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🚚 FedEx contractors are banking

The Hustle - Silicon Valley Tech News


September 2, 2021

Here’s a fun fact: Contrary to popular belief, Cheez-Its are not squares. They’re actually rectangles that measure 1.02 by 0.94 inches. Depending on your personality, that’s probably either moderately interesting or extremely annoying, so we’re sorry or you’re welcome.

Today’s rundown:

  • FedEx is hot: Prices for contractors to “own” a delivery route are exploding.
  • Chart: How many electric school buses are there in the US?
  • Good news: The government wants to make it easier to fix your phone.

Let’s do it.

The big idea

FedEx contractors are cashing in on scarce delivery routes

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:

  1. A contractor can buy the exclusive rights to deliver packages in a specified area for up to 3 years.
  2. In return, the contractor (who still has to supply trucks and drivers) takes a fee for each package.

This unusual ‘asset class’…

… 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).

FedEx was founded in 1971 on air delivery

But its ground game is now the growth driver. Per Bloomberg, over the past decade:

  • FedEx Express (transports mostly by air) saw sales increase 60% to $42B.
  • FedEx Ground has seen sales 3x over the same period to $30.5B (with much better margins)

Since 2019, FedEx Ground has revamped its business…

… to keep up with the ecommerce boom. Major changes for its 5k+ contractors include:

  • Extended delivery (from 5 to 7 days a week)
  • New routing software
  • Accepting both larger and smaller packages

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.

SNIPPETS

This again? Costco has reinstated purchase limits on some products as pandemic stockpiling returns to grocery stores. #ecommerce-retail

Step by step: Swiss scientists made a “nanogenerator.” It’s nanocrystal-embedded flooring that generates electricity when you step on it. #clean-energy

The mantis shrimp throws a mean punch. To understand how, researchers built a robot version of the small crustacean. #emerging-tech

Twitter has long struggled with harassment on its platform. Its next strategy is Safety Mode, which auto-blocks mean or repetitive users. #privacy

Minor miners: A pair of siblings, ages 14 and 9, are pulling in $30k+/mo. mining crypto. #fintech-cryptocurrency

Apple users in Arizona and Georgia will be the 1st to get state IDs on their iPhones. Next up: Connecticut, Iowa, Kentucky, Maryland, Oklahoma, and Utah. #big-tech

Now on MFM: Sam Parr thinks this is one of the best episodes they’ve ever done! It’s got the future of venture capitalism, a $200m graffiti artist, and more. #mfm

Chart

What’s the deal with electric school buses?

Every school day in the US, ~480k diesel-powered school buses schlep ~25m kids to school. But electric buses are slowly gaining steam: 258 school districts (among ~13.5k) have committed to at least 1 electric bus.

The obvious challenge here is cost.

President Biden’s American Jobs Plan proposes it’ll take $20B to electrify ~20% of US school buses. By that math, it could take $100B+ for a nation-wide conversion.

(Related: Check out this school bus powered by a literal jet engine with 5k pounds of thrust, or this insane monster truck one.)

Podcast

The man behind Roku streaming

The Shake Up episode 5 is out, with plenty of clout.

The duo sits down with Dan Robbins (Roku VP of marketing and partner solutions) to break down why TV streaming is the future of advertising.

Roku reported $1.1B in revenue in 2019, and 66% came from ads and commissions.

Highlights from the Roku TV streaming pod episode:

  • How Roku is reinventing the way we interact with ads
  • The growth and trajectory of Roku’s original content
  • Tons of advertising gems from 3 industry veterans

(For the quick ‘n dirty recap, peep the “key takeaway” sound bites.)

Dan’s plan →
Listen Now

The man behind Roku streaming

The Shake Up episode 5 is out, with plenty of clout.

The duo sits down with Dan Robbins (Roku VP of marketing and partner solutions) to break down why TV streaming is the future of advertising.

Roku reported $1.1B in revenue in 2019, and 66% came from ads and commissions.

Highlights from the Roku TV streaming pod episode:

  • How Roku is reinventing the way we interact with ads
  • The growth and trajectory of Roku’s original content
  • Tons of advertising gems from 3 industry veterans

(For the quick ‘n dirty recap, peep the “key takeaway” sound bites.)

Dan’s plan →
Tech Regulation

‘Right to Repair’ legislation could make it easier and cheaper to fix your devices

Ever damage an iPhone or MacBook and end up buying a new one because the cost was the same as fixing it?

That’s the type of situation the government is working to change.

Momentum for ‘Right to Repair’ legislation is building…

… thanks to 2 recent events:

  1. The Fair Repair Act was introduced in Congress, which would force manufacturers to provide information that would make repairs easier for individual repair providers.
  2. President Biden announced an executive order that would curb manufacturers’ ability to prevent self-repairs and third-party repairs.

Offering consumers more options for repairs could lead to serious savings. Case in point, after Apple quoted $999 for a repair on WSJ reporter Joanna Stern’s 2017 MacBook Pro, she brought it to an independent repair shop and was quoted $325.

Apple and other manufacturers argue that unreliable repairs could be unsafe for consumers

While this may seem like a convenient excuse, it has merit:

  • In the wrong conditions, lithium-ion batteries can catch fire or explode
  • Making more information available could make access easier for hackers
  • Independent repair people could access your personal information

If we’re being honest, it seems like this situation could be avoided if Apple and other manufacturers just made their devices more water- (and coffee-) proof.

AROUND THE WEB

🏹 Whoa: Artist Sarah Hatton used a black paint so black you can’t even see objects painted with it at certain angles. It seems kinda dangerous, but it’s also very cool!

💸 On this day: In 1969, the 1st ATM opened at Chemical Bank in Rockville Centre, New York.

🍍 Haha: If you’ve always wanted to watch people play music by tweaking and slapping pineapples, we’ve got great news.

🍿 Cure boredom: Scrolling aimlessly through Netflix again? This website recommends highly rated films and shows with an emphasis on lesser known media.

🍓 How to: If your local farmers market is a key part of your summer diet, Well+Good has some tips to make fresh berries last longer.

Wait, what: A 1.7k-pound walrus that won’t stop lounging on (and subsequently sinking) small boats off the coast of Ireland is getting his very own floating couch.

Meme of the day

This is technically correct (Source: Imgflip)

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