More About FedEx Truckload Brokerage

[ATeam]

In another topic, FedEx Truckload Brokerage was brought up and discussed. See:
http://www.expeditersonline.com/dcforum/DCForumID1/6274.html

Wanting to know more, I went to my Contract Coordinator to ask. I learned the following:

1. FedEx Truckload Brokerage was originated as a way to bring new business into FedEx from new sources. FedEx Freight Brokerage agents troll the load boards and other freight sources for new opportunities to serve new customers. Once a prospective customer is identified, the agents match the customer's need with the FedEx portfolio of services, company wide.

2. The FedEx Truckload Brokerage marketing material that went out from Virginia Albanese, FedEx Custom Critical CEO, did so because FedEx Truckload Brokerage is part of FedEx Custom Critical (as is Air Expedite and Passport Transport.).

3. FedEx Truckload Brokerage is part of FedEx Custom Critical because the idea for FedEx Truckload Brokerage and the groundwork to establish it came out of the minds of FedEx Custom Critical people. Within the larger FedEx corporation, FedEx Custom Critical is unique in that people there often think in cross-division and broader-market terms. A single shipment may be flown in from overseas, loaded onto a FedEx Custom Critical truck, cross loaded onto another one at a FedEx Freight or FedEx Ground facility because the first truck driver was out of hours, and finally delivered to the consignee. That kind of experience gives rise to the kind of outside-the-box thinking that produces ideas like FedEx Truckload Brokerage. It is the same kind of thinking that developed exclusive-use temperature control and temperature validated markets; markets that have benefited numerous FedEx Custom Critcal contractors. Indeed, expediting itself was invented by Roberts Express, the FedEx Custom Critical predecessor company.

4. Since FedEx Truckload Brokerage is trolling for freight not from existing FedEx sources but from new customers outside the company, it is unlikely that FedEx Truckload Brokerage will impact FedEx Custom Critical freight in a significant way.

It seems to me that the one-call customer solution that FedEx Custom Critical promoted over a year ago, and is now touted by several competitors, is now an established fact of life in our business. In a world where customers are increasingly offered a one-call solution, FedEx does it better than others. That is because FedEx has the in-house portfolio of companies to work with - Custom Critical, Ground, Freight, Federal Express, and more - and the increasing capability to communicate across divisions for the customer's benefit.

This, I belive, will result in a net gain of freight for Custom Critical. As more people in more divisions become more aware of what we Custom Critical contractors do, more customers will too.

 

[tallcal101]

Phil,at every turn in the road for the last 8 years, rumor,prediction and highly anticipated revnue generating schemes have been constantly anticipated by FEDEX CC and communicated down to the owners.Truckload Brokerage is nothing more then more of the same."It's going to turn anytime,it's just around the corner" etc.I don't need to go into detail for those who have been around for a few years.It's not a rub on the people at CC,whom I like and respect.I have seen the good days and the poor days.The call in concept is great,and for a company like FEDEX it is quite appropriate.My point is,CC used to be the fastest growing segment of the family.Great future was predicted based on some very successful years from 99 to 03 -04.
The end result is shipments have dropped from an AVERAGE of 1150 shipments per day to an AVERAGE 650 shipments per day.Recruiting continues to recruit and the fleet size stays about the same.Yes,competition is also a factor,and the lack of being able to get FEDEX FRT and EXPRESS to cross sell Custom Critical was a factor.CC sales people are independant contractors,and not really part of the family(low overhead).I believe it is the only division that has this sales set up for their sales team.
Don't get me wrong,we all sell for the commission,but we like to have a benefits program and 401 K etc to fill in the important gaps.
I believe the field sales team that was pushing CC exclusivly are now selling brokerage over CC.In other words they will be calling on their CC customers with other options,mainly brokerage.
It's no different then in the Van Line business.When domestic drops off(like now)you sell international,or office moving,or anyhting you can sell except the freight thats not moving.
Welcome to sales 101
TC

 

[Turtle]

FWIW, a friend of mine owns a tool and die place where they do a lot of single piece custom work, and he ships 2 or 3 expedited shipments every week. He's loyal, in that he's been using FedEx for years, and no matter what I say or how good of friends we are, he won't call another carrier, including the ones I have worked for. (You take your friends to the grave, but you can't take them to the bank, is what he says.)

Couple of weeks ago he made his customary call and was a little taken aback when they offered him a significantly cheaper shipment method that would get there almost as fast, but not quite. He declined, and told them why, that he wanted exclusive use of the truck from pickup to delivery and a driver who would take care of his freight. Since then he's been offered alternative transportation several other times.

He called me today to tell me that this morning he called another carrier.

I really don't understand what FedEx is thinking, not that it's my place to worry about such things. But, still.

Incidentally, Con-Way Truckload and Brokerage was a part of Con-Way NOW. It was the expedite people who came up with the idea. Same people who came up with the flat FSC, too, I'll betcha.

Maybe UPS is gonna cut a check. :+

Slow and steady, even in expediting, wins the race - Aesop

 

[greg334]

I am sorry Phil, your sales pitch is rather discouraging to me and a few others and it shows something about you don’t understand about resource management and sales.

“FedEx Truckload Brokerage was originated as a way to bring new business into FedEx from new sources. FedEx Freight Brokerage agents troll the load boards and other freight sources for new opportunities to serve new customers. Once a prospective customer is identified, the agents match the customer's need with the FedEx portfolio of services, company wide.â€

There should be absolutely no ‘trolling’ for anything, this only produces a hit or miss opportunity and does not really produce anything outside of a short term relationship with a specific customer for a specific need. AND it has been done before in other industries and failed there. The customer may need this or that at one time but at what discount will this occur and how much time will FedEx spend securing the freight at the same time producing a smaller margin without a guarantee of further usage by the customer?

Is it quantity or quality they are selling?

Instead of spending hours looking over load boards, they should be reinforcing the FedEx name with proper sales staff and use of promotions that would get us (CC) in the door and show we would be a better fit the customers overall needs.

I can see where this great idea was created and the inexperienced people who are driving it but I can not see a long term success for the group or FedEx.

“4. Since FedEx Truckload Brokerage is trolling for freight not from existing FedEx sources but from new customers outside the company, it is unlikely that FedEx Truckload Brokerage will impact FedEx Custom Critical freight in a significant way.â€

I also don’t agree with your sales pitch, there are no new sources for customers, FedEx has one of the best recognized names in the world – up there with Coke, McDonalds and others – and most likely FedEx has those customers for packages and small freight already.

LEVERAGE the name, get sales people out there and expose the NAME! Tell the customers what FedEx can do for them. Take the USPS approach to marketing and don’t change things in mid-stream. As Turtle pointed out, there is something to be said about consistency, point of contact and opportunity for sales. The ones who actually are successful in many industries don't change often and when they do, they communicate those changes to the customers and service providers before the changes take place.

The impact I see is this – if there is a multitude of options for the customer to choose from, the idea of exclusive use and/or special handling may not be a concern for the customer after being offered the other services. It is highly unlikely that most customers will know exactly what they want and how it is to be shipped and this is where the agent or broker can look at the portfolio of services and pick the one for the customer that will get the job done but provide a savings for the customer at the same time increasing the brokers commission and/or the companies profits.

Remember we get 61% of the load but if FedEx can reduce that to less than 40% through the use of freight than they will surly do that and not care who takes the freight – it is servicing the customer at the same time increasing profits. Not a bad thing at all but….

Oh and I got to say about specialized freight, I have a feeling that supply chain may end up doing some of this as a routine for them and eliminating WG and a bunch of other things. Just a thought…

Don’t get me wrong, I really love working for FedEx, despite having some issues with things that are being done but that is because of what I know how big business act. I want to see them prosper but I just don’t see it with this move, as I have yet to see it with the CC rearrangement and other things.

 

[davekc]

Sometimes a company's spin on things, and what might be reality, are not necessarily the same. Limited exposure from one source doesn't eliminate the operating costs of a company that has to move its own trucks first. I think Talcal and Turtle's post amplify those experiences with the results. CC is a value added service, not their core operation.
As a stockholder, I don't believe CC has ever been mentioned in anything of the literature I get.
My other thought is that the one call solution has been around for awhile. Again, based on Talcal and Turtle's friend, who are customers, have found some issues. As for who is best might be open to interpretation.












Davekc
owner
23 years
PantherII
EO moderator

 

[RichM]

Sometimes self reassuring posts about youe future are needed to keep from facing reality. TallCal and Turtle plus my brother in laws experience show more of a realistic view of what is happeniong within FedexCC.

 

[x06col]

Don't remenber seeing CC on the wiring diagram in my lit either. Ever. In the grand scheme of things, CC revenue is a drop in the bucket. When as a Roberts Contractor, the buyout came, it was time for me to seek greener pastures. Had gone thru a couple ownership changes with Roberts previous, and none of em did me a favor. The percieved needs of a customer by someone in the Ivory Tower, are in fact bunches removed from the customers needs, in many cases.

 

[ATeam]

>Phil,at every turn in the road for the last 8 years,
>rumor,prediction and highly anticipated revnue generating
>schemes have been constantly anticipated by FEDEX CC and
>communicated down to the owners.Truckload Brokerage is
>nothing more then more of the same."It's going to turn
>anytime,it's just around the corner" etc.I don't need to go
>into detail for those who have been around for a few
>years.It's not a rub on the people at CC,whom I like and
>respect.

I like and respect the people at Custom Critical too. Perhaps because I have only been an owner-operator for 16 months, I have not tuned into or been informed of "highly anticipated revnue generating schemes." While I have stated my blief that FedEx Expedited Freight Services and FedEx Truckload Brokerage will result in net freight gains for FedEx Custom Critical (exclusive use trucks like what we drive), I have never expected the gains to be large or to make a significant increase in our business. An increase? Yes. A company revolution? No.

It could also be that I am not being told that "It's going to turn anytime, it's just around the corner" because I don't go to FedEx asking when the corner is going to be turned. Happy where we are and with how we are doing, I'd prefer that the current course be maintained. If nothing changed between now and when we retire (a false hope indeed), I'd be happy.

Perhaps the saying "ignorance is bliss" applies in this situation. Perhaps forces are shaping up out there that I am totally blind to and we will one day find ourselves depressed, dejected and broke. But I don't think so. We do prepare for the bad and we are prepared for the recession that I believe is coming. Other than make hay while the sun shines and prepare for the rainy days, what can you do?

>I have seen the good days and the poor days.

In four years, and as a fleet driver some of that time and a one-truck owner-operator the rest of the time, the closest thing to bad days I have seen from FedEx Custom Critical is sitting for several days withoiut a load. With the exception of two months when we had no fleet-owner truck to drive (another story), we have made money every month we have been in the business, and have only rarely sat for multiple days waiting for freight.


The call
>in concept is great,and for a company like FEDEX it is quite
>appropriate.My point is,CC used to be the fastest growing
>segment of the family.Great future was predicted based on
>some very successful years from 99 to 03 -04.
>The end result is shipments have dropped from an AVERAGE of
>1150 shipments per day to an AVERAGE 650 shipments per
>day.

THAT is a sobering fact. It would be interesting to compare run count numbers among competitors over similar time frames, but is not likely to happen because the companies keep that information to themselves. It is known that FedEx has pretty much gotten out of the cheap-freight automotive portion of the expediting business. How much of that accounts for the run count drop? It is also known that the number of expediting carriers, large and small, has grown since FedEx purchased Roberts Express (then the only game in town) and renamed it FedEx Custom Critical. Certainly, that accounts for some of the lower run count numbers.

So, what do I as a one-truck owner-operator do in face of declining run counts? As I see it, nothing. I don't need 650 shipments a day. We are doing very well on 12 runs a month. While I can see where declining run counts may deeply trouble fleet owners that invest heavily in multiple trucks, and then struggle to put drivers in them, and then struggle to keep the drivers busy enough to stay, one-truck owner-operators with strong balance sheets and their cash flow under control have fewer such challenges to meet. (And we don't have to deal with the fact that when a fleet owner gets a really-good team into a truck, the very next thing most good teams want to do is get into a truck of their own.)

>Recruiting continues to recruit and the fleet size stays
>about the same.

That's good news, is it not? Recruiting replaces the drivers that leave but FedEx Custom Critical is not over-expanding the fleet. That is a lesson FedEx well-learned in the past, I believe.

>Yes,competition is also a factor,and the lack
>of being able to get FEDEX FRT and EXPRESS to cross sell
>Custom Critical was a factor.CC sales people are independant
>contractors,and not really part of the family(low
>overhead).I believe it is the only division that has this
>sales set up for their sales team.
>Don't get me wrong,we all sell for the commission,but we
>like to have a benefits program and 401 K etc to fill in the
>important gaps.
>I believe the field sales team that was pushing CC
>exclusivly are now selling brokerage over CC.In other words
>they will be calling on their CC customers with other
>options,mainly brokerage.
>It's no different then in the Van Line business.When
>domestic drops off(like now)you sell international,or office
>moving,or anyhting you can sell except the freight thats not
>moving.
>Welcome to sales 101
>TC

Having been a self-employed sales person myself, I agree. It makes sense to sell what people are buying. I have no way of knowing what the field force is doing now, except by talking to the one rep I know, but I doubt he would be inclined to tell me much about other products he sells since my only interest is in him selling the services Diane and I are equipped to provide.

It is not unusual to see corporations or corporate divisions get sidetracked and later get religion about returning to their core competencies or core business.

It is also not unusual to see up and coming corporate exeutives develop new revenue sources for their employers. That, sometimes, is how companies get sidetracked...looking at new revenue opportunities too much while taking their core business for granted.

I don't know if that kind of bottom-up new revenue schemeing is behind the one-call approach, or if one-call is being mandated corporate wide from the top down, or even if one-call is worth thinking about at all. Whatever it is, and however it plays out, self-employed Custom Critical sales reps will act in their own best interests, just as we self-employed independent contractors will.

Which leads me back to the question Diane and I ask ourselves every day. "Is what we are doing right now taking us closer to our goals?" Today's answer is, "Yes."

We know of no other carrier or place in the expediting industry where we (living the lifestyle and driving our straight truck of choice) can make more money than where we are right now, FedEx Custom Critical. If tomorrow's answer becomes "No," we will adapt. But today, we say "Yes" to FedEx Custom Critical.

It does not matter to us if one-call works or not. It does not matter to us if EFS and Truckload Brokerage turn out to fly or flop. It does not matter to us if the run count rises above 1,000 or declines to 300 or 150 or even 50. As long as FedEx Custom Critical continues to keep us as busy as it has, with the freight that pays as it does, and as long as no other expediting carrier can do us better, we are staying.

The exclusive-use, door-to-door market may be shrinking industry wide as companies like FedEx and its competitors develop other ways to ship freight fast. Exclusive-use, door-to-door market share may be shrinking too, as more and more companies, large and small, try to carve out their slice of the pie.

That does not trouble me much. Diane and I run one truck, not a fleet, not a carrier. I believe there will always be at least some demand for the kind of services we provide. I also believe that Diane and I can carve out as much of that business as we have to, to achieve our goals. Right now, we don't have to work very hard to do so. FedEx sends us offers and we say yes or no. Happy campers here.

 

[tallcal101]

I made my point on the subject of single W/G TVAL owners several weeks ago.I am quite certain you,and all others in your position are doing very well,and will continue to.In fact, fleet owners who have the pockets to keep multiple TVAL W/G trucks on the road are doing well too.
But a great number,in fact most,of the fleet don't meet those qulifications.They drive SE trucks or have small SE fleets.And I'm sure many of them are squeaking by,but by no means planning their retirment from the pay they are making after expence's.
My point is, for several years,year after year you could pretty well predict what the next year would look like.That quit happening for me about 18 months ago.Too many trucks,not enough HIGH PAYING freight.Plenty of SE offers($1.07 to $1.25) where before there were NONE.Only hauled W/G mostly Refer freight.
I'm sure you will be fine Phil(you learn about truck ownership when that beautiful rig becomes 3 to 4 years old).Enjoying what your doing is the most important thing,and I know you guys do.All the best. TC

 

[ATeam]

Thanks for your good wishes. Back at you. We have not made ourselves strangers when we have been in your neighborhood. The freight just has not given us time to stop in. It' our turn to buy lunch. We'll be there one day.

 

[davekc]

Tallcal wrote;
Too many trucks,not enough HIGH PAYING freight.Plenty of SE offers($1.07 to $1.25) where before there were NONE.Only hauled W/G mostly Refer freight.
I'm sure you will be fine Phil(you learn about truck ownership when that beautiful rig becomes 3 to 4 years old.
=========================================================
I think that says quite a bit right there. Hard to run any kind of reefer truck on $1.07 to $1.25.
Talcal is right, run at those rates and reality will set in quick when those repairs start coming.
The only difference between a fleet owner or a individual at those rates is the delayed financial hemorrhaging.








Davekc
owner
23 years
PantherII
EO moderator

 

[ATeam]

>Tallcal wrote;
>Too many trucks,not enough HIGH PAYING freight.Plenty of SE
>offers($1.07 to $1.25) where before there were NONE.Only
>hauled W/G mostly Refer freight.
>I'm sure you will be fine Phil(you learn about truck
>ownership when that beautiful rig becomes 3 to 4 years old.
>=========================================================
>I think that says quite a bit right there. Hard to run any
>kind of reefer truck on $1.07 to $1.25.
>Talcal is right, run at those rates and reality will set in
>quick when those repairs start coming.

We'll be ready. Already are. We don't haul freight that cheap so it does not matter if it is offered or not. If the industry degrades to the point where $1.25 is a good price and $2.00 freight is only a memory, we'll be ready for that too.

As far as knowing about repairs on older trucks, Diane and I drove older fleet-owner trucks for three years before buying a new truck of our own. We know all about driving trucks that break down and sometimes have to be towed in. It does not take a rocket scientist to realize that if we own the truck, we will be the ones to pay for towing and repairs. We're ready...more ready than most.

 

[davekc]

Have to agree. Doesn't take a rocket scientist to realize that the truck owner would have to pay for repairs and potential towing bills.

It might take a rocket scientist to figure out how you would pay for that running a $200,000 truck at $1.07 to $1.25 per mile.
Might take some fuzzy math to get those numbers to work.
I think this is what Talcal was refering to in his comments.








Davekc
owner
23 years
PantherII
EO moderator

 

[cheri1122]

When the only offers coming in are at lowball prices, and even basic trucks are a tough sell in a saturated market, it'll get real interesting, that's for sure!

 

[x06col]

Yepper!! Probably have to get creative.

 

[ATeam]

>It might take a rocket scientist to figure out how you would
>pay for that running a $200,000 truck at $1.07 to $1.25 per
>mile.

And if the truck is paid for?

 

[x06col]

IF? No problem. IF not? Problem.

 

[ATeam]

No problem, then. It's not paid for yet but will be soon enough. We could pay it off now but prefer not to cut that deep into our reserves. It will be paid for long before we have to look at $1.25 a mile as a realistic scenario.

 

[davekc]

Wouldn't matter whether it is paid for or not. On a $200,000 truck, running at that $1.07 to $1.25 there is a negative return on the investment.
That even assuming that the truck will never be replaced after it is worn out. If you were a financial planner, this certainly wouldn't be a convincing investment to a client. Actually a pretty foolish one.
Better off with a simple CD and donning the blue vest at Wally world.

If you bought two trucks at $100,000 a piece, and run them at the same rate, that would represent a little more of a respectable margin on a $200,000 investment.










Davekc
owner
23 years
PantherII
EO moderator

 

[ATeam]

You may be right, given the numbers you present. But those numbers are not our numbers. Apples and Oranges. Diane and I are doing well, without fuzzy math and with sound financial planning and business practices. As much as you seem to want to cloud that fact, the fact remains.

We are getting to the point where quibbling may take over as the dominate theme in this thread. It includes a good discusion above. In the interests of preserving that, can we stop the quibbling here? If you want to talk about getting a good return on one's investment in a truck, that would be a very good topic to start in another thread.