BUYING FEDEX AS AN INVESTMENT PRODUCT
A FedEx Ground linehaul business has traditionally been viewed as an operating business. Many investors in the space now see owning these types of business as a hands off investment product, similar to a stock or bond. The most similar type of comparison would be to that of owning a REIT, or even more simply, buying an apartment building.
Each apartment unit is comparable to a an individual run assignment contract. Most apartments are relatively similar but may have slight differences that impact the revenue they generate - whether it be the number of bedrooms, layout, or location. Similarly, most run assignment are generally the same, but vary on their profitability based on elements like dispatch time and weekly miles. Upon buying a business, investors can decide if they want to keep and operate all of their run contracts, similar to running a rental building, or if they want to sell off individual contracts, like if you were to sell off some units in a condo while renting out the rest.
For new buyers, the most important elements of maintaining a successful linehaul business is: (1) recruiting drivers and (2) keeping up with truck maintenance. Just like with an apartment, where the two main concerns are recruiting tenants and keeping up with apartment maintenance.
The similarities don’t end there, just check out some more below:
⁃ Depreciation for tax purposes
⁃ Appreciating company value
⁃ Expense write-offs
⁃ Steady cash flow and fixed pay dates
⁃ Liquid market to buy and sell
⁃ Ample service providers and vendors
Linehaul investors can now benefit from something that has existed in the real estate world for centuries - full service management companies.
When you purchase a building, you can do all of the work yourself; find and screen new tenants, keep up with paperwork, and coordinate vendors to make repairs - or you can outsource all of that to a property management company so that you’re involvement is completely absentee. The same now exists in the linehaul industry.
Investors can purchase a linehaul business and outsource 100% of the operations to professional management companies who specialize in FedEx - and are typically cheaper to use than doing it yourself. Need to find drivers, get them qualified, provide benefits, and stay compliant with government regulations? The Ambassador Group can do all of that for you, making sure your company stays fully staffed at all times. Need to deal with around the clock truck breakdowns, setting up a preventative maintenance scheduling, and coordinating reported issues from drivers? Fleet Advocate takes the role of an outsourced fleet manager so you never have to worry about these issues. The small amount you pay to these companies, usually just a few hundred dollars a month, is greatly outweighed by the large volume discounts you can benefit from through then.
Utilizing outsourced linehaul management companies allows investors to create a new asset class to compete with stocks, bonds, and REITs. It is now possible to own a truly absentee investment product that provides returns significantly higher and more stable than most traditional products.