it's going
400. 21:11to be a direct effect to us.
401. 21:13Um, fuel calculation, however, is separate, right?
402. 21:16So the fuel cal- calculation is very messy.
403. 21:20Um, and it's not… well, it's not very messy.
404. 21:22It's just messy.
405. 21:22Um, but if you understand kind of how you're paid and you understand that
406. 21:28it does have some float, um, then you can understand it a little better.
407. 21:32Uh, everything else that we as contractors kind of manage to is very fixed, right?
408. 21:38It's, it's a very fixed number.
409. 21:40Um, so per stop, per package.
410. 21:43But the, the fuel actually does float a little bit.
411. 21:47You have a rate that you've negotiated with FedEx, um, for your fuel, right?
412. 21:53Um, and that's a per stop rate.
413. 21:55So there's a calculation, but FedEx does change that calculation, right?
414. 22:00They, they give you kind of a flux, um, when things are up or down.
415. 22:05So the difference, you have a base fuel rate, which is the one that you agreed
416. 22:08to, and then you have a current fuel rate, which is also based on diesel.
417. 22:12Um, so for us, right, there's the difference between those two.
418. 22:16Those are on your settlement, very easy to find.
419. 22:19Um, that's a percentage.
420. 22:20That percentage is then applied to your fuel c- your, um, PCAT rate.
421. 22:25So if fuel in, in your settlement is up 72%, your fuel rate is also up 72%.
422. 22:32Now, that's not gonna offset because it is a per stop rate, right?
423. 22:36So it's not a one-for-one.
424. 22:38They're not just saying like, "Hey, your fuel went up three bucks, so we're
425. 22:41gonna give you three bucks extra per mile." That's not the calculation.
426. 22:44It is a per stop calculation.
427. 22:47Um, and then you kind of have to figure out what that looks like, um, as far as
428. 22:51how many miles per stop you drive, right?
429. 22:54Your country contracts, like our country contract, we're getting
430. 22:58drilled a little bit on fuel right now because thanks for the extra, you
431. 23:02know, 72% of that, you know, 50 cents.
432. 23:07But fuel is actually up, and I'm, you know, and I'm at eight miles per stop.
433. 23:11So that's a little messy in that contract, where the other contracts
434. 23:14even out a little bit more.
435. 23:16But I think just understanding that there is some float.
436. 23:19And to be fair, there's other customers or contracts out there.
437. 23:24So if you are a landscaper, your customers won't tolerate, you know, a, a big unflux.
438. 23:30And, and the customer's also not saying like, "Hey, sorry landscaper, I know
439. 23:33fuel's up, so here's an extra 100 bucks."
440. 23:36Right?
441. 23:36So you have a customer that has met you kind of where you are,
442. 23:39understands that fuel's gonna flux one way or another, and has adjusted.
443. 23:44Uh, but it is not gonna be a one-to-one.
444. 23:46Um, also, you chose trucking, right?
445. 23:51So I always say, like, you never see a farmer scoring the land
446. 23:54when it's a drought, right?
447. 23:55This is the, this is the trade he selected.
448. 23:58So you gotta kind of figure out then what do you do, um, to address how you can then
449. 24:03get more efficient with fuel costs, right?
450. 24:06But, but understanding that fuel rate, um, and it's super easy.
451. 24:10You can take the fuel dollar amount and divide it by your stops, and you
452. 24:14very g- you know, you'll get an idea.
453. 24:16And then you can see what the difference is between what they're actually paying
454. 24:19you and, you know, what you agreed to.
455. 24:21And, and again, you know, it's… I, I believe that it's fair at this point.
456. 24:26Uh, again, it's never gonna be one for one.
457. 24:28It's not one for one when fuel's $2.98, um, and it's not
458. 24:31one for one when fuel's $6.
459. 24:33So that understanding has to be there first.
460. 24:37Um, but they are, they are putting something in place
461. 24:40to, to help with the float.
462. 24:41So that's, um, you know, it's kind of a good thing, but I don't think everybody
463. 24:45really acknowledges that off the gate.
464. 24:48Yeah, and, and there's, there's two questions in the chat about fuel.
465. 24:50So one, uh, you've addressed this one, but, you know, somebody
466. 24:53was saying, "I thought FedEx covered fuel." Uh, and they do.
467. 24:57They cover an amount of fuel.
468. 24:59So they pay, li- like Amy was saying, there's a certain amount in your
469. 25:02contract that they pay per stop.
470. 25:04Mm-hmm.
471. 25:04And it… But it's never going to completely cover your fuel cost.
472. 25:07And P&D, it's not designed to cover your complete fuel cost.
473. 25:11No.
474. 25:11It's the way FedEx structured it.
475. 25:13Um, but it does cover some costs.
476. 25:13Yeah.
477. 25:13So it's also, it's also called a fuel supplement- Yeah … right, for a reason.
478. 25:17It's a fuel surcharge, supplemental charge.
479. 25:20Um, they're not paying for your fuel.
480. 25:22It's your business.
481. 25:23Um, right?
482. 25:24So part of those other costs of operation, right, which is, um, how much it costs
483. 25:30to start the truck, uh, when you operate.
484. 25:33Uh, we have a cost of that, right?
485. 25:35So we figure out, before I load one box on my P&D truck, how much does
486. 25:41it cost for me to show up, right?
487. 25:43And we get paid.
488. 25:45There's a service charge, there's stop charges, there's pickage charges, there's
489. 25:48all the charges, right, that add up.
490. 25:50And the idea is that all of that is going to cover your costs,
491. 25:53and you will then be profitable.
492. 25:55But it's not… The fuel is not a one-to-one.
493. 25:59It's a supplement, right?
494. 26:00And the benefit of doing business with a customer like ours is that that
495. 26:05fuel supplement does in fact float.
496. 26:07So, you know, you will get, um, you know, an, an increase and an upcharge
497. 26:13or an uplift when fuel is up, um, based on your, you know, agreed base rate of
498. 26:20fuel and the current base rate of fuel.
499. 26:22So it can also go the other way, right?
500. 26:24Yeah.
501. 26:24If you negotiated a high base rate and all of a sudden fuel goes down to 298, things
502. 26:28might change a little bit differently.
503. 26:29Yeah.
504. 26:29Um, but yeah, so there's a little bit of float.
505. 26:31You just have to, you know, ask your terminal manager or ask your BDS, um,
506. 26:36you know, or your SPS I guess it is now.
507. 26:39Um, ask them, you know, kind of which is the middle man between FedEx and us.
508. 26:43Um, still a FedEx employee, but ask them, you know, if you have any questions
509. 26:47about how to, how to calculate your fuel.
510. 26:49Yeah, and th- the other question around fuel.
511. 26:52So, you know, you talked about you have one of your territories that's rural,
512. 26:56and right now we're in a, a point in time where fuel rose dramatically.
513. 27:00Mm-hmm.
514. 27:00So there is the adjustment week to week, but is there anything that you've ever
515. 27:04done or tr- like, have you ever gone back and said, "I'm going to renegotiate
516. 27:07because the price of fuel has gone up", or is that just something that
517. 27:10you're trying to manage operationally?
518. 27:13So we've never really done that because in those contracts, those base rates in
519. 27:18the fuel rates acknowledge that, right?
520. 27:22So my, in my flux in that country cons- contract is much higher
521. 27:27than the other ones in the city.
522. 27:29So FedEx has already kind of taken that in account.
523. 27:32Um, and you know, I hate the word baked in, but they've already kind of
524. 27:35also taken in account that I'm doing eight to 10 miles per stop because my
525. 27:41contract is paid differently, right?
526. 27:44So it's not, again, a one-to-one.
527. 27:45It's very unique.
528. 27:47Um, but because of the way that they've structured it, when fuel
529. 27:50rises, we do get a little bit more float on that contract as well.
530. 27:55FedEx is pretty good about, the engineers are pretty good about that.
531. 27:58Now, if you don't feel it's correct, or you don't feel like they can acknowledge
532. 28:02that, you know, eight stops and say it used to be, or eight, eight miles per
533. 28:06stop, say it used to be four miles per stop and you gained an area, or things
534. 28:10got difficult and now it's eight to 10 miles per stop, that's definitely
535. 28:14a conversation that you can have.
536. 28:16Start with your, your SPS, which is your middleman.
537. 28:19Go to your terminal manager, and then, you know, potentially, um,
538. 28:22you know, open yourself up to renegotiate or have a conversation.
539. 28:25Any time there's, um, hard data changes in your contract, 100% an opportunity.
540. 28:32Actually, the easiest opportunity because there's no gray and no subjectivity.
541. 28:37It's just, hey, this is what it used to look like, and now it looks like
542. 28:40this, and these are hard numbers.
543. 28:42Um, so it's, it's very easy to have those conversations, and those are the
544. 28:45conversations that the engineers, right?
545. 28:47They're numbers guys.
546. 28:48Those are the ones that they want to have.
547. 28:50So, um, so yeah, if it's changed significantly.
548. 28:53But, um, you know, for example, my rural contract is, um, they've,
549. 28:58they've accommodated for that.
550. 28:59We've had those conversations already.
551. 29:01Um, you know, we've shown them the seven-mile driveways,
552. 29:06literally to deliver one box.
553. 29:09Um, and y- and because it is a sum of all parts also, right?
554. 29:12So, um, it's not just how much that one stop costs, uh, but
555. 29:17it's the sum of all parts.
556. 29:19Uh, so you have to look at your contract kind of, um,
557. 29:21individually and holistically.
558. 29:23Yeah.
559. 29:24Perfect.
560. 29:25Yeah.
561. 29:25Okay.
562. 29:25So the, the other operational cost I wanted to talk about is large package.
563. 29:29So, um- Yeah … talk a little bit about what that rate is, and then we
564. 29:34can talk a little bit about how it's affecting, uh, the market right now.
565. 29:37Yeah.
566. 29:38So I think the first thing to say is, um, as contractors or as per piece
567. 29:43or per mile, um, people, uh, this one gets a little bit fuzzy, and it,
568. 29:48and it gets frustrating sometimes.
569. 29:50Um, the large packages are paid based on a percentage of large packages of
570. 29:56your total for the month prior, right?
571. 29:58So this, this month, um, I'm getting paid a percentage of
572. 30:06what May, what May's large package percentage looked like.
573. 30:09So the large packages have a, you know, an, uh, you know, it's
574. 30:14girth by weight, by height, all these things, and if it qualifies,
575. 30:18it's considered a large package.
576. 30:20That then, um, contributes to the total of large packages, and then
577. 30:29that is then a percentage of all the packages you deliver, right?
578. 30:33Um, so, so that's how that percentage is, you know, kind of made.
579. 30:39Um, then that is applied to all of the stops right, in
580. 30:46your, in your current month.
581. 30:47So this month, if I do 10,000 stops, um, or 10,000 packages,
582. 30:52the percentage is applied to this.
583. 30:54Last month's percentage is applied to, right, this week's rate on my settlement.
584. 30:59Um, so it's a little bit fuzzy in the way that we as contractors wanna see,
585. 31:06I know for a fact in my head that Joe on Route 420 did 720 refrigerators
586. 31:13this week, and I wanna see a line item that says rate times 720.
587. 31:19That would make me feel secure and warm and fuzzy, but
588. 31:22that's not how it does, right?
589. 31:24And then there's other factors, right?
590. 31:26So just that general factor of the line item of how we think
591. 31:30is one, one frustration, right?
592. 31:33Is that that's not how it's paid.
593. 31:34It's paid as a percentage, and then that percentage then gets the per piece rate.
594. 31:41So that's kind of fuzzy math in general.
595. 31:44Um, the other things that, I did take some notes, too.
596. 31:46The other things that, you know, affect that, that, that kind of throw
597. 31:50us off, is when smalls are injected.
598. 31:53So, right?
599. 31:54So we talk about, um, 2.0 coming.
600. 31:572.0, no one's overnighting a refrigerator.
601. 32:00Mm. So the beautiful part about 2.0 is it's the injection of small boxes, right?
602. 32:05Peak is also the injection of a lot of small boxes, right?
603. 32:09Shirts and pants and shoes and all the things that come in these
604. 32:12tiny little lovely boxes that we actually really like to deliver.
605. 32:16Right?
606. 32:16So that's fantastic, but the problem is that the, even though the ICs
607. 32:22may, or the large packages may rise a little bit or even significantly,
608. 32:27the total stops is also rising, right?
609. 32:29So that is a little bit of fuzzy math as well because you can, you know, FedEx
610. 32:34is gonna bring us all these 2.0 volume, and the big boxes aren't going away,
611. 32:39but that percentage is gonna drop just slightly because we're injecting more.
612. 32:43So if you're in math, right, the denominator changes, um, and
613. 32:47then that affects going forward.
614. 32:49So those are conversations to have, right?
615. 32:51Like, wait, my percentage went from 10 to seven, but I still have
616. 32:56to run a full-time bulk truck.
617. 32:57Why?
618. 32:58Well, because you have more smalls and the bigs are still there and
619. 33:02they still need a bulk truck.
620. 33:03Or, you know, whatever that looks like, or even a straight truck for, for some
621. 33:06of the, the business routes, right?
622. 33:08So that's one of the other thing, and then the other big
623. 33:11feel is the actual feel, right?
624. 33:14Because it's projected a month forward- Um, and you're kind of using that rate.
625. 33:20The actual feel of, let's example, um, it was just April, so May
626. 33:25was a little clunky, right?
627. 33:26Because there was Wayfair Days, and we're coming into Amazon Prime, which is June
628. 33:3122nd through the 25th, right, Prime Days.
629. 33:33So if you keep an eye on those things, right?
630. 33:36So April's was way down.
631. 33:39April's percentage of large packages was way down.
632. 33:42But tax season and Way Days and all these specials pushed all this new
633. 33:47volume into the end of April and May.
634. 33:50So now I have this low percentage applied to really big volume, right?
635. 33:56So the actual feel is like, dude, there are boxes everywhere, right?
636. 34:02And then you get the money, and you're like, meh, that was not reflective in the
637. 34:06amount of work that we did this month.
638. 34:08The good thing is that you're delivering those boxes in May, so
639. 34:12June should look better, right?
640. 34:14And it's kind of a rolling.
641. 34:16So, you know, it's very difficult for us to wrap our heads around
642. 34:19it as, like I said, per piece and mile, per mile people because
643. 34:23that's, that's what we want to know.
644. 34:24Like, I delivered 150 stops.
645. 34:26Our drivers are even in that mentality, right?
646. 34:28I did 150, I want to make X. I did 100, I know I'm going to make less.
647. 34:33Like, and that's just not how large package works.
648. 34:35So it gets a little fuzzy, but that is in fact kind of, that's kind of
649. 34:39the f- the, the formula, and then kind of the fuzziness that comes with it.
650. 34:44We have kind of rode this out though.
651. 34:46Um, and it does… There are months that you're like, "Holy Hannah, we're
652. 34:50at 13%? I haven't really seen it." Not recently because, you know, the boxes,
653. 34:55they just keep coming for some reason.
654. 34:57The big ones.
655. 35:00But yeah, so that's, that's kind of, uh… So I think I, I think
656. 35:03I, yeah, I think I nailed all, all my concerns and my kind of…
657. 35:06It's all, um, you know, understanding and mindset too.
658. 35:11Yeah.
659. 35:11It, now, I, I think exactly what you're saying.
660. 35:14It, it, sometimes it can feel like it's a lot more, and maybe the, maybe the math is
661. 35:18just gonna be applied to the next month.
662. 35:20But have you ever tried or have you ever found a good way, like
663. 35:22let's say you do think for some reason they're calculating it wrong.
664. 35:26Is there a good way to either check back and try to see if it was right,
665. 35:30or is it just something you would almost have to manually track and
666. 35:34compare to the next month's percentage?
667. 35:36So you can, um, pull data out of DRO the night before, um, and it'll give
668. 35:42you an idea of like what the cubes are.
669. 35:45The problem with DRO in that way is that if there were like three small
670. 35:48boxes that added up to 50 pounds for one stop, it's gonna mush that together.
671. 35:53And those really aren't ICs, it's just three heavy boxes for one
672. 35:57customer that went over 50 pounds.
673. 35:59Um, and they're not gonna count that, but DRO will see it as such.
674. 36:02Um, so I think there's a little bit of fuzziness.
675. 36:05Um, there, you know, definitely, you know, have your guys like, you know,
676. 36:10kind of keep track of what that is, but there is no like 100% way to say
677. 36:14like, "All of these were 50 pounds."
678. 36:16Um, especially with the mislabels, right?
679. 36:19Like I got a tire the other day, and I'm not kidding, it was a
680. 36:22tractor tire, and it was bigger.
681. 36:23I have a picture of my driver in the tire.
682. 36:26She's like standing in it, like right?
683. 36:28Yeah.
684. 36:29And that, that tire was march, marked 16 pounds, right?
685. 36:32So we had to actually, she reported it and was like, "Hey,
686. 36:37we're not getting paid for this."
687. 36:38Yeah.
688. 36:38Right?
689. 36:39Um, not that, you know, what we were getting paid was gonna offset
690. 36:42having to flatbed this thing to a, to a customer's location.
691. 36:46But, um, but you know, we reported it to FedEx.
692. 36:50They in our- already caught it on their side because, you know,
693. 36:53they have a process for them- for themselves on how they catch large
694. 36:56packages and, and mismatched, um, labels and things like that.
695. 37:00Um, they obviously have fraud calculations and, you know, the, the belt lines
696. 37:04have scanners, and the IC tuggers have, you know, they do all that good stuff.
697. 37:10Um, but on our side, I mean, it really does come down to the people saying,
698. 37:14like, "I'm absolutely blown out," right?
699. 37:17Mm-hmm.
700. 37:17So we kind of track it on that regard.
701. 37:20We track it more so on resources than on individual packages.
702. 37:24So I really don't care about the percentage or how much
703. 37:27they're paying me in that regard.
704. 37:29Um, I mean, I do, don't get me wrong.
705. 37:31But I'm more concerned with how many resources it took me
706. 37:34to service them successfully.
707. 37:35Yeah.
708. 37:35Right?
709. 37:36So I can show them that it was, like, you know, $2,412 versus $2,106.
710. 37:42Like, okay, you owe me 100 bucks, right?
711. 37:45I'm not looking at that.
712. 37:46I'm looking at, like, hey, these boxes are so big.
713. 37:49Because a large package is very, like, okay, it's one, right, in your head.
714. 37:54It was one large package.
715. 37:55But is it a tire the size of the building?
716. 37:58Is it 10 refrigerators?
717. 38:00Or is it just a bunch of, you know, auto parts stuff that
718. 38:03was over 50 pounds- Mm-hmm
719. 38:05that you can fit in a truck, right?
720. 38:07But what we're finding is the boxes are so big that we're just cubing out.
721. 38:11Mm-hmm.
722. 38:11So I think that's the bigger conversation that you don't really get, um, by
723. 38:17kind of, you know, analyzing that.
724. 38:19So we would like to say, you know, we typically run 17 routes.
725. 38:22We had to run 20 routes on Tuesday because, you know, because of Amazon
726. 38:26Prime days or because of- Yeah
727. 38:28you know, weigh days or whatever that looks like.
728. 38:30Um, but the boxes are just coming, and they're getting bigger.
729. 38:33So, you know, I think those are the conversations, and if that becomes
730. 38:36regular, right, then that's when you have to start tracking it and having
731. 38:40conversations with FedEx that, you know, or when your efficiency is dropping.
732. 38:43You're like, "Hey, my efficiency is in the tank, but I'm servicing you. Like, I'm
733. 38:48doing this for you, and we gotta get the boxes out, so what do you want me to do?"
734. 38:52They're like, "Well, buy bigger trucks." I'm like, "They're all 1200s. Like,
735. 38:55I- … I can't get any bigger," right?
736. 38:57Yeah.
737. 38:57I can't put a, a straight truck on every route s- to accommodate weigh days.
738. 39:02Um, so I think, you know, looking at it differently and not
739. 39:05just, is the percentage wrong?
740. 39:07Um- You know, and you can also tell if your percentage changes based
741. 39:11on the number of stops you have.
742. 39:13So you can tell, like, if you were super busy and your percentage
743. 39:16drops, you know, there's probably a, a pretty big injection of smalls.
744. 39:21Yeah.
745. 39:22Talk a little bit more there about what you're doing or what you
746. 39:25can do to manage your business as this large package increases.
747. 39:30And, like, you know, there's gonna be sometimes where you can see in
748. 39:32advance, hey, we're gonna have a bad week or a bad couple of days because
749. 39:35we know- Mm-hmm … a major event.
750. 39:36You know, there was Prime Day, next week's gonna suck, just prepare for it.
751. 39:40But I think in general, like you said, we're continuing to see a,
752. 39:43a larger number of large packages.
753. 39:45So- Yeah … what, besides building, just buying bigger trucks, which
754. 39:49is, is definitely part of it, what else do you kind of do to
755. 39:52manage this as this is happening?
756. 39:54So I think the first thing is, is get your head right around ICs and bulk and
757. 39:58communicate that to your drivers, right?
758. 39:59This is job security.
759. 40:01Um, it doesn't feel good, but FedEx is using this, their sales team are
760. 40:05using this as a way, as, like, a barrier of entry to get more customers
761. 40:10and get more small boxes, right?
762. 40:12They wanna process more small boxes too.
763. 40:14Um, on my linehaul trucks, if the boxes are all big, they're running more
764. 40:18linehaul to move the same number of boxes.
765. 40:21So they want the bigs and the smalls, right?
766. 40:23Um, and they want more smalls 'cause it's easier on the
767. 40:26network, it's easier on everybody.
768. 40:27So, you know, FedEx isn't out to get us, but this is a competitive advantage
769. 40:32that they've kind of dug their heels into, um, to get us more volume and
770. 40:37to prove that we can do it and that we can do it safely and timely.
771. 40:40So just kind of putting that there, right, is that there's a reason behind it.
772. 40:43They're not just going, "Muahaha, how can I stress the network," right?
773. 40:48Um, so I think that's the first thing, is for everybody to kind of get that
774. 40:51off their, right off their chest.
775. 40:54And then secondly, um, you know, depending on the size of your contract, right, if
776. 40:59you're a smaller contract, um, maybe your BC, you know, kind of sweeps kind of the
777. 41:03more difficult and the bigger bulk, right?
778. 41:05Make a plan for it.
779. 41:07If you have a bigger contract and you can, and you have a full-time BC, uh, full-time
780. 41:11bulk route, you might need to put a second one in place during certain times of year.
781. 41:15Um, at Christmastime, we have, um, a full bulk supervisor who kind of does bulk and
782. 41:22sweeps and pickups and kind of manages service, and we put another guy on.
783. 41:26We put three more bulk trucks on- Mm … at peak, right?
784. 41:31Just bulk.
785. 41:32And the cool thing about that is that we put all the… So when you say, like, how
786. 41:36many people are you hiring for peak, we hired more bulk, but then my other guys
787. 41:40were able to do, like, 300 stops, right?
788. 41:42288, 300 average because they had all these tiny little things.
789. 41:45They're just like the mailman, they're just throwing stuff left and right, right?
790. 41:48Well, not throwing, but you know what I mean.
791. 41:49Anyway, um, so, um- So that's one thing, right?
792. 41:53The other thing, so your managers can help.
793. 41:55You can build large package routes.
794. 41:58You can also have, you know, a program where they leave it, but they have
795. 42:01to have a conversation with you.
796. 42:03We have dri- managers, our, our team leads and managers are walking the
797. 42:07dock in the morning because those trucks, they close their doors, and
798. 42:10they're like, "Shh, you can't fit it." You open the door, and you're
799. 42:13like, "Dude, you can fit this," right?
800. 42:16Yeah.
801. 42:16You know, it's gonna be a problem, but you can fit it.
802. 42:19So we try to make sure that they're fitting things, having good conversations.
803. 42:23We also use drive-throughs, right?
804. 42:25Like, a lot of my guys drive through an area before they get to their own.
805. 42:29They're on the outskirts, and maybe they can hit a, um, you know, a, a bulk stop
806. 42:34or a large package stop on the way to their route and kind of free up everybody.
807. 42:39So there's a lot of options to problem solve, um, especially depending on,
808. 42:42like, what size of contract you are.
809. 42:44Um, but I think the big thing is, you know, if it becomes regular where you
810. 42:49have to run these, make sure that you're having conversations with FedEx about
811. 42:52the resources that it takes to service them, um, so that you're not upside down
812. 42:57making sure that your service is 100%.
813. 42:59Um, there is some wiggle room in there, right?
814. 43:01But there are gonna be days that things are heavy and things are uncomfortable.
815. 43:05So I would also say stay aware, right?
816. 43:08Like, um, let's see.
817. 43:10I'm gonna grab my phone real quick, but stay aware of sales.
818. 43:13I have a separate email that e- that I, you know, 'cause I don't
819. 43:16want every big box special and on sale thing, um, going to my email.
820. 43:22But, you know, make sure you are, um, kind of addressing, you know, the sales
821. 43:27and what's going on in the network.
822. 43:28I just me- I just sent a message, and of course I'm, you know, trying to do this
823. 43:32while I'm on the phone, so I apologize.
824. 43:34Um, but I s- just sent a picture of weigh days, um, or Amazon
825. 43:38Prime days, to my managers.
826. 43:39I'm like, "Hey, this is June 22nd through the 25th." And it's
827. 43:43vacation season in Ohio because it actually gets nice in July.
828. 43:47So what does the 26th through July 4th look like?
829. 43:52Also knowing that that's a holiday, right?
830. 43:54So now we have a week where one, right, we're gonna have one day off,
831. 43:58and we're gonna get- just beat up with these big boxes from weigh days.
832. 44:03And if you look at what's on sale, it's like 80% off like patio furniture,
833. 44:08and umbrellas, and outdoor rugs.
834. 44:10And you're like, "Awesome." Right?
835. 44:13So how do you communicate that to your team, but also make sure they don't
836. 44:17call off because you're scaring them?
837. 44:19So one of the things that you could do in that regard is maybe run a
838. 44:22truck, or plan for your manager to be in, um, you know, in town.
839. 44:27Or plan to run heavy, kind of like you would for peak.
840. 44:30So instead of 15 routes on a 15 route day, maybe you run 17.
841. 44:34And you try to offset and accommodate that so you're not reacting, right?
842. 44:38We're business owners.
843. 44:39Don't be surprised a- about Prime Days.
844. 44:42That's in everybody's email, on everybody's cellphone, on
845. 44:44everybody's Facebook page, right?
846. 44:46Don't be surprised that the volume's coming.
847. 44:48You know what we do for a living, right?
848. 44:50So I think that's part of the conversation, is like
849. 44:53stay ahead of it, right?
850. 44:54We all know that peak is coming, and we're not surprised Santa wants to
851. 44:57bring stuff six weeks before Christmas.
852. 44:59That's not a surprise.
853. 45:00But all of a sudden, weigh days comes and you're, or tax season comes and you're
854. 45:03like, "Why, you know, why was it busy?"
855. 45:07You know?
856. 45:07And with that you may also need to put in some incentive programs.
857. 45:13Um, and know that, you know, FedEx is gonna pay you for the volume, but
858. 45:16they're not gonna pay you bonuses.
859. 45:18Um, you know, and that, that current LP rate is gonna roll next month,
860. 45:23uh, to the, to the next month, so hopefully that'll cushion a little bit.
861. 45:26But it might cost you a little bit, um, to run those extra resources to cover it.
862. 45:30But instead of kind of chasing your tail and re- reacting, is to
863. 45:34really plan and get ahead of it.
864. 45:37And I guess quickly for, you know, you keep mentioning Amazon Prime days.
865. 45:41Why, as a FedEx contractor, would you be worried about Amazon Prime days?
866. 45:45Oh, 'cause we're contracted to bring all the big boxes.
867. 45:47Yeah.
868. 45:48So FedEx has made an arrangement, right?
869. 45:50Our customers made these arrangements for us to take some of the big boxes.
870. 45:53We've proven that we can do it.
871. 45:55Um, and again, that's a marketing strategy, right?
872. 45:57It's a barrier to entry.
873. 45:58If we can take the big ones, then hopefully the small ones will come.
874. 46:01Um, so it's just, you know, it's just something that we're
875. 46:03gonna have to get used to.
876. 46:04Um, and you also have to hire with that in mind, right?
877. 46:07Have those big conversations with people that the 150 box,
878. 46:10150-pound boxes are fairly regular.
879. 46:14Mm-hmm.
880. 46:14Yeah.
881. 46:14They're not just one, they're not two-man li- You know, and I have
882. 46:17that conversation all the time.
883. 46:18Like, well, I heard, you know, I have to, this box says two-man
884. 46:21lift, but you put it on my truck.
885. 46:22And I'm like, "I will help you lift it into your truck." Yeah.
886. 46:26Two men.
887. 46:27Yeah.
888. 46:27You know?
889. 46:28Um, but we give 'em, you know, give 'em the, the tools they need.
890. 46:31Mm-hmm.
891. 46:31Um, in the country in the winter, we actually have snow sleds, right?
892. 46:35They're like flat sleds- Mm-hmm … and they put the boxes on the, the,
893. 46:39drag it right up because you can't pull in those driveways.
894. 46:41Yeah.
895. 46:42Um, so how do you, you know, make sure your folks have smart footwear if it's
896. 46:45snowy or icy or rainy, um, if they have to trek up there or call the customer
897. 46:50and say, "Hey, you know, it's winter.
898. 46:51Can we leave these at the dollar store?" What does that look like?
899. 46:54Um- Yeah … so large packages, I mean, it's a, it's a big conversation.
900. 46:58Yeah.
901. 46:58So, uh, you brought up another thing.
902. 47:00So besides large package, you know, it- it's June, but
903. 47:04we're already thinking peak.
904. 47:05So- Yeah … anything Schedule K or anything you're expecting different
905. 47:08this peak season that you're already,
906. 47:11uh, preparing for or that FedEx has already started conversations around?
907. 47:13Oh my gosh.
908. 47:14I have no, I mean s- Literally, if I say peak to my guys right now,
909. 47:19they're probably gonna kill me.
910. 47:22To be fair, because again, FedEx is, you know, uh, these, these new contracts
911. 47:26that we've gotten, it, a lot of it does include quite a bit of growth.
912. 47:30Um, so for us, we're already, like I'm hiring and ramping
913. 47:34up almost like it's peak.
914. 47:35Mm-hmm.
915. 47:35Um, you know, and that'll be for a before peak timeframe.
916. 47:39Mm-hmm.
917. 47:39And then, you know, and then what?
918. 47:40I get a month rest, and hello.
919. 47:42Right?
920. 47:43But we start hiring for peak in July, and I'm hiring right now for 2.0.
921. 47:48Mm-hmm.
922. 47:48So, this is just gonna be a really interesting, right, push with,
923. 47:54with staffing and, and people.
924. 47:56Um, but it'll, you know, it's gonna be, it's gonna be busy.
925. 48:00Um, it'll be, it'll be challenging.
926. 48:02Uh, but I'm, I'm excited for it, right?
927. 48:04Like, challenging times means growth and more money.
928. 48:07It, it- Yeah … always resulted in more money.
929. 48:09If you do it right, and you lean in, and you ask the questions.
930. 48:12Um, but if you see an anomaly or a pattern, um, either one of those
931. 48:17things you need to, you need to ask.
932. 48:18Ask questions and, and don't wait until you're, you know, upside down
933. 48:22or underwater or feeling the pressure.
934. 48:24Like, start, you know, analyzing your business, um, as you go, including large
935. 48:29packages, 2.0, timeframes, mileage, right?
936. 48:32Distance, stops per, uh, stops per day, miles per stop.
937. 48:36Like, you should know these things about your business so that when
938. 48:39something changes, you're like, "Hmm, not so, nah, that doesn't sound right."
939. 48:43Uh, right?
940. 48:44Or, "Hey, why are we running 27 routes all of a sudden?
941. 48:47We were running 25." "Oh, well, we run two bulk trucks every day." "Oh, I didn't
942. 48:50know that." Well, why don't you know that?
943. 48:52Right?
944. 48:52Ask the questions.
945. 48:54Yeah.
946. 48:55You feel it- Yeah … in your bank account.
947. 48:56I'll tell you exactly why you feel like you're $1,000 a day short.
948. 49:00Yeah.
949. 49:01I, I know for sure that, you know, this time of year, especially, like,
950. 49:04let's say you're a new contractor who just started this year, you're not
951. 49:07realizing, but next month is peak prep.
952. 49:10Like, you need to be already starting.
953. 49:12And so, um- Yeah … you know, Amy touched on it, but if you, if you are
954. 49:15in your first peak or you're looking at peak and you don't know how you're
955. 49:18gonna prepare, reach out to us.
956. 49:20We have a course and a program built by Amy around- Mm-hmm … peak preparation.
957. 49:24Uh- Yeah … or if you just have kind of custom questions, reach out to us.
958. 49:26There's plenty of ways we can help.
959. 49:28But, uh, it is, I, I, you know, it's… I always feel, like,
960. 49:32crazy, but, you know, it's June.
961. 49:34You really need to be thinking about October, November, December
962. 49:38already because that is- Mm-hmm
963. 49:39you know, your mo- sometimes your most important months of
964. 49:42the year, but you can't wait till then to start- No … preparing.
965. 49:46No.
966. 49:46The opportunity at peak is so big, you have to be prepared for it
967. 49:51so that you can capitalize on it.
968. 49:52Yeah.
969. 49:53Um, and that's, that's just kind of, right?
970. 49:54You just have to, you have to structure it.
971. 49:56You have to be thinking about it.
972. 49:58You have to think of capacity, both truck and human capacity,
973. 50:01what people are capable of, right?
974. 50:03And, and move forward, and we do.
975. 50:05We have a great course.
976. 50:06Um, Route Consultant, Josh, and everybody, we all came together last year.
977. 50:09It was, like, a nine-week course, I think.
978. 50:11We talked about everything from trucks to humans to route structure
979. 50:17to DRO to, oh my gosh, um- Yeah
980. 50:20Schedule K to how to even figure out what you're doing.
981. 50:22Um, it was, it was a great experience.
982. 50:24We had a lot of people that, um, you know, brought great questions, um,
983. 50:27and they could learn from each other as well, so it was a great, a great
984. 50:30kind of study group, if you will.
985. 50:32Yeah.
986. 50:33Um, so, so I've got one more question here in the chat.
987. 50:36Yeah.
988. 50:36If anybody else has questions in Q&A, this is basically your last time to
989. 50:40ask it before we come to an end here.
990. 50:42But, uh, one more from Allison.
991. 50:44So as you're thinking about and seeing these express changes and we're just
992. 50:47thinking about scale in the network, I know scale is always kind of a loose term
993. 50:51in terms of how FedEx enforces the, how large you can get in a given terminal.
994. 50:55Mm-hmm.
995. 50:56Are you seeing those hard limits change?
996. 50:58Or is there, like, a, a specific number or percentage that we're
997. 51:01seeing, or is it still kind of loose?
998. 51:03I don't think, this is again my personal opinion, right?
999. 51:06Right.
1000. 51:06That's all, that's all I need.
1001. 51:06Yeah.
1002. 51:06As, as being in- Yeah … as being in the network, um, I don't think that there…
1003. 51:11I think there's a very floaty scale, too, right?
1004. 51:13Like, I don't even know if they know what it's gonna look like.
1005. 51:16Um, I know, like, we were in a contract and we were, I don't know,
1006. 51:2019% of, and we were at the top.
1007. 51:22Mm-hmm.
1008. 51:22And then they peeled off half the terminal into a different terminal, and now we're,
1009. 51:27like, 39%, and that's normal, right?
1010. 51:29Yeah.
1011. 51:29So I, like, it depends on the co- it depends on the terminal.
1012. 51:33Um, it also depends on your success, right?
1013. 51:35Like, there's exceptions, and they can give you exceptions
1014. 51:38on scale if you're doing well.
1015. 51:40Um, and they can, you know, they can also, if you're not doing well,
1016. 51:43they can hold you to s- to scale and kind of say you're too big.
1017. 51:46My personal opinion and what I'm seeing, um, is the sweet spot in
1018. 51:51routes is around 22 routes, okay?
1019. 51:53Whether that's 20 plus bulk or 20 plus, you know, business routes
1020. 51:57or whatever that looks like.
1021. 51:58It looks like that's the sweet spot.
1022. 52:00Um, it takes more management and, and more attention to detail to
1023. 52:04manage anything higher than that.
1024. 52:06Can be done.
1025. 52:06We have two contracts that are running 32 routes.
1026. 52:09Um, you know, not a big deal.
1027. 52:11You can do it.
1028. 52:12Um, but also, I think they're recognizing that those smaller contracts, maybe 13,
1029. 52:1714, 15, can be super solid and profitable if they were just a little bit bigger.
1030. 52:22So I think 22, right?
1031. 52:23It's not bad to start small.
1032. 52:25I mean, you can certainly manage that, and big is also good.
1033. 52:28But I think that's kind of what I'm seeing in the network, um,
1034. 52:32as it shakes out, is they're kind of trying to right-size everyone.
1035. 52:35So, you know, to obviously long-term, what's the end goal?
1036. 52:39To have all areas successful, contracted, right?
1037. 52:44Reduce in non-contracted areas.
1038. 52:46Only lean on contingency in contingency situations, and have contingency
1039. 52:50kind of not be the norm, right?
1040. 52:52Um, or be able to lean on internal contractors for contingency instead of
1041. 52:57this kind of across-the-world type things.
1042. 52:59Um, so I think that's the end game is they're trying to kind of figure out what
1043. 53:02the secret sauce is, uh, right, from a size and, and territory type situation.
1044. 53:08So right-sizing the network would be, would be a great, um, would be great
1045. 53:12because to be fair, I want people in Wisconsin and Texas and New Mexico
1046. 53:17and, you know, Kentucky and Tennessee, I want everyone to be successful.
1047. 53:21Because when you service Chewy, I get to keep Chewy, right?
1048. 53:25Mm-hmm.
1049. 53:25Yeah.
1050. 53:25More boxes for me.
1051. 53:27So we all have to pull together to make sure that the network is strong, and I
1052. 53:30think, you know, I think our customer is really helping to be a part of that.
1053. 53:34Um, you know, and there are days where I don't feel it all the time, right?
1054. 53:37Like, I'm like, "Oh, my gosh, what's going on here?" Um, so it's not always
1055. 53:41sunshine and rainbows, but I think at the end of the day if you see their
1056. 53:44business the way you see yours, um, you'll recognize that these are all,
1057. 53:49you know, huge, huge measures to protect our volume and to stay nimble, right,
1058. 53:54in the network and to stay, um, you know- I don't know, just stay relevant.
1059. 54:00Right.
1060. 54:00Yeah.
1061. 54:00Right?
1062. 54:01I mean, we are way doing things different than we were 20 years ago.
1063. 54:05Oh.
1064. 54:05And if we were, you know, if I hitched my wagon to a train that was doing things
1065. 54:10the same way they were, you know, 20 years ago, I would be pretty upset that
1066. 54:14they weren't, you know, developing and moving and shaking and trying to get their
1067. 54:18hands and be more efficient and things.
1068. 54:20So, you know, they're, they're a, they're a pretty big business, so I'm
1069. 54:23gonna, I'm gonna- … follow lead and, and continue to service my customer.
1070. 54:27Not saying I don't have difficult conversations with them or that
1071. 54:30the data's not wrong or things need to change, um, because I do
1072. 54:33have those conversations every day.
1073. 54:35But I do it in the mindset that I'm still here and I want to be here.
1074. 54:39Um, you know, so I think that's, that's also key.
1075. 54:44Yeah.
1076. 54:44A, a question I saw from Travis, what multiple, how are we seeing multiples
1077. 54:48being evaluated on FedEx P&D routes?
1078. 54:50He, he said revenue multiple, EBITDA, SDE.
1079. 54:53Typically, multiples on these businesses are EBITDA.
1080. 54:57Uh, I would always ask the question if you're looking at any business and they
1081. 55:00have a multiple, just make sure that you know what that multiple is based on.
1082. 55:04Most of the time they'll just have a multiple listed.
1083. 55:08All of our listings are EBITDA, but it, it is really important
1084. 55:11that you ask that question.
1085. 55:12It's a good question because some people will just put a percentage of revenue.
1086. 55:16Some people will put just kind of a, a, a guess at what average, um,
1087. 55:21profit margins could look like.
1088. 55:23We base it on EBITDA.
1089. 55:24And, and generally what we see is e- is somewhere between a high three
1090. 55:28multiple and a low four multiple is where most of these lands.
1091. 55:31Yeah.
1092. 55:31There's some that land higher than that.
1093. 55:33There's some that can land lower than that.
1094. 55:34There's good reasons for both of those.
1095. 55:36But yeah, that's where I'd kind of say an average multiple lives today at least.
1096. 55:41Yep.
1097. 55:42And that all depends on the health, right?
1098. 55:44There's 100 things that can happen.
1099. 55:46Not just the, not just the EBITDA- Yeah … but also the health.
1100. 55:48Uh, which- Yeah … it does have a one-to-one correlation.
1101. 55:50But the health and the, you know, the management style, like, all of those
1102. 55:54things come into play- Yeah … with what you can ask for, right?
1103. 55:57If you're completely hands-off and your business is, you know, profitable
1104. 56:01and, and the person can just come in and kind of business as usual,
1105. 56:05um, that's gonna be one thing.
1106. 56:07If it's a broken business, you're gonna get, you know,
1107. 56:10you're gonna get what you get.
1108. 56:11Yeah.
1109. 56:13So Patrick asked this question that I don't think there's a short answer to, but
1110. 56:19if you could give a 60-second answer on you're going into your first peak, where
1111. 56:23should you spend the most time and effort?
1112. 56:26Oh.
1113. 56:27Oh my gosh.
1114. 56:28Yeah, I- I- like I said- Um- … I don't think there's a short answer.
1115. 56:30I think that's something that, that- Yeah, so I think honestly short
1116. 56:33answer is, um, stops per resource capability, and then staffing.
1117. 56:39So if you can get your staffing right, like trucks, eh.
1118. 56:42Once you get that done, you'll know exactly how many trucks you need.
1119. 56:44You can rent them, you can buy them.
1120. 56:45That's a different strategy.
1121. 56:46But I think the big thing is getting right with FedEx's projections,
1122. 56:50which are also, you know, three or four iterations as you go.
1123. 56:55But, you know, in September they're gonna start having conversations about
1124. 56:58what the volume's gonna look like.
1125. 57:00And then you take that volume, figure out what you can possibly achieve.
1126. 57:04So we do, like, what are they currently doing?
1127. 57:07What is the max that they can do, right?
1128. 57:10Or what can they do at peak?
1129. 57:11What can I push them to?
1130. 57:12So if they're at 100, can they do 120?
1131. 57:14And then on a day, like there's seven crazy peak days a year, right?
1132. 57:19On a day where the absolutely hits the fan, what is that person gonna do?
1133. 57:25Like, what can they do?
1134. 57:26Like, pushing them to the brink, right?
1135. 57:28And you kind of figure out what that looks like on all three of those, what they're
1136. 57:31currently doing, what they're capable of doing, and what their max would be.
1137. 57:36And then you take that max number and you figure that out, and you manage to those
1138. 57:39seven kind of crazy days, um, whether that's one or two of your managers in
1139. 57:43a truck or whatever that looks like.
1140. 57:45But you 100% manage to volume and resources, and then everything
1141. 57:49else will fall in place.
1142. 57:50How many scanners you need, how many trucks you need, and all that good stuff.
1143. 57:53But it starts with the people.
1144. 57:55They gotta show up to deliver the boxes.
1145. 57:56You can't do it all yourself.
1146. 57:58Yeah, and so- Nailed it.
1147. 58:0060 seconds.
1148. 58:01You- you're corrupted.
1149. 58:02But, you know, if you're trying to learn more tactically about how you can figure
1150. 58:07out Express at your terminal, if you're trying to think through those situations,
1151. 58:10if you're trying to figure out what does contingency mean or look like, how do I
1152. 58:14think about it today, or how do I think about some of these things like peak, how
1153. 58:18am I thinking about the rest of this year, you should be here next week in Nashville.
1154. 58:22A- all of those topics are things that Amy and the team are
1155. 58:24talking about in our offices.
1156. 58:26Again, completely free to attend.
1157. 58:28The Thursday event, so June 11th, is targeted towards new investors
1158. 58:32who are trying to figure this out for the first time, and the Friday
1159. 58:35event, the P&D Pro Series, is for current contractors and people who've
1160. 58:40decided P&D is where they want to be.
1161. 58:42So those two events, Thursday and Friday.
1162. 58:44If you haven't registered already, we'd love to see you there, and
1163. 58:47we will have two full days to talk through all of these topics- You got
1164. 58:50it … uh, beyond just this hour.
1165. 58:52Um, so I, that, I will kind of stop it here for today and call it as
1166. 58:57we've reached the top of the hour.
1167. 58:58So Amy, thank you so much for being here.
1168. 59:00You're welcome.
1169. 59:00Thanks, guys.
1170. 59:02Thanks everybody else for being here, and we will see you next time.
1171. 59:04Hopefully next week.