FedEx Routes: P&D Routes Vs. Linehaul Runs

Understanding the FedEx Ground Route Types

The FedEx Ground network is divided into two different sections: Pickup & Delivery (P&D) and Linehaul.

These two types of businesses have very different operational models, pay structures, and requirements. Before you start looking at FedEx Ground routes for sale, you first have to decide which type of operation you want to start with.

P&D Routes

Pickup & Delivery (P&D) refers to the last-mile package delivery sector of FedEx Ground. These operations deliver packages to homes and businesses every single day. Every P&D operation is responsible for a designated territory of zip codes.

P&D contractors deliver and pickup all FedEx Ground packages within their contracted territory. FedEx Ground then compensates the contractor through a combination of fixed and variable pay rates (i.e. per stop, per package, fuel surcharges, and more).

Pros

P&D is a great place to enter the FedEx Ground space for the first time. The valuations and entry costs to the P&D space are less than Linehaul. Roughly 80% of the entire FedEx Ground network is comprised of P&D contractors. As such, there are many more P&D operations available to purchase all across the country compared to Linehaul. Operationally, P&D is easier to recruit for, has high growth potential tied to the growth of e-commerce, and new contractors can establish themselves much easier.

Cons

The difficulty with P&D is that every day is different. The P&D space is ever changing — Package volume varies day-to-day, driver turnover can be high, trucks break down, technology fails, etc. Your success as a FedEx Ground P&D contractor is entirely dependent on your ability to operate, contingency plan, and solve problems on a daily basis. No matter what challenges you face on a given day, FedEx Ground still expects you to deliver all of the packages and to complete all of your pickups.

Linehaul Runs

Linehaul refers to the over-the-road 18-wheeler sector of the business. Linehaul runs typically haul two 26ft trailers from one terminal to another. These runs can either involve one driver in a truck (called a “solo”) or two drivers in a truck (called a “team”).

FedEx Ground compensates Linehaul contractors for every mile that a truck travels on a run. Some runs may travel a few hundred miles each day and some may travel thousands of miles each week. The goal is simple — the more miles your trucks travel, the more money you make.

Pros

Linehaul primarily operates when you sleep. Drivers are traveling great distances either overnight or throughout the week, and you will not be at the terminal very often. Operationally, these runs are much simpler than P&D routes.

Linehaul operations typically experience higher profit margins compared to P&D. A single Linehaul run generates much more revenue than a single P&D route.

FedEx Ground is constantly in high demand for Linehaul power. What this means for you is massive growth opportunity. Each run you add to your operation could add as much as half a million dollars in equity to your business.

Cons

Linehaul is expensive. Compared to P&D, the Linehaul space can cost significantly more to buy into. Even though these businesses generate much more revenue and benefit from higher profit margins, they require much more cash to operate across the board. Not only are valuations higher due to the increased revenue and profitability, but drivers and vehicles are also much more expensive.

The biggest operational challenge in the Linehaul space is recruiting. Finding qualified CDL drivers and retaining those drivers can be extremely difficult. To be a successful Linehaul contractor, we highly recommend you employ or outsource full-time recruiting efforts to keep your pipeline full.

We like to say that Linehaul is 90% boredom and 10% terror. The reason for this is that while most of the action happens when you sleep, when something does go wrong it’s usually not a simple problem. These are large expensive pieces of equipment traveling thousands of miles each week. Accidents are always very expensive and can even be fatal.

What's the Right FedEx Ground Business for You?

There are pros and cons to both types of FedEx Ground businesses. You have complete freedom to choose one or the other, or you could do both. Evaluate your budget and which option may be the best fit for you and your financial goals.

Want to Learn More?

Dive into the world of logistics and delivery routes with our complimentary FedEx Ground Routes 101 E-Course. This course will teach you the fundamentals of delivery routes so that you can decide if this is an industry worth pursuing further. Whether you’re interested in FedEx Ground routes, Amazon routes, Bread routes, or other logistics operations, we are here to help. Enroll now for free and take the first step towards entrepreneurship in the e-commerce space.