Linehaul Safety and MEDALs with Alex Frum
In this episode of Industry Insights with Route Consultant, we sit down with Alex Frum, owner of Alpha Kilo Logistics, to discuss the critical topic of safety in the logistics industry. Alex explains how FedEx tracks and grades contractor safety using the Safety Results Summary (SRS) and Safety Results Indicator (SRI).
He also covers the administrative classifications, impact of accidents and violations, and strategies for appealing incorrect assessments. Additionally, we address the importance of the MEDALs Program and how safety scores influence business growth opportunities. Tune in to gain valuable insights on maintaining and improving your FedEx linehaul business.
About Alex Frum
Alex is the owner of Alpha Kilo Logistics, a Transportation Service Provider (TSP) for FedEx Ground with operations in Memphis, TN, Olive Branch, MS and Independence, KY. In addition to his Linehaul activities, he is a co-founder of the Linehaul Summit & Expo and provides consulting services to potential and existing Linehaul Contractors. Prior to becoming a FedEx contractor, Alex spent 15 years on Wall Street managing a fixed income trading desk and serving as a regional branch manager. Alex is a former Army officer and a graduate of the United States Military Academy. He is happily married to his wife of 18 years and has 4 beautiful kids.
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[00:00:00] Welcome to Industry Insights with Route Consultant, your front row seat to the fast moving world of logistics and beyond. Each week, we bring you game changing insights, real world strategies and fresh perspectives to fuel smarter investments and build stronger businesses. Join us as we sit down with expert guests to explore emerging trends and pressing topics across a wide range of industries.
This is industry insights. Alex, welcome back to the studio. Welcome back. And you know, we've talked about a couple of things, but I think really what I wanna focus on today is diving into the extra fun topic of safety, but safety in terms of how FedEx really does grade you and treat you and rank you. So I guess just at a high level, I know safety's important, but how does FedEx actually.
You know, track how well you're doing at safety, you know, so it's kind of funny, um, you ever see the movie Groundhog [00:01:00] Day? Yeah. With um, bill Murray? Yeah. You know, so he is like repeating the same day, same in day in and day out. Sometimes you feel like this with FedEx where you're talking to them about safety and it's like the same conversations on a monthly basis.
So the way it works with, uh, FedEx is they have something called the Safety Results Summary. Okay. And your safety results indicator, so the summary is a summary of all your different safety events that they measure you on. Mm-hmm. And your indicator is your actual score. Okay. Okay. Now there's, uh, the summary comes out on the 15th of every month.
Mm-hmm. However, I generally don't request it until the 20th. Now, it's not something that you can get in. My biz account. Mm-hmm. Or so an MGBA, you actually have to request it from your senior manager, or you need to request it from SPS. Okay. Um, I generally request it from one of my senior managers. They get it to me faster than SPS.
Okay. And the reason why is that your senior manager for line haul, if you're in Memphis or Olive Branch, or Woodbridge or Rialto, you're probably one of 30, maybe one of 50 [00:02:00] contractors. Mm-hmm. If you're requesting it from SPS, you're probably one of. 500 contractors they're dealing with. Yeah. So I find I get better, um, communication better response times from my senior managers than SPS.
Um, but it's a little bit frustrating that it's not on MGBA. Yeah. But it's fine. It comes as a PDF and, and I think that's something that. I, I know when new buyers find out about the SRS and SRI and how everything works, they're like, oh, great. Well, can I just go get that? And you can, you just deliver that to me.
And it's always, uh, an exciting experience to explain to them. No. Yeah. Uh, we have to request it and we'll see when we can get it to you. But yeah, it seems like something that should just be. In MGB, but it's not. Yeah. Yeah. So it's not, um, they keep saying that it's eventually going to be Yeah. Um, I think it's a, it's a function of the fact that FedEx has multiple legacy systems.
Yeah. From all the different mergers that they've gone through. So you'll recognize pretty quickly that you have your own CAS number, you have your own V number, which I don't know what a V stands for. I think it's actually vendor. Vendor. I, I only found that [00:03:00] out recently, but I think it's because technically we're vendors for FedEx.
That's fascinating. I know, I know. I never knew that. Okay. So, yeah, so then you have your vendor number, and then there's something even crazier that we've never, I've never been able to figure out. It's called an A UA ID number. I don't even know what that is, so I can't help you there. Uh, yeah. So I think it's because of all the different legacy systems.
Yeah. So when you're building your tractor files or you're providing different documentation to FedEx. They want you to report, you know, either your V number or your CDEs number, or your A UA ID number. Um, so all that information goes up to different systems. And so I think it's because safety at the end of the day, encapsulates a lot of different products that probably are legacy systems that don't speak to each other.
Yeah. So they have to import it into a centralized database and that, that publishes your SRS. So if you think about it, um. Your SRS is a, your Safety Results summary. Mm-hmm. Or your score, your SRI, your safety results indicator is based off of a rolling 12 months. Okay. So each month you have a decay function.
You get the current month [00:04:00] added to it, and then your last, you know, the. 13th month gets rolled off. Um, and it's based off of the number of miles that you drive during that rolling 12 months. So if you're a growing contractor, um, you should see that, that number increasing your, your denominator increasing from month to month.
Um, and just as a quick aside, I know we're talking linehaul, this does exist for p and d as well. It's just different, but we're not gonna talk about that today. This is just for anyone who's listening and thinking, oh, I'm gonna do p and d so I don't have to worry about the SRS or SRI, like there are these safety tiers that exist there as well, but we'll focus on line.
Yeah. You have like, you have like a super large tier in Yeah, there's a, there's a, yeah. We only have four tiers in SRS. Small, medium, large, and extra large. Yeah. I have no idea what the d the basis is. Yeah, I do know how they come up with it. It's based on every month they reassess all the contractors.
Mm-hmm. So there's approximately 1700 line haul contractors, give or take. It's probably somewhere between 1650 and [00:05:00] 1800 every month. Um, and that's just net normal attrition and accumulation and growth within the, within the line haul space. What they do is they take all the miles driven in that month. Um, and then they divide it into quartiles.
Mm-hmm. And so based off of what your size is, you'll be. You know, in a different quartile. So somebody who does a lot of spots, um, and spots are, you know, customer pickup points. You're going to, uh, a Walmart distribution center or a Milwaukee tool and die distribution center, or a Chewy's, and you're picking up a trailer that's been spotted there or left there, you know, maybe the night before or the day before, or maybe this three hours before.
Yeah. And then you're. Dropping a new trailer off that's gonna get loaded and you're bringing that loaded trailer back to FedEx. So those guys are usually doing runs that might be 20, 50 miles long. Mm-hmm. That's it. So versus somebody like me, like my shortest run is, my shortest run is 400 and. 28 miles.
Yeah. My longest run is [00:06:00] 1,760 miles. So you know, that's a single dispatch. Mm-hmm. Like I'm going from point A to point B, 1,760 miles. Yeah. So for somebody like me, you know, I have a lot of, I do a lot of miles on a weekly, a daily, weekly, monthly, um, point in time. And so. I'm an considered an extra large carrier.
Okay. Somebody who does a bunch of spots is probably considered a small or a medium carrier. And then it's also based off the number of trucks you dispatch. Yeah. Like if you only dispatch two trucks a day and you're doing a thousand miles, you might be a small carrier. Yeah. Um, or if you do 20 spots and you get to a thousand miles, you might be a big contractor by the base of the number of trucks you have.
Mm-hmm. But based on the number of miles you're small. Hmm. Um, and that goes into your tiering. Okay. So, um, based off of your safety results indicator, your, your score that you generate, um, they, then they have ranges that are tier one, tier two, tier three, and tier four and tier five safety. So there's four [00:07:00] categories.
And then, um, tier five safety means that you had no, um, safety. Um, failures in the past 12 months, it's pretty much impossible for an existing contractor to do. Yeah. Um, as a brand new contractor, you come in and you have nothing on your score, and so you generally maintain, um, almost a perfect score for at least six months.
Yeah. It's very rare that you have, you generate a safety. Everybody gets to start tier five. Yes. It's the, the pleasure. Few people ever stay there. Um, like right now I'm safety tier four. Mm-hmm. Um, which is pretty good for a large contractor. Um, that being said, I do have a couple accidents a year. Yeah. Um, I drive almost 5 million miles a year, so I'm going to generate, you know.
You know, a number of accidents. I have, um, a number of CSA violations. Um, just the, the number of miles I'm driving and how often I drive through a way station or go by a [00:08:00] mandatory DOT inspection point. Yeah. Just means that the, the percentage of incidences that can occur is great. Yeah. And so, um, A DOT officer can always find something that happens.
So, um. So, yeah, so I mean, I'm tier four, which is really, really good. Um, and so what my safety score is based off of is 1 your accidents. Mm-hmm. So whether you had a, um, a preventable accident, um, not, um, or a DOT recordable accidents. So, uh, FedEx will categorize your accident whether it's preventable or non-preventable.
And this is not, uh, this is not based off of what you think of as insurance wise. So. Um, you know, insurance is different than accidents. Mm-hmm. They hold dr, uh, commercial drivers to a higher standard. Yeah. And the American Truckers Association, of which FedEx is a member and extensively you as A TSP, are a member of as well, holds drivers to a higher standards.
You are a professional, you're not a, a civilian [00:09:00] driver who's doing this as a hobby. Mm-hmm. Whether you drive to and from the work, you're still doing it as a hobby. As a truck driver, you are professionally trained to drive your truck in a certain manner. So if you do it perfectly, you should be, uh, following all these F-M-C-S-A requirements, and you shouldn't be getting into accidents that you can prevent.
Now, there are plenty of accidents that are gonna be non-preventable.
the A TA, the American Truckers Association, um, has a guide to determining accident preventability. Mm-hmm. Okay. So as a professional driver, you're expected to be able to prevent the majority of accidents.
Accidents that you can prevent are non-preventable. Yeah, so for example, you should never be using a cell phone while you're driving. Um, you should always be driving in the right lane and maintaining more than three seconds worth of following distance to the vehicle in front of you. If you're driving in traffic, you should be always scanning around yourself and provide, making sure that you have an out in the event [00:10:00] that a hobby driver, a civilian driver, you know, does something that's unexpected.
Yeah. So there's a lot of different things, um, that they're expecting you to, to take precautions to prevent an accident. Yeah. I mean, if you think about it, like personal drivers, I see I get so mad every day with the stuff that I see when I'm trying to just navigate through the traffic on the way home.
But you know, half of the things I see are also. To get out of it. I cut in front of the semi driver 'cause it's the easiest way in. So, you know, that's, I think about that all the time. It's, I, I've started to be so much more aware. 'cause I'm like, I know that it looks like there's a big gap that I can get in, but then I know how quickly they have to stop.
I know that they're, you know, yes, they're aware, but. You see those, you see that everyone uses those to cut in front of a semi truck. Yeah. The weather conditions. Yeah. I mean the, the, the, the thing that blows my mind, and I've learned this, you know, over my last six, seven years of being a contractor, like it's extraordinarily dangerous to pass a tractor trailer on the right [00:11:00] side, on the passenger side, the.
The lack of visibility that they have is, mm-hmm. Ginormous. Now we talked about that there's things that safety that contractors can do to prevent Yeah. That from becoming a risk. But you know, if you're not driving with a FedEx contractor, if you're driving just, you know, whatever trucks on the road. Yeah.
It's really dangerous. Like I teach my kids who are learning to drive. Right now, my 17-year-old, my 15-year-old, I teach 'em never to pass a tractor trailer on the passenger side. Yeah, because it's just such a dangerous event for them. Yeah. I got hit by a, a garbage truck that was, he, he was, uh, I, I was past him on the right side.
It was a merge lane, so I had to, but he was like, yeah, I can't see anything there. And you know, that's exactly those types of trucks, no safety technology. He is just driving whatever. And so, yeah. So it's, it's dangerous. But anyway, so there, the, the, so I recommend that anybody who's getting into this. Base.
So go to the ATA Guides, uh, ATA a's website. Mm-hmm. And you can buy the book. It's, it's, it's around 300 pages long. You can download it as a PDF. [00:12:00] Yeah. It's costs about 26 bucks. It's called the ATA a's Guide to Determining Accident Preventability. Mm-hmm. So it's what you should do and evaluate your truck drivers as well.
But it's what FedEx evaluates. An accident. Yeah. So they'll look at the accident through that lens and determine if it's preventable or not. So for example, if you get rear-ended mm-hmm. By and large, those are gonna be accidents that FedEx deems as non-preventable. Okay. Yeah. There's nothing you could do to prevent Yeah.
A rear end. So in that situation, FedEx is not gonna assess you any points. Now, if you get into an accident, if you do a side swipe. Which is probably the most common type of accident that you can occur. If it's, if it's not DOT recordable, it's worth 45 points. So your safety score will go up by 45 points.
Um, if it's DOT recordable, DOT recordable means it was a fatality, it was a injuries that required an ambulance, or it required a tow truck that's worth 60 points. [00:13:00] Um, and then you have other types of accidents. If you have like property damage that's worth 30 points. Mm-hmm. Uh, so those are all the different types of, there's a couple more.
There's disconnects. Yeah. And improper assembly. Um, improper assembly is like if you forgot to, uh, put the latch on your dolly. On the pen hook. Um, you forgot to hook up your safety change properly. Um, that's in an improper assembly. If you thought, forgot to lock the jaws, I don't know how you do this, but if you forgot to lock the jaws on your fifth wheel, I don't know if you could actually tow a vehicle if you didn't lock the jaws or tow trailer, but that could be an improper assembly.
A disconnect is actually where you have a disconnect, where you drop the trailers. Mm-hmm. Or you drop the dolly, so that's more dangerous. Think about it. You're driving down the highway and all of a sudden you see this. Trailer just moving along by itself, you know, with no tractor attached to it. And it's almost always a serious accident.
Oh yeah. Like there's, you'd have to be really lucky for that not to cause some damage. Yeah. So that's, uh, that's an imp uh, so that's a disconnect. Mm-hmm. So those are all in the accident Classifications. And then [00:14:00] you have the administrative classifications. Okay. So those can be a CSA violation, they can be HOS violations.
Those can be your ve mm-hmm. So it could be, uh, driver fitness. Um, and so they're all scored at different levels. So if you get a CS, A violation for vehicle maintenance, so you go pull into a waste station. Uh, the DOT officer sees that you have a flat tire, that's a vehicle maintenance. Your vehicle is actually gonna be put outta service until you actually repair that vehicle and you're gonna get a CSA violation and you're going to get hit with 45 points.
Hmm. So, fire extinguisher, unlatched, uh, flat tires, uh, airlines, brake, uh, brakes, lights, all those kind of things that a. DOT officer can observe in a way station or if they pull your vehicle over. Mm-hmm. Those could all, those are all CSA violations and those will cause you to get hit with a vehicle, main vehicle maintenance and that'd be 45 points.
Um, then there's, uh, driving violations. So [00:15:00] if you're driving in the left lane. On a highway and you're in a restricted zone where they're not allowed to have tractor trailers in the left lane, you can get hit with that. That's gonna be worth, I believe those are worth 40 points. Don't quote me. There's a frequently asked questions on the FedEx, uh, my ground, uh, my ground site, not the.
Not the MGBA, but MGB where you can do a search for SRI and SRS and it actually gives you the table of what everything's worth. Yeah. Um, you can have driver fitness, so like if your medical certificate is expired or if your medical certificate is not tied to your driver's license. Um, if your driver with an expired driver's license, those are all driver fitness.
Mm-hmm. Uh, if you were prescribed to wear with glasses. Drive with glasses and you're not wearing your glasses if you're required to wear a hearing aid and you're not having your hearing aid. And those are all driver fitness and those are all worth 30 points. Um, D-U-I-D-W-I, yeah, those are, you know, worth a certain number of points.
And so those are all under the administrative. [00:16:00] And then you have the vetter. Mm-hmm. Ki And so, and there was, there's. There's two components to it. One, like if your veter, if you don't have a veteran, a tractor, uh, if your vet's not working properly, um, those are, those can cause you to have a failure. Up until the month of March, it was only worth five points as you failed because we were switching to a new vet.
System, but now it's worth 23 points of view fail. And now you have new KPIs. So if you get caught speeding, if you get caught speeding a certain number of times mm-hmm. If you get caught using a cell phone, a certain number of times, if you get caught, um, following distance, a certain number of times, uh. Uh, cell phone usage and camera obstruction.
And not wearing your seatbelt too, right? And not wearing your seatbelt. Those are all worth 23 points. Um, and then you can get a credit. So if you get a clean violation, or sorry, clean violation, if you get a clean CSA Yeah. Um, then you can get, uh, you get seven points added back. Okay. Um, and so they, they take [00:17:00] all those different things and they add 'em up, and they divide 'em by the number of miles that you drove.
So if you have. Let's do it easy. So if you have a hundred points mm-hmm. And you drove a million miles in the past year, um, that's gonna be 0.00001 or something like that. Yeah. Then you multiply it by a hundred thousand. Okay. And that gets you a score of 10. Okay. Yep. So that score of 10, depending on what area, if you are driving a million miles a year, that probably is pushing you probably in large.
Mm-hmm. And so that would probably be tier three, maybe tier four safety. Okay. I have no, I mean, yeah, you have to look at the the FAQ, but yeah, that's how the math works. Yeah. It's based on the size is what quartile it puts you in and the number of miles that you're doing the size of your business. And then it's all based on all of those different characteristics you talked through and and value, and you're held at to a higher standard.
The, you have, um, you held to a higher standard the larger you get mm-hmm. Or the more miles you run. Yeah. Not the number of dispatches. Yeah. And not the number of trucks, but the more miles you run, you're held [00:18:00] to a lot a higher standard. So if, if you're a contractor who does only team runs and you're doing only four trucks a day.
I mean, you could be doing over 20,000 miles a week. You could be doing upwards of 24,000 miles a week with four team runs. Mm-hmm. So if you think about that, you, you're gonna be over a million miles a year and you could be an extra large contractor, you know, depending on where you fall on that metric.
Right. Around the, the barrier. Um, the crossover from large to extra large was only four tractors. Yeah. Which is really unfair because the number of incidences you can incur. Um, it's just like you get one accident, it might throw you into tier one or tier two safety, whereas, you know, you look at somebody like me, I'm doing five, almost 5 million miles a year.
Yeah. You know, I get into four accidents and you can still be. Uh, 180 points. Yeah. Um, out of 5 million miles, I'm, you know, I'm two, that's like four points on my SRI score. I assume the logic of it is if you're running this large of a [00:19:00] business, they're, you're a potential higher risk to them. You know, they're putting more faith in you as a larger contractor, giving more volume.
So we need to Yeah. Hold you to a higher standard, but it's, it's not a perfect system. Yeah. Because it misses all, it's, it's really, it's not the number of miles you drive, it's the number of. Dispatches dispatches. You do? Yeah. Um, that's where the greater the risk is. Yeah. 'cause, you know, driving down the highway, um, uh, yeah.
The 1700 miles, like your highest run Yeah. The, the, the number of incidences might occur is not as great as the number of times if I do, if I do 10, if I do 10 spots in one day. Mm-hmm. The opportunities for me to have a backing failure. Yeah. Or to have a d uh, equipment damaged or property damage is much greater than me driving down the highway.
Yeah. 'cause you're going in and out of potentially city areas, areas, roads that aren't necessarily built for tractor trailers. Oh yeah. So, I mean, you see it all the time on the Upper East Side. On the upper East Coast. Yeah. Like, you know, the west and especially the southwest is. Is glorious for tractor trailers to driving.
You have big, wide highways with large, wide [00:20:00] medians. Yeah. You know, all the factories, all the distribution centers, all the warehouses have been built in the last 30 years. So they're all set up to handle tractor trailers. You go to the east coast that, you know, started developing and building the warehouse and distribution center when we were still driving around with horses and buggies.
Yeah. You know, some of these. Uh, distribution warehouse points are tiny and really tr it's tight. Yeah. Like I was driving in, I was driving in the middle of nowhere Massachusetts recently, and by the way, it's amazing to me how empty the middle of nowhere Massachusetts is can be for how small of an actual state it is.
Yeah, exactly. Yeah. But I came across this distribution center and it was literally. Like you would have to back up in the middle of the road to back into it. Like you'd be sticking out, like, yeah, I think only a straight truck could actually get in there. You couldn't get a semi. Yeah, but it's built for a semi.
That's fine. Yeah. I mean, yeah, like, oh, I wouldn't wanna be discounted. Yeah. Yeah. But somebody has to deal with it and it's just, you're right. Yeah. Um, so yeah. So that's how the, that, I mean, in, in [00:21:00] a nutshell, that's how your safety score works. Yeah. Um, and you, you get that every, every once a month. Mm-hmm.
You have to request it. Remember to request it. I would re suggest requesting it around the 19th or the 20th, every month. Mm-hmm. I know it's supposed to be ready by the 15th and my experience. They're still, like, they're still updating it up until the 15th. Mm-hmm. Just the, how archaic the system is. Um, so pick it up, you know, get it on the 19th or 20th, review it, make sure the data is correct, and make sure the accidents and the CSA violations are correct.
Can you appeal anything? Yes, you can appeal it. Okay. Uh, there is a process specifically to appeal accidents you have a month after the accident occurs. Okay. To appeal it. Uh, there's a specific form that you can download from NGB to appeal. Um, it doesn't give you a whole lot of room to explain. Yep. Um, nor is it really easy to attach.
So, in the body of the email, give a much more robust explanation of what occurred, why you're, you're contesting it, and then provide all the supporting me material. Yep. You know, accident report. Police [00:22:00] witnesses or police report witnesses, um, any extra video cameras. Mm-hmm. All that kind of stuff. Add it into the body of the email and send it off.
And then it goes, the senior manager will review it. If he says, yeah, you're right, then he will send it on. If he says, no, you're wrong. He still has to send it on, but it doesn't have, your senior manager actually carries a lot of weight in this process, so if, if your senior manager believes that it's a non-preventable accident or a preventable accident, then that will go, it will carry a lot of weight when it goes up to the accident Review committee.
Mm-hmm. I don't know who serves on the accident review committee. I know that it's other Senior Terminal Managers and SPS and safety. Okay. But I don't know the exact makeup. So there's the five tiers and we've thought five is basically you're perfect. Yeah. Or just a new contractor. Uh, how do you think about, you know, like tier four, what does that mean to you?
Tier three, tier two, tier one? How do you loosely kind of think about those tiers? So, um, I will say that. If you're tier three and above, FedEx likes you. Mm-hmm. They want to encourage you to [00:23:00] grow. And so if you're tier three, tier four, tier five, you are gonna get opportunities where FedEx will reach out to you and say, Hey, you know, we got this temp assignment.
Mm-hmm. You know, we think you're perfect to run this. We're gonna test it out and see if we want to actually make this into a growth run. Yeah. Um, or, hey, we have a station in. Middle of nowhere, Arkansas. Um, we're looking for new contractors to come here, you know, would you like to bid on this growth opportunity?
So they're gonna give it to anybody that's tier three, tier four, or tier five, or, you know, you're, you're, there's a CGO out and you're gonna bid on those runs. Mm-hmm. More often than not. Um, it, it, it changes from year to year, but more often than not, you're not eligible to bid on growth runs unless you're tier three or above.
Yep. Um, tier two, um, your safety's not great. Mm-hmm. You're not gonna lose your contract, but FedEx is concerned and they're probably having conversations on a regular basis with you saying, Hey, you know, what are you doing to address this issue? How are you getting better? You're not growing. But you're not being told [00:24:00] you need to get rid of your business.
Yeah. If you're tier one, you're been, you've been asked to provide a letter to Cure, you're probably asked to provide a letter of assurance, so an OTC and a letter of assurance. Mm-hmm. An LOA. Um, you have to explain to them what you're doing, how you're changing your program, and if you get another incident within a 45 day period.
You are losing your business. Yeah. Um, a lot of times what FedEx will do is they'll say to you, Hey, um, we don't think you're gonna make it, or, we don't trust that you are gonna be able to improve your safety situation. Or We don't, you've had such a poor track record, you know what, we're gonna ask you to sell your business.
Mm-hmm. Otherwise we're gonna take it away at the next opportunity. Yeah. And I often will tell people if you're, if you're tier one and you don't see a path. For you to improve your safety, that's a great time to go talk to a broker, like Rock Consultant to sell your business. 'cause it's, you don't want to be in the position where FedEx says you've got, you know, 30 days.
It's a lot easier if you're like, I'm tier [00:25:00] one. I don't see a great path forward. But, you know, I, I, I don't have a time limit yet. I'm gonna start working on, on selling the business. Just because like we talked about, when a new buyer comes in, they're tier five, they start over. So it's a rolling. You know, issue could be be something from 10 months ago, but it's just something that is still impacting your score.
And maybe you think the next two months are too risky where you don't think you'll get there, where it'll come off, new buyer comes in and resets. Yeah. I mean, and that's the hardest thing, right? Yeah. I mean, so it's a rolling 12 month, like contractors have talked to FedEx about making a decay function.
Mm-hmm. But they've never wanted to move that. So an accident occurs. In the month of May. Mm-hmm. 2025 or 2024 is worth as much as an accident that occurs in March. Yeah. So even if I have had no accident since May of 2024, it still has the same weight to it. Yeah. As an accident in March, even though I might have improved my entire business.
Mm-hmm. And so where you see a lot of guys get themselves in trouble is they [00:26:00] had an accident in December of 2020. Three. Mm-hmm. Or 2024 and they're rolling into peak and you're getting into the most dangerous time of the year. Yeah. Which is the winter driving season. And you know, they're still teetering on tier two and then they get into an A situation in October.
Mm-hmm. You know, can they make it the next two months? Yeah. That next 60 days without getting another incident. To have that event that happened in December roll off. Yeah. And so in that situation, I, I agree with you. It, it probably makes a lot of sense to say, Hey, I'm working to sell my business. FedEx will usually work with you in that situation and allow you to work through and sell that business.
Now, one of the things that FedEx might require you to do is sell it to an existing contractor, depending on how bad it is. Yeah. And how big you are too. How big is it? Yeah. You know, how complex is your business? Mm-hmm. Um, the timeframe, if you're doing it during peak, they're not gonna wanna sell it to somebody who's new.
Um, so, you know, get with your broker, you know, route consultants or somebody else and say, Hey. [00:27:00] And here's my situation. Um, I've talked to FedEx, they're gonna give me the leeway, but I need to sell it to an existing contractor. Mm-hmm. You know? Yeah. So yeah. Everybody knows contractors that are trying to buy.
Yeah. Yeah. Um, so. Have you seen situations where you said that you're held to a little bit higher standard when you're larger? Have you seen situations where people try to sell a piece of their business to drop a size category to see if it'll have any impact on their safety? Does that ever work in that rec characterization?
I don't think. No, it doesn't because, um, all you've done is just put yourself into a more, into a much more challenging environment. Actually, what can help you out actually is to grow. To buy. To buy or, or grow. Yeah. You know, the more miles you get. The, the more it's spread out mm-hmm. The bigger your denominator is, what the last thing you wanna do is shrink your denominator, because then all you've done is just created, you, you've put yourself into a lower tier where the bands are, you know, you have higher bands Yeah.
But you're, you're causing so all, all sorts of problems. Yeah. I, I have seen people who sold off a [00:28:00] piece and we're kind of surprised to discover what it did to their safety score when they realized what they had left. Actually, I would recommend actually buying in that situation. It sounds. Yeah. Kind of counter, uh, intuitive.
And in a lot of situations, FedEx won't let you buy. Yeah. If you're tier two or one, it might be a challenge to grow FedEx not. But if you're tier three and you're trying to spread the mileage out to, to maybe get up to tier four. Yeah. Now, one thing that FedEx might allow you to do is sometimes FedEx recognizes that.
It's you're tier two, but it's not a true tier two. Yeah. So if you have a lot of CSA violations and you happen, you know, this is not current, but when we we're operating under the old DOT number mm-hmm. Um, mandatory inspection states were a very. Challenging place to operate. Yeah. That meant that every single time a FedEx truck went by, an inspection point, the FedEx truck had to go in.
Mm-hmm. And so that increases the, the incidents where you can get a, a negative DOT number. Yeah. And you know, at the end of the day. You know, you don't want to say it, but I bet you that [00:29:00] there, the do, uh, DOT officers, just like police officers have a quota, a quota of how many CSA violations are required to give.
Yeah. You know, and you know, if you go into a way station or a DOT inspection point at the beginning of the month. You're probably have a lot better odds of coming out with a clean inspection Yeah. Than you do at the end of the month. Yeah. I mean, no one wants to say it and you know, who knows if that's true or not, but it sure seems Yeah.
You know, anecdotally. Exactly. Yeah. So, um, yeah, so, uh, growing is better. Yeah. Um, having, you know. You know, trying to keep your CSA inspections clean as much as possible. Don't avoid, because it's actually a CSA violation to avoid an inspection point on purpose. Yeah. Um, you know, so it's, it's worse if you just get a, you get a hit.
If you avoid it on purpose, you might as well roll the dice and see what happens when you go. Um, and then just be respectful. Yeah. I mean, one of the things we do in my company is we [00:30:00] train our drivers on how to interact with DOT officers. Yeah. Because it is a very stressful situation. Think about yourself when you get pulled over by a cop.
Yeah. Are you, is it very calm? Is it very easy? Are you nervous? I'm nervous every time. Yeah. Every time. I, to see the lights on, turn on behind me, I'm like, I don't think I was doing anything wrong, but maybe. Yeah. So it's a nervousness. You know, what you wanna do is just be respectful. Mm-hmm. Be quick, be efficient.
Um, you do need to do certain things like your drivers need to know how to be able to transfer their, um, uh, their HOS logs, hours of service logs from the ELD to the police, the DOT officer. Um, it's not a very simple process. We have, like all my tractors, have a quick reference guide that explains the process to transfer the ELD from.
Uh, the hours of service logs from your ELD to A DOT officer. Um, but, uh, you know, my drivers make mistakes. Yeah. It happens. Yeah. So just practice and training will help them be more calm and not get [00:31:00] all nervous and scared worked up and then they seem suspicious. Yeah, exactly. So we've got the SRS, we've got the SRI, these five tiers.
We don't have to go super in depth on it, but you know, one of the big things that FedEx is doing to grade contractors now is something called the Metals Program. Mm-hmm. So how does safety and SRS play into this program? And, and if you would, would just give us a quick overview of what it even is. Yeah.
So there's, uh, some metals, uh. It's not, um, as robust and is not as useful, I think as it, it is on the p and d side. Mm-hmm. I think on the p and d side, metals is a real true evaluation of a business. Mm-hmm. And has meaningful metrics to improve yourself, um, in the, uh, in those businesses. On the, on the con, on the line haul side, we still have gold, silver, bronze.
Yeah. But it's not clear. What it takes to be like, I know what exactly what it takes to be silver. Yes. It's not clear to me what it takes to be gold. I think I know what it takes to be bronze. Yeah. I've never been anything other than silver, so I [00:32:00] can't tell you for sure. Yeah. I think to be gold, you have to be perfect uhhuh, so you can't have, um.
Your, your CSA score, your SRIS, you have to have a 15, or sorry, a 15, you have to be tier five safety. Yeah. Um, you have to have no service failures and you have to have no availability failures. So I think if you're perfect, yeah. You can be gold. You know, don't quote me on that. You know, FedEx hasn't published what it takes.
Yeah, yeah. Um, I don't know if they publish on the p and d side, but they not really. No. They haven't shared. There's not enough contractors and not enough history for us to get there. Yeah, silver. As long as you're tier four safety or tier three safety, you're silver. Mm-hmm. And as long as you don't have, as long as you're above 90% service.
Or, sorry, 90% availability and 99.5% service, you're, you're gonna be silver. Mm-hmm. Um, and then your bronze, if you're failing any of those metrics. Yep. Um, I would say that safety is the greatest, but it's actually not as [00:33:00] heavily weighted as I thought it would be. Mm-hmm. To me, safety should be weighted about 60%.
Yeah. Um, service should probably be weighted about maybe 20%. Or actually I take it back, so let's make it 70% for safety. Yeah, 20% for service and then 10% for availability. My understanding, I think FedEx has communicated to us in the past that safety is closer to like. 50%. Um, and then availability is around 35% and services around 15.
Mm-hmm. So it doesn't make a lot of sense, but I don't quote me on exactly that because Well, and it changes all the time too. Yeah. So, and you know, honestly, it's a work in progress. Yeah. And, and, and here's the, I think what the real detriment is to metals, um, the, the senior line hall managers in the hubs.
Mm-hmm. So think about the hub areas. Mm-hmm. So a hub area, for example, would be. Woodbridge, New Jersey. Yeah. And then everything that feeds all the little stations that feed into that hub. So that's the hub area. Mm-hmm. So think of like. [00:34:00] Um, and I don't even know. So let's try it. Let's do Chicago. 'cause I know Chicago Market a little bit better.
So you have Willow Springs, which is the hub, and then you have Wheeling and Carol Stream. Mm-hmm. And, uh, Bedford Park, and Cicero and Joliet. These are all the little stations that feed into it. So the hub knows that, you know, all we care about is. Two things. Your safety score, and if I call Josh up and I say, I need this run done, he's gonna be able to provide me with a tractor and a driver.
Yeah. That's what the hubs care about. Okay. You go to say Carol Stream. Mm-hmm. Carol Stream's a p and d station. So they've been beaten up about the head for the last three or four years, three years, however long. Mm-hmm. That metals is the thing. Mm-hmm. So metals is how we evaluate our contractors and metals is what matters.
And we only give, we only give growth opportunities to the gold contractors. Mm-hmm. Well, on the p and d side, that's great. You know, because it's actually a living, breathing product that works really, [00:35:00] really well on the linehaul side. It, it's kind of, it's it's not relevant. Yeah. And so you have that p and d station manager because you don't have a linehaul manager in the, in the stations.
Um, you have that p and d manager who's looking at that, maybe three linehaul contractors in Carol Stream and saying, you're gold, you're silver, you're bronze. You know, or no, your gold, your silver, your're silver, and not realizing that that guy's only gold because he is been around for six months. Six months, yeah.
And he's giving all the opportunities and all the, you know, mm-hmm. The cool stuff to that gold contractor. Whereas these two other guys are silver and they're great. They've been around for 20 years and they, you know, they've bend over backwards for FedEx, but they're not getting the opportunities because this one guy happens to be gold where it's a meaningful number because.
You know, I've seen contractors go from gold to bronze and bronze back to silver. And then, and you ask 'em, what'd you do different? And they're like, I don't know. Yeah. Yeah. I, I think it's still something that FedEx is working on [00:36:00] the right ways to, to, to judge that program. It's, it, I think. In a, in a vacuum, uh, you know, a, a metals program is a good thing where you get, you get lots of data, you get to know where you as a contractor are not hitting the standards that FedEx has set out.
It's, it puts you in different categories. You get to know where your focus areas should be to improve and it. For from FedEx's end, obviously it's great for them to identify the contractors that they want to give more growth to, and the contractors that are, you know, ones that are a, a risk for them. Yeah.
As long as the metrics are good. Well, I mean, like, perfect example, I, I believe on the p and d side, there is an operational efficiency ratio. Yeah. Right. How many tr uh, how many trucks do you have and are you dispatching too many trucks or too little trucks? Mm-hmm. Because that goes right back to profitability.
Yep. Okay. Look at my business. I have 30 dedicated runs. I have 36 tractors. Mm-hmm. Okay. Am I operational efficient or I'm unefficient, you know? Now look at somebody who has two dedicated runs. [00:37:00] Yeah. 36 tractors, but ha, but dispatches 30 tractors a week, their day to cover spots. Mm-hmm. So is that contractor evaluated the same way as me?
So if you're gonna evaluate me on operational efficiency mm-hmm. Like you do in p and d. You know which one is better. We both generate the same amount of revenue. Yeah. We both do the same amount of, you know, we don't do even close to the same number of miles. Right. But each of our businesses are super important to FedEx.
Yeah. Like we wouldn't get packages if that guy's not going to Chewy's and wafer. Yeah. The buckle and whatever, and picking up. Packages and delivering 'em into the stations or into the hub so they can get redistributed across America. Mm-hmm. And by and large, like if I'm not running a hundred thousand miles a week, then you know there's something else going wrong.
Well, those chewy boxes are still still where they got picked up. Exactly. Yeah. So it's really challenging because whereas you can say to a PD guy, like rural versus dense versus. Half rural, half dense is not the same [00:38:00] like linehaul. It's really, really comparing apples to oranges. Yeah, like you can probably use very similar metrics to evaluate somebody who's rural versus dense.
I mean, yeah, FedEx has figured it out. I mean, not only that, but there's five or 6,000 K contractors, more data points. 50, 60,000 trucks they can look at on a daily basis. And they have a pretty good idea of how many stops somebody can do, like in an apartment complex versus a high rise versus you're, you're in the Grand Tetons in Wyoming.
Yeah. You know, line hall's a totally different, you know, stand, uh, basis. Like what? Like the number of spot pickups I can do in Kolby. Nebraska versus the number of spot pickups I can do in Rockford, Illinois. Mm-hmm. Um, or the number of miles, like, I mean, are my miles equal when I'm running from Memphis to Rialto as somebody who's running from Chicago to Woodbridge?
You know? Yeah. Chicago to Woodbridge is 800 miles. Me running from Memphis to Rialto is 1700 miles. [00:39:00] Um, I'm driving in very, um, open areas. Mm-hmm. On relatively flat highway that is, you know, very rural. Somebody going from Chicago to Woodbridge is driving on, you know, you have to cross, I mean, one, you have to go by the Great Lakes, so you have the potential for.
Crazy snow during the winter. Mm-hmm. Um, you have to go through the Adirondacks and the Allegheny's and. Whatever that, you know, other mountain chains in New York, the, the Poconos. Yeah. So you have, you know, you have, it's, it's a, it's not the same mile, so there's, there's a lot more variables that you have to evaluate.
Yeah. So I think it's a work in progress. I think it's a great idea, a great concept, but it's gonna take a lot more granularity in the line hall business, and I don't know if FedEx has figured out that granularity yet and how to evaluate it. Yeah, it'll, it'll be something they keep working on. I fully anticipate that it just continues to grow and evolve as, as the, as they work on the program.
But yeah. But I will say the safety results summary and their [00:40:00] safety results indicator, they're not perfect. Yeah. There's, there's things that they can approve to it. Um, but it's a very good basic snapshot of how safe or unsafe your business is and how good, um. How well trained your drivers are. Yeah, and you know, correct me if I'm wrong, but I think if you're tier two, the highest you can be is silver metal and tier one.
I think the highest you can be is bronze. Yes, that's true. So it, it comes back to yes, it's the highest percentage. It also, if you're struggling on the SRS. It will directly impact your metals and set the cap for what you can even be. So, so, I mean, I think it's, it's, there's more things that you can add to the SRS and SRI mm-hmm.
And make it better. But I mean, what I would love to see out of it is, um, if I was, you know, sitting in a, in a room with Paul and Clay and Jeff and Mike and said, Hey, you know, and they said, Hey Alex, how can we make. SRS or SRI better, um, one, I would love to see a decay function so you can actually [00:41:00] see growth.
Yep. Or trend. Yep. Um, because that's what you really want to see. You don't wanna see a static number, you wanna see a trending number because then you have some predictability about where is the contractor right now, and where do we expect them going in three months. Mm-hmm. And so that's important because what you don't want is when you look at two contractors, especially if they're both tier two.
Um, you wanna know which one is gonna be getting to tier three or which one is going from tier three to tier four? Yeah, because that's the one we want to give the growth opportunities to. You don't want a one that's gone from tier four to tier three to tier two and is generating a negative trend line.
Yeah. Um, and the SRS can provide that information if it had a decay function to it. Um, would I love to see some tweaking on what are the different, uh, weightings of the different scores? Yeah. I think driver fitness is probably. Should be lower weighted. I would like to see other areas higher weighted.
Mm-hmm. Like I think it should be much more, there should be a biggest, a bigger [00:42:00] penalty if your driver has a DWI or DUI. Um, I think that. Um, improper assemblies, um, should be weighted lower than a disconnect. Mm. Like there should be a greater risk to a disconnect. Uh, property damage probably should be lower.
I think it's, I mean, or maybe there should be a weighted scale to property damage. Like not all property damage is treated the same. Very, yeah. Like if you happen to run, run over the grass at a customer site, that's not as bad as you clipping a guard house. Yeah. Yeah. You know, so like a de minimis amount of money, it should, maybe, there should be a, um, um, a value attached to that property damage and thresholds.
So it's less than $2,500, eh, if it's $50,000, oh, we, we wanna be serious about those. So there should be some kind of functionality to that. Yeah. Yeah. And I think there's all of those things, but, uh, I think at the end of the day, the biggest thing is. One for new buyers [00:43:00] and contractors to even understand what this is.
Mm-hmm. Uh, and learn how to. Correct. And appeal and handle the challenges that come with it and just know as much as they can. If you know there's, there may not be any trending in the way that FedEx does it, but you should be looking at those scores e exactly when you said every month to make sure you know how your business is trending and find ways in your own business to to see trends before you've gotten down to the tier two.
Yeah. And try to correct it before it's a FedEx forced correction. Yeah. I mean, then the other problem is, is that like, yeah. The, the thing, the great thing about the SRS is that it's always gonna tell, tell you when you're not focused enough on safety. Yeah. Like safety should be like, you know, safety should be number one priority.
Yeah. Safety above all is what FedEx says, and that should be your priority. And the moment you take your eye off the ball. When something happens, it's, it's gonna be the No, it's not gonna be one thing happening. One thing happening is it makes sense. Yeah. You know, you're not a bad contractor if you have a CSA violation or you have something occurring once a month.
Mm-hmm. You [00:44:00] know, I mean, depending on the number of trucks and how many miles you're doing, but. I don't get uptight. If I have one thing happening a month, I get uptight when I have two, three things happening a month. Then I've been like, okay, I haven't been focusing. Yeah, okay. Let me talk to my managers.
Are we having our safety meetings on a regular basis? You know, are all our drivers doing our safety videos on a regular basis? You know, are we re doing remedial training or my manager's mailing it in and saying, Hey. Where your seatbelt. Yeah, no, like we get into the, we get into the habit and we train.
Like we had a driver who had this bad habit of never putting on a seatbelt. You know what I did? I wouldn't let him dispatch for three days straight. And you know what? Every single time he got in and out of the truck, he had to put on a seatbelt. Put on a seatbelt first. Yeah. Yeah, yeah. So sometimes it's what it takes.
Perfect. Well, Alex, I really appreciate, I, I know that it's a, it can be dense and it feel difficult to parse for people who are looking at it for the first time, but it's such an important part of this business to understand how you're doing [00:45:00] and how you're trending and safety. And like we've said multiple times, safety is the.
The most important thing for FedEx and the biggest reason why contractors can get into trouble and fail. So it's incredibly important to understand that. Well, I mean, and I think long term is it's also how you grow. Yeah. Like the more safe you are. If FedEx knows that you're a safe contractor, they're gonna try to reward you with having you grow organically or inorganically.
They're gonna give you opportunities. They're gonna give you a tap on the soldier and say, Hey, go talk to Joe. Mm-hmm. Joe probably needs to sell. Yeah. Or they're gonna say, Hey, we have three growth runs. Do you want to bet on those runs? Yeah. Um, so, and the other thing is, I mean, what's really great is, you know, at the expo this summer, or the expo in a future year, I mean, we always have a class on safety results summary, um, and the bidding process.
And maybe one of these years we'll toss in metals into there too. Yeah. But at a minimum, we're gonna talk about what is the safety result summary, and actually go into more details about the tables and the metrics and everything like that. And then we're also gonna talk about, um, how did, how does it.
Really impact your bidding score. Yeah. [00:46:00] And ultimately that, you know, that's what it is. Yeah. It's, it's protecting your contract and it's protecting your future and your growth. And so that's always something that should be important. Yes. Yes, definitely. So Alex, thank you for walking through all that today for us.
It was my pleasure. Yep.
