Expediting is a Business

**terryandrene** · 02-12-2007, 01:38 AM

Throughout the nearly 8 year history of ExpeditersOnline, our members have discussed the nature of expediting, its pitfalls and its rewards. We have heard about all the Do's and Don'ts imaginable. We've read about dozens of the success stories from people who started with little and are now fleet owners. We've read about the many couples that started with a nice nest egg, or paid-up house, lost much of that to bad business decisions, and now happily drive without worries for successful fleet owners. And, we've read about many people that started expediting with nothing and left expediting with nothing.

Over the years, we've each read:

Expediting isn't just trucking, it's a lifestyle;
expediting isn't just a lifestyle, it's an adventure;
expediting isn't just an adventure, it's a job;
expediting isn't just a job, it's a business.

All of the above may be true, but first and foremost, expediting is a business. Expediting is not the simple act of buying a truck, leasing on with a reputable carrier and driving down Easy Street. Whether a person is leased to a carrier as an Independent Contractor, or subleased to an Owner/Operator as a driver, that person is operating an independent business.

If we can each agree that expediting as an Owner/Operator is a business, then why can't we each agree that success in this business is best reached by being adequately capitalized. That is having sufficient reserve funds to pay all operating expenses to accomplish the work for which we are contracted. It seems that lately, we are reading an increasing amount of posts where people want to enter this business on someone else's dime. So many people seem to want a carrier to provide benefits, or access to carrier resources that are typically provided to employees, not contractors. They want carriers to provide advance money for fuel or food, or for truck repairs in advance of work performed. They want carriers to respect the fact that they are independent contractors and then want carriers to help out with problems that are clearly outside of the terms of their lease agreement.

I'm not referring to people who are taking advantage of a carrier's run money advances after pickup of freight or upon providing proof of delivery. These advances are entitlements to which the contractors and carriers have a contractual agreement on pay schedules.

ExpeditersOnline has long been recognized as The Expedited Freight Information Center. In that capacity, those of us that have joined EO as Forum Members are being recognized as folk that provide sound information for those aspiring expediters who come here to get the best information available on carriers, trucks, policies and procedures. So, I end this long-winded essay with a request that we each commit to emphasizing the need for new entrants to expediting to ensure they have adequate working capital to attain success. We should also emphasize the desirability of finding an O/O mentor with their carrier of choice. Experience and knowledge of a mentor can be beneficial to success.

**Dreamer** · 02-12-2007, 01:38 AM

Excellent post Terry, and even better advice.

Dreamer
Forums Administrator

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"You cannot tailor make the situations in life, but you can tailor make the attitudes to fit those situations before they arise"

Zig Ziglar

**nightcreacher** · 02-12-2007, 05:33 AM

i agree with dreamer,great information

**Packmule** · 02-12-2007, 10:22 AM

As always Terry, Good, sound, reality check advice!
Even though I may have gone against the grain in some of my decisions in expediting, I did so as an educated business risk based on the solid information I had recieved from this forum.
I will always turn to the experience and knowledge of the experienced "ol timers" on this site to help me make good decisions, and I am very thankful for this site and those, like yourself, that are always willing to help and contribute to the success of others.

Thank you,
Danny

**fastrod** · 02-12-2007, 10:42 AM

First, is it really a independent business if the carrier controls the pricing of the service? Second, if you are really a independent contractor, you should be able to offer your services to multiple carriers instead of just one. This is just food for thought, but with all the stipulations placed on a o/o by the carriers it looks more like a employer/ employee relationship. An example is how does a independent contractor get fired for a low acceptance rate? The contractor should be able to accept any amount of runs they desire.

**Packmule** · 02-12-2007, 11:20 AM

FastRod,

It's called a LEASE. When you sign with one company you are bound by the terms of that lease. If you have your own authority you can sub lease to any company you like to haul their freight under your authority and Insurance. Big difference! When you sign with a carrier and and do not feel you are still an independent Contractor, re-read your lease. You signed it, It didn't change, If you didn't like what it said in the first place you shouldn't have signed it.
If the Carrier is doing things differently than what is stated in the Lease, then you need to have a discussion with them that will get you both back on the same page.
I agree with you that sometimes we really don't feel like a true Independent Contractor, but it's the way this business has evolved. Sometimes you just have to grin and bare the bad things, and be thankfull for the Good things.

Keep on Truckin'
Danny

**terryandrene** · 02-12-2007, 11:26 AM

My interpretation of Independent Contractor is simply that we are independant from the carrier and not on their roles as an employee. Employees are fired; contractors' carriers terminate contracts due to dissatisfaction with the performance of the contractor. Conversely, contractors terminate their contracts whenever they are dissatisfied with the carrier.

The only stipulations my carrier places on me are those that I have agreed to by contract. Granted, many of those carrier stipulations to which I agreed are pretty vague and are subject to modifications, with or without notice. At such point that I no longer accept any changes, I'll terminate our contract in accordance with its' terms.

My contract with my carrier is not much different than the contract I had with a company that painted my house last week. The painter agreed to perform a given amount of work for an agreed upon price. He chose the manner in which he painted, his work was satisfactory, so I paid him.

**LDB** · 02-12-2007, 11:35 AM

Excellent post. I can't remember who has/had a tag line that I think read "Businessman first, driver second" but this post clearly expands on that.

Leo Bricker, 73's K5LDB, OOIDA Life Member 677319
Owner, Panther trucks 5508, 5509, 5641
Highway Watch Participant, Truckerbuddy
EO Forum Moderator
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Support the entire Constitution, not just the parts you like.

**lanier1** · 02-12-2007, 11:53 AM

I agree with what you said. I would go a little farther to say the Carrier has an even bigger responsibility to inform prospective contractors of the importance of having reserve money and the pitfalls of the business. I think it would be in thier best interest to do so. Turnover, as we know, is rampant and not good for anyone. It was not my experience that this was stressed at time of signing on. If you qualify as a driver and have a qualified truck you are hired. I think that is fine but thier should also be better information shared from the carrier about the business. They know that most who are getting into it have very little or no experience.

I also agree that expecting more than what was contractually agreed to is out of line. Asking for it is one thing. I have never had a problem asking for something and don't feel there is anything wrong with it. But, to ask and be denied and then whine about it is quite another thing. When I needed a new laptop I called and asked if I could borrow from my escrow account. The answer was no. That was fine, I don't think anyone heard me whining about it because I didn't. I do feel the more benefits a Carrier will offer can only help with retention and success of contractors. My uncle drove as an O/O for Schneider for years and loved them. They paid for tires and maintenance and took it out of his pay a little at a time. They also provided showers and a cafeteria at most of thier hubs. How nice would it be if we could enjoy that type of thing at the FedEx Ground facilities? Their are companies in other industries who are offering, for a price, a true group health care plan to independent contractors that are contracted to them. Between all the O/O's in the FedEx organization there are more than enough to warrant the validity of such a plan. Should we "expect" these types of benefits? No, only if they were promised when we signed on. Lets face it, this is a tough business right now. I have been hearing since I signed on the busy season never matierialized this past year. I don't know about the rest of you but these type benenfits would go a long way with me.

**terryandrene** · 02-12-2007, 12:33 PM

If you'll allow me a bit of devil's advocacy here, I'll offer a comment that our carrier might offer if they posted here.

Each of the FedEx operating companies(OPCO)are separate and distinct from the other. Although there is some cross pollination when it comes to providing a product tailored to a shippers' requirements, each OPCO has it's own President and each OPCO is protecting it's own bottom line with policies and procedures peculiar to that company.

I've heard of some drivers that want to buy fuel and use the repair, maintenance and DOT inspection facilities at FedEx Ground and Freight terminals. I doubt that these facilities have a license that allows the retail sale of fuel, or would even entertain the headaches required to obtain such a license from each of dozens of jurisdictions. Additionally, if we could buy fuel at these facilities, we'd loose out on the FSC and limit our procurement options. Not much difference on the maintenance issues. To whom would you complain for unacceptable work?

**greg334** · 02-12-2007, 01:00 PM

Excelent post, but you left out the paid tourist thing ;)

Actually Terry, with trucks (C,D and those big E units) this would not be a problem seeing that FedEx ground sells fuel to the contractors who are essentially the same as us at the level that the FSC is supposed to adjust the price to - $1.25.

Also I would not really want access to the maintance system because the really is no price breaks when I asked about what they pay these roving mechanics. On the other hand I would like to have access to the inspection stuff, it would be a nice perk but not really needed.

**lanier1** · 02-12-2007, 01:35 PM

Don't get me wrong. I am not saying I think these are things they "should" be doing. I signed up for the way it is and "expect" nothing more than that. All I am saying is the more a carrier can logistically do to aid in a higher rate of success and retention the better it is for the carrier. I don't see how a maintenance escrow of some sort or a group health plan that is fully funded by the beneficiaries could be detrimental beyond the administration costs of same. I believe the carrier would benefit in the long term to such plans even with the added admin costs. As to the Ground facilities I refered to I understand we are all seperate companies. However, if we could utilize the facilities for nothing more than a safe place to park, shower and eat it would be a big benefit.

I agree with your original post. It is not the carriers responsibility to "ensure" my success. It definitely should be stressed to newcomers that under capitalization is probobly the number one reason for failure.

**terryandrene** · 02-12-2007, 01:43 PM

Greg:

Thanx, but I 'spect it would be a problem. FedEx Ground contractors procure all their fuel on the same acounting system that provides their compensation. They buy all their fuel at the $1.25 price and never worry about the FSC variables. There is very little, if any, personal use of the truck because the Ground contractors generally only drive from customer to terminal, thence to terminal to customer.

If you could buy fuel at the $1.25 price, you'd receive no FSC for that amount of fuel you buy. Would you want to buy all your fuel from a Ground facility, or just some of your fuel when it's convenient for you to do so? If you just bought some fuel from Ground, how then would Custom Critical prorate your FSC for revenue miles and personal miles. After buying the fuel, if you could, FedEx Ground would have to bill FedEx Custom Critical then Custom Critical would delete the monies owed from your settlement. Two different accounting systems, two different headaches and, of course, someone would have to pay for these money transfers; guess who that would be.

You just might not save enough to offset the cost and inconvenience of getting fuel from a different OPCO.

**greg334** · 02-12-2007, 01:49 PM

Actually FedEx does not have seperate companies, Ground, freight and express are 'segements' or divisions of FedEx.

You know you got a good point with health care. I think that if a company like FedEx would seriously negotiate health care packages for the contractors to pay leveraging their size, it would really help us.

**RLENT** · 02-12-2007, 01:58 PM

Greg is correct on the fuel - Fedex Ground and Home Delivery, which is a Division of Ground - and does "sell" fuel to it's contractors - it is deducted from the contractor's settlements weekly. However a couple of things:

1. In Home Delivery's case (only one I know about for sure since my son is a contractor) only the primary contracted vehicle for the route may fuel at the Fedex pumps. This means if you are running a supplemental truck (something that happens quite a bit over peak and for repairs) you can't fuel those units there. My son has 4 routes and 5 vehicles - four primaries which are diesel and do fuel at the Fedex pumps and a gas van which does not because it's a supplemental ..... and it's gas (no gas pumps at the terminal.) Primary vehicles which are gas recieve a "fuel supplement" - monies which are added to the settlement (similar to an FSC.) Over "peak" my son was running 12 trucks and drivers - the subsidized fuel would have been nice for the month and half that he was doing that - however as a matter of policy and contract structure Fedex HD won't do it.

2. Since the fuel is deducted from contractor settlements I can imagine the problems there might be to get Grounds computer systems which tracks the fueling to talk to Custom Critical's computers.

Like Terry said, they are really separate and distinct entities.

Personally if I ran for Fedex I doubt I would really want to fuel at a Ground terminal - I'd think it would be far more convienent to just do it along my runs.

On the maintenance/repairs .... yeah ..... like anybody here is gonna wanna wait until the terminal repair facility can get around to working on their vehicle .... I think their priority will always be that the Ground vehicles would come first.

My son has 99% of his maintenance work done elsewhere, even though the Ground and Home Delivery terminals are right next door to each other.