What to Expect In Expenses for FedEx Routes for Sale

Understanding Expenses in a FedEx P&D Route Business

One of the most attractive aspects of investing in FedEx Ground P&D routes is the built-in revenue stream. Unlike most businesses, contractors don’t have to market or generate their own sales—FedEx provides consistent package volume.

Your success as a contractor is determined by how efficiently you deliver that volume and manage your operational costs. A well-run FedEx Ground business requires understanding and optimizing your profit and loss (P&L) statement.

Here’s a breakdown of the core expense categories you’ll find on a typical FedEx Ground business P&L—and how to evaluate them.

Key Expense Categories for FedEx Ground Contractors

1. Gross Driver Wages

Driver wages are typically the largest expense in any P&D operation.

• Healthy range: 37% to 52% of total revenue

• Anything above 50% may signal inefficiencies

• This figure does not include payroll taxes, which are listed separately

*High payroll costs don’t necessarily mean the business is a poor investment—but they do require closer analysis. Often, there’s an opportunity to improve operational efficiency by optimizing route planning, staffing, or driver performance.

As your business grows, you'll likely add more drivers to meet rising package volume. The key is to balance staffing needs with route efficiency to maintain profitability.

2. Fuel Costs

Fuel is another major operational expense, and it's calculated differently for P&D and linehaul.

For P&D Routes:

• Based on average miles per day and number of routes

• Assumes 255 working days per year

• Fleet trucks average around 10 MPG

For Linehaul (for reference):

• Calculated based on miles per week

• Assumes 52 working weeks per year

• Tractor-trailers average 6.25 MPG

The vast majority of businesses will use a fuel card for this expense. Fuel cards are one critical tool for reducing employee theft; additionally they make tracking and vetting average fuel expenses easier.

3. VEDR Technology

Video Event Data Recorders (VEDR) are required in every vehicle. Costs vary based on the vendor and fleet size.

4. Scanners

Scanners are crucial to the success of your organization and the efficiency of your drivers and will vary based on the vendor and fleet size.

5. Plates

Registration plate expenses vary by vehicle type:

• P&D trucks: ~$200 per vehicle

• Linehaul tractors (for reference): ~$2,350 per vehicle

6. Payroll Taxes

Payroll tax rates are state-specific. To calculate payroll taxes, find the tax rate for the state where the business is located and multiply the tax rate by Total Salaries + Wages.

7. Insurance

FedEx contractors are required to carry:

• Workers’ Compensation

• Non-Trucking Liability Insurance (NTL)

• Employment Practices Liability Insurance (EPLI)

• Optional: Physical Damage Insurance

Insurance should represent 3%–6% of total revenue, with Workers’ Comp typically making up ~80% of the cost.

*Pro Tip: Your Experience Modification Factor (Mod Score) heavily influences your Workers’ Comp rate. You’re not locked into the seller’s Mod Score—you can reset it by choosing your own provider.

Invest in safety (e.g., slip-resistant shoes, back braces, in-vehicle safety features) to reduce injuries and claims.

Other Admin Expenses

• Physicals: This number may vary, but we see it typically hovers around $500 total.

• Uniforms: Uniforms cost approximately $300 per employee annually.

• Accounting and Legal: An average FedEx Ground route business can generally cover required accounting and legal costs for $2,000 per year.

• Supplies: Most route businesses spend approximately $2,000 in supplies per year.

• Travel and Entertainment: You should allocate roughly $1,000-$2,000 annually to cover employee appreciation or travel.

Equipment Maintenance and Rental

Fleet upkeep is a major long-term cost and is dependent on vehicle age and route mileage.

• P&D repair/maintenance: 8%–12% of revenue

• Linehaul repair/maintenance: 15-22% of revenue

* High-mileage routes can still be very profitable—with the right fleet strategy and proactive maintenance planning. 

Want to Learn More?

For a comprehensive understanding of FedEx P&D or Linehaul routes, consider enrolling in our FedEx Ground Routes 101 E-Course. This course provides foundational knowledge to help you decide if investing in logistics routes aligns with your goals.

If you’re ready to explore available routes for sale, visit our Routes for Sale page.