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Fleet Upgrades, Route Expansion Can Deliver Results for FedEx Operators

Mar 07, 2019
Posted by: Stearns Bank

Thanks to a strong economy, Independent Service Providers (ISPs) are enjoying favorable business conditions to expand their FedEx routes or upgrade vehicles.

Terilynn Palmer, an account manager with Stearns Bank’s Equipment Finance Division, is seeing consolidation among contractors. Small operators are being acquired by their larger peers looking to add routes and increase delivery volume. By expanding their service area, these operators can more easily meet FedEx baselines for efficiency and revenue.

“If smaller operators are not cutting it, other contractors are strongly encouraged to take over those routes,” Palmer says. “FedEx is always looking to improve efficiency and revenue.”

The Financing Process

With fleets getting larger and operators multiplying their capital investment, financing needs are growing and varied. Traditional vehicle purchases and fleet expansion including routes are still financed with equipment loans. But for more aggressive business expansion, an SBA loan may be appropriate.

“Stearns Bank can work with operators on a full range of financing – from equipment loans to SBA loans,” says Palmer, who has 14 years of industry experience. Palmer and her team work with operators to understand their business challenges, current and future revenue potential and vehicle valuations.

Starting the financing process is as easy as a phone call or submitting an online application. Stearns Bank has a strong reputation with FedEx operators for understanding their business needs, responding quickly, and delivering customized financing solutions – such as “app only” approvals up to $350,000 in a matter of hours.

Palmer added that operators can work with any dealer, and private sale financing is available. As a direct lender, Stearns Bank is involved in every step of the financing process, from the initial phone call and application to funding and servicing the loan.

The efficient loan documentation process along with in-house decision making ensure that operators get fast answers to their questions and ultimately fast approval on their loan request.

Careful Considerations

In today’s tight labor market, hiring and retaining drivers is crucial to success. When considering an acquisition, operators look at the longevity and stability of their drivers as part of the business valuation. “Part of what you are buying or selling is the drivers – continuity and familiarity with routes,” Palmer says.

Electric cars and alternatives to fuel-powered vehicles have been featured in the news. However, Palmer says she has yet to see much investment in these emerging technologies. “There has not been much changeover to electric,” Palmer says.

“These vehicles are on the road a long time. There are few charging stations, and battery life is not adequate for a full route.”

However, she adds that as electric-powered trucks become more cost effective and dealers start carrying these models, we may see a few added to fleets on a trial basis.

Despite competitive and technological challenges, there are great opportunities for FedEx operators, Palmer says. Growth of e-commerce and online purchases have created strong demand for home package delivery. For business, titled equipment purchases and financing continue to require overnight delivery of paper documents.

Operators looking to expand their routes, acquire an existing operator, or increase the productivity of their fleet can start the financing discussion by calling Terilynn Palmer at 800-247-1922 or emailing

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