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It seems like every asset has boomed since the pandemic started — and FedEx delivery routes are no exception.
Under the brand FedEx Ground, FedEx offers the following opportunity:
… has seen prices — AKA the right to own the route — increase 50% in 3 years, per Bloomberg.
The going rate for 10 routes is ~$1.25m, with profit margins of up to 25% for a well-run business. While FedEx vets the initial sale, it also allows a thriving secondary market to exist.
This arrangement allows FedEx to have a lower cost structure than its rival, UPS, which has unionized drivers (the flip side being, UPS employees have industry-leading wages and more benefits).
But its ground game is now the growth driver. Per Bloomberg, over the past decade:
… to keep up with the ecommerce boom. Major changes for its 5k+ contractors include:
Deliveries exploded to 3.1B packages in 2020, up 23% YoY.
With no end to the “I’m gonna order toilet paper online ‘cause I’m too lazy to go to the store” in sight, the value of these routes could keep going up.