Financial Planning for FedEx Contractors: Managing Your Income and Expenses
10th September

By: Groundmetrx
Introduction
Stepping into the role of a FedEx Ground Contractor is an exciting venture, but with the thrill of running your own business comes the responsibility of managing your finances effectively. This role is not just about delivering packages; it’s about being an intelligent entrepreneur.
One of the most critical aspects of this is financial planning. In this post, we’ll dive into how FedEx contractors can manage their income and expenses, ensuring a profitable and sustainable business operation for years.
Managing Your Income
Understanding Your Revenue Streams
As a FedEx contractor, you’re paid based on several variables, the type of routes you operate and the miles driven. You have a few types in the beautiful world of FedEx Ground Line Haul. The first is a traditional LineHaul Run.
These come in the form of Assigned, Unassigned, and Spare. Based on the caliber of run you have will dictate the predictability and reliability of the work.
In addition to this, if you happen to run out of a terminal, you could also have revenue coming from P&D spots; these are customer pickups that P&D drivers would typically do; however, when the customer ships so much that it warrants a trailer, they will send you to complete the pickup.
Understanding these revenue streams is essential to predict your income accurately and thoroughly.
Diversify and Expand FedEx Ground Contracts
Consider diversifying your income by taking on more routes or different types of runs. Expanding your operations might require additional investment, like hiring more drivers, acquiring more trucks, or even buying out other contractors. Even though this may take an investment upfront, it could significantly increase your revenue in the long run.
Another thing to focus on is split-seating tractors. Look to get more work at different points of the day so you can keep that truck moving 24/7, remember, if those wheels aren’t turning, you aren’t earning!
Managing Expenses
Tracking Expenses
Maintaining an accurate record of all business-related expenses is crucial. This helps you understand where your money is going and is necessary for tax purposes. Regular payments for FedEx Ground contractors include fuel, vehicle maintenance, insurance, and employee wages. You should have some financial reporting through us here at our website GroundMetrx or another system like an Excel spreadsheet.
You should be able to identify where all the money in your company is going and track the significant expenses listed above. A reporting category for Miscellaneous costs would be best, as these can add up quickly.
Using software to track expenses is essential, like QuickBooks or other third-party software. If you can’t visualize and follow it, you can’t control it, which can harm your bottom line.
Budgeting for fedex ground contractors
Create a realistic budget that factors in all of your operating costs. Remember to include fixed costs (like vehicle payments or insurance) and variable costs (like fuel and maintenance) in your budget. Remember! This business is simple; the work you get is consistent and sometimes fixed by Fedex ground contracts or assignments. Increasing revenue can be challenging without growth opportunities from FedEx Ground or acquisitions. However, expenses are something that you have complete control over; every dollar saved is a dollar earned!
If you need help budgeting for your company, consider checking out our article on building business budgets for contractors. This will show you how we put together our budgets to run a streamlined operation.
Maximizing Income and Minimizing Expenses
Efficient Route Planning for FedEx ground
Efficient route planning can save time and fuel, reducing expenses and increasing income. Utilize the FedEx Ground network and technology to plan the most efficient routes.
Remember that FedEx Ground pays you based on the pre-determined route! This means that if your drivers decide to take another route, they may be burning unaccounted-for fuel and adding unnecessary miles to your truck that you aren’t paid on! Getting with the FedEx Ground terminal to identify the approved routing for each trip is essential to ensure that drivers only drive what they get paid for.
Note: some routes are not cost or time efficient; you can work with the terminals in certain instances to adjust or change the routing of a trip. This can help you to save time and avoid unnecessary traffic due to things like construction or traffic at certain times of the day.
Regular Line Haul Maintenance
Maintaining your vehicles regularly can help prevent costly repairs down the line. Ensure your fleet is routinely serviced and promptly address any minor issues before they become significant problems. Ensuring that drivers are doing pre & post-trips regularly can help you catch defects quickly to reduce the risk of a breakdown. Breakdowns on the road are costly and can turn a good day into your accountant’s worst nightmare.
If you are a more prominent contractor and operate more than ten trucks in a tight market, you should consider bringing your maintenance in-house vs. using a local shop. With maintenance in-house, you can get a lot done faster and for a better price per job. However, if you are more spread out and only have a few tractors at each terminal, it might make more sense to work out a deal with a local shop or consider a truck lease so the leasing company like Ryder will handle most of the maintenance.
Again if you are looking for some help with pre and post trips check out our article on the ideal pre and post-trip, along with our custom build software to help you manage it!
Insurance
Shop around for the best insurance rates and understand precisely what your policy covers. Although FedEx Ground covers your liability insurance, ensuring you get the best rate on your non-trucking liability is reasonable. This policy can be costly and add up if you have many tractors on the road.
We recommend working with a broker to get this insurance at a reasonable rate. BEFORE you ask, YES, the broker takes a cut, but it is well worth it. I assure you, they are nonbiased to the company you are insured by, which means they are always looking out for the best deal they can get, and sometimes that means switching carriers.
Workers Comp
This is yet another significant expense for you. With the trucking industry being high-risk, workers comp rates are off the charts depending on the state you live in.
Joining a captive or group insurance plan can help you significantly reduce the cost of workers’ comp. For those that don’t know about a captive, it is group insurance that larger contractors can typically join if they meet a certain premium minimum. With this, the risk is shared amongst the entire group, which, if everyone is staying safe, can help reduce your rates.
Again, we recommend you work with a broker to keep those carriers honest.
Conclusion
Financial planning is a critical aspect of being a successful FedEx Ground contractor. It’s about more than just managing the dollars and cents – it’s about understanding your business, making informed decisions, and planning for the future.
Here at GroundMetRx, we aim to do just that by giving you the tools and support you need to grow this business to something special.
By proactively managing your income and expenses, you can ensure your business is profitable and sustainable in the long term. Remember, the key to financial success for FedEx Ground contractors lies in carefully managing your assets, thoughtful planning, and constant adaptation to the ever-changing dynamics of the logistics and supply chain industries. S good luck, and stay safe out there!