Stay private or go dedicated? (Part 3 of 3)
Knowing when it’s time to switch from an in-house private fleet to an outsourced dedicated fleet
Switching from a private to a dedicated fleet—or committing to a dedicated fleet provider after using other third-party carriers is a major change. But that change pales in comparison to the costs and consequences of staying with a model that isn’t working. Here are the warning signs that it’s time to look seriously into a dedicated model.
Liability Concerns
Carriers today face staggering risks from nuclear verdicts resulting from accidents. A study released by the U.S. Chamber of Commerce Institute for Legal Reform found that massive jury awards of $10 million or more continue to increase in frequency.[iv]
Even when no nuclear verdict is involved, the cost of accidents can be devastating. According to FMCSA, the average cost of a large truck crash involving a fatality is $3.6 million per crash.[v] Even if a business with a private fleet hasn’t experienced an accident or been penalized for regulatory violations, those risks should weigh on them.
Through insurance, a dedicated fleet provider can shoulder the load, and through safety training, risks can be reduced. Says Dabbs, “We take safety very seriously. We make sure everyone is trained before they get in a truck.”
Dedicated fleet providers like TA Dedicated absorb the cost of safety training. For the world’s largest provider of end-to-end wire and cable management solutions, TA Dedicated created a driver training program to teach safe and proper loading of the company’s fragile and hazardous freight. As a result, the regular incidence of accidents and damage claims prior to the program were reduced to zero for the six months following the program.
Your dedicated partner’s investment in advanced safety technology can also help mitigate risks. “Outward-facing onboard cameras help reduce exposure to potential lawsuits. We also employ collision mitigation technology.” Dedicated fleet providers often help ease regulatory compliance headaches, says McNeil: “When there’s a lot of change on the horizon, it’s good to know you have someone who’s on top of it.”
The need to comply with today’s many safety regulations exposes private carriers to the risk of fines, out-of-service orders, and poor CSA scores by maintaining electronic logging devices (ELD) and fleet management technology and managing DOT mandates. Ensuring compliance with state and federal regulations regarding things like hours of service (HOS) rules and California Air Resources Board (CARB) requirements is a dedicated fleet provider’s domain.
Ambitious Sustainability Goals
Customers, authorities, and the public demand sustainability results. McNeil says that 80% of TA Dedicated customers have a sustainability program, and it’s something carriers like his take very seriously. “It’s important to customers so we’re embracing it,” he says, citing the company’s recent certification by EcoVadis, a leading provider of sustainability ratings for global supply chains.
“The dedicated space lends itself to implementing sustainable solutions, because we can help intelligently map out how customers can make progress on their goals.”
For companies ready to explore high-tech equipment solutions, some dedicated partners can provide alternative-fuel and electric yard trucks. These are some of the easiest points of entry and they can offer significant cost-benefit value.
No matter where businesses are on the spectrum of environmental commitment and investment, dedicated partners can offer solutions that work toward their goals. “It’s not just about buying expensive new trucks,” McNeil says. “It’s good trucking practices—minimizing empty miles, spec’ing trucks with aerodynamic features that improve fuel efficiency.
It’s also incenting drivers to get the best MPG possible—and helping them with that. For instance, we’ve introduced new in-cab technology that gives drivers feedback on every trip about how they can increase MPG. It’s route engineering to save miles by making the supply chain as efficient as possible.”
Companies are seeing significant progress toward sustainability goals with these measures. “Through engineering we saved one healthcare company 300,000 metric tons of carbon output—as well as $1 million in transportation costs,” McNeil says. “And by creating specialized MPG tracking and reporting, we’re helping one of the world’s largest automakers approach their goal of net zero emissions by 2040.”
“By creating specialized MPG tracking and reporting, we’re helping the world’s seventh largest automaker approach their goal of net zero emissions by 2040.”
Driver Shortage
The pressure to recruit and retain good drivers is a major problem that is not going away. According to American Trucking Associations, the industry is short 60,000 drivers. CDL holders are in high demand and hard for fleets to hold onto.
It’s the main reason that the HR costs of having a private fleet are so high. Logistics Management reports that private fleet executives say that they invest more staff time and money on driver recruiting, onboarding, and retention than their for-hire counterparts. Private fleets typically interview 10 drivers to find one new hire. And the average cost to “onboard” a new driver in a heavy-duty fleet is $8,450. [vi]
A dedicated fleet provider can help insulate companies from the effects of the driver shortage. “Hiring and qualifying good drivers is challenging,” McNeil says. “If you have a lot of turnover, leave that to a company whose core business is trucking.” A lot of times switching to dedicated service doesn’t have to mean losing the long-term quality employees they do have: “We’ll keep their drivers and other staff if they meet safety standards.”
Many companies today are challenged to get drivers to fill seats when orders surge during peak seasons. Resorting to overtime or bringing in outside drivers whose performance may vary are both undesirable options. A dedicated fleet can meet a need for additional drivers from its vetted pool of drivers and provide customer training to meet company standards.
TA Dedicated provides flexible options for a leading U.S. retailer’s private fleet for seasonal demand spikes or instances when their driver recruitment slows. By providing the right drivers and leveraging our retail logistics expertise, we’ve maintained a 99% on time delivery rate for the retailer’s critical just-in-time delivery schedule.
Soaring Operational Costs
The total cost of operating a truck recently reached a record high according to American Transportation Research Institute’s Analysis of the Operational Costs of Trucking: 2024 Update.[vii]
Ops costs have been increasing for years, and it’s only going to get worse with the average age of trucks in America’s fleet at 7.87 years.[viii] Trucks in all fleets are getting older and new equipment purchases or upgrades are inevitable. Businesses that foresee a big capital investment in equipment on the horizon could avoid it by engaging a dedicated fleet provider.
“Companies operating private fleets may not know the best tech to invest in,” McNeil says. “If their trucks are aging, or if their safety record is disconcerting, a dedicated fleet provider could not only save them an upfront drain on their balance sheet but also ensure their new fleet is cutting-edge.”
Dedicated fleets could offer a faster option for modernizing, too. Private fleets wanting new trucks will have to wait up to two years for delivery, according to Logistics Management.[ix] And dedicated fleet providers, like TA Dedicated, will often offer to purchase equipment that is still viable, enabling businesses to easily divest from capital investments and put that money back into their operations.
Divesting also solves the major challenge of finding staff for in-house shops. There is currently a shortage of 80,000 diesel techs in America.[x]
Rising Customer Expectations
Do you have what it takes to keep up with buyers’ expectations for on-time delivery and order visibility? Logistics plays a pivotal role in customer satisfaction and brand reputation. If you’re concerned by the demands of meeting on time performance, choosing a dedicated transportation solution can be a game-changer for business growth.
Retailers on-time requirements are stricter than ever and just-in-time supply chains are in favor once again. A dedicated partner can support strict delivery schedules through proven processes and investments in software that aids in planning and route optimization.
Meeting customer requests today can be demanding. The ability of a dedicated fleet provider to customize services and provide extra equipment and drivers to perform high-touch tasks provides you with a competitive advantage.
Offering customized services, such as forklift services or precise scheduled drop-offs, builds customer confidence and business growth and helps drive long-term relationships based on reliability and exceptional service. However, they often require investment in new equipment and training.
For a large auto part customer, TA trained drivers to make multiple overnight stops, leveraging liftgate trailers to deliver orders into stores using electric pallet jacks. Deliveries were ready when employees arrived to open the store the next morning.
Protecting Your Core Business
For any size company, running a private fleet is a distraction that draws staff and resources away from the company’s main business. Transportation management staff are often drawn into details that dilute their attention and draw them from other important initiatives.
A dedicated fleet partner allows staff and operations focused on transportation to direct their attention to strategic, high value, or revenue-generating tasks. They can do so knowing important transportation details are being expertly handled.
With a dedicated solution, companies can have control and visibility of shipments without the responsibility of constant fleet management. They can pay less attention and benefit from lower costs, reduced liability and outstanding customer experience.
For a world leading manufacturer, TA Dedicated achieved years of consistent service levels while ensuring sensitive products were protected from damage and theft. A dedicated fleet relieved the customer of procuring specialized trailers and managing the logistics of DC transport and final mile delivery. With our help they were able to achieve service levels of 98% or higher through a dedicated solution that relieved them of intensively managing shipments.
Essential Technology Upgrades
Private fleets find it increasingly difficult to invest in the latest technology. Technology ranging from the latest visibility software and safety hardware provide a decisive advantage in optimizing operations and mitigating risks. But staying on the leading edge comes at a cost and upgrades and new product introductions are constant.
Advanced TMS, WMS and SMS are necessary to integrate systems and make use of massive amounts of data being created today. These systems and their maintenance fees are considerable, but today they are a cost of doing business. Customers’ demands for shipment tracking and custom analytics are unrelenting.
Dedicated fleet providers help shippers with:
- access to shipment visibility
- improved route planning
- perform shipment consolidations
- optimize loads
TA Dedicated’s ISAAC tablets are an example of this. They establish a direct real-time link to fleet drivers remotely and provide answers to technical issues regarding delivery services, proof of delivery documentation, or routing changes on the spot with the aid of video.
Collision mitigation systems, active speed intervention stability control systems, and forward-facing video are becoming standard on newer vehicles. Private fleets that want to leverage these advantages often face upgrades that when applied to entire fleets become significant expenses.
Dedicated fleets that prioritize newer trucks keep shippers in a constant state of the art. That includes sensor technology like IoT and RFID that gather real-time data from events and players throughout the supply chain to provide a seamlessly-integrated real-time view into inventory levels, production statuses and shipment tracking.
Gathering the data is only the first step. Private fleets need the capability to provide advanced reporting, perform predictive analytics and make recommendations. Unless a fleet is committed to a constant state of change, they will quickly fall behind. In today’s market, a dedicated fleet that is continuously investing in technology for all its customers helps you maintain a leading-edge advantage in logistics.
Relentless And Continuous Improvement
In today’s economy, shippers must look beyond the obvious to reduce costs and optimize efficiency. Technology provides a huge advantage in route optimization and load building as well as in tracking and providing predictive guidance.
Private fleets with many business initiatives often lack the staff resources and systems to explore opportunities to continuously improve transportation processes. In contrast, a well-resourced dedicated provider is driven to monitor unique and specific processes, alternative route dynamics, driver performance, and safety programs.
Optimizing operations by analyzing and executing efficient routes can significantly decrease transit times and reduce miles. Utilizing advanced routing algorithms and GPS technology enables dynamic adjustments. These objectives provide shippers with advantages that strengthen their businesses.
For a leading pharmaceutical company, TA Dedicated developed a multi-stop solution that optimized their regular routes from their DC to multiple retail locations. Analyzing traffic patterns and the needs of individual locations guided our team in reengineering the customer’s network for significant cost savings without compromising the safety of their high-value shipments.
Much of continuous improvement comes from expertise which a dedicated partner brings from working among many verticals, shippers and circumstances. Resources also provide shippers using dedicated fleet providers with scalability advantages like leveraging a large terminal network as well as capacity from a wide equipment and driver pool.
Expert problem-solving can lead to the realization that certain loads can be eliminated, which was the case with one industrial manufacturer. Through better load prioritization TA Dedicated eliminated the need for over 50 expedited loads and $65,000 in savings.
Look Outside to Future-Proof Your Transportation Strategy
The only certainty in trucking in the future is that there will be uncertainty. In today’s atmosphere of constant change, a dedicated fleet provider can help businesses bridge the limitations of private fleets in a way that provides peace of mind, alleviates cost unpredictability, and frees businesses to strengthen and grow their core operations.
With a Dedicated Fleet You Are Free to Succeed
Businesses that get ahead of the currents of change with a dedicated strategy can transfer the costs and complexity to come to a dedicated fleet provider. That’s why today the true control, capacity and cost savings of the three Cs actually lie with an outsourced dedicated fleet strategy.
Learn what a dedicated fleet could look like for your organization by contacting Rob McNeil at RMCNEIL@TADEDICATED.COM or visit WWW.TADEDICATED.COM.
About TA Dedicated
TA Dedicated offers truckload transportation services through a portfolio of dry van, refrigerated, flatbed and tanker equipment. As one of the largest dedicated fleets in the U.S., TA Dedicated engineers optimize supply chains, enhance visibility and work to reduce CO2 through sustainability programs. They provide a highly specialized, hands-on freight service for complex supply chains that have unique requirements and custom needs such as hazmat shipping. They have terminals across the U.S. and are headquartered in Eagan, MN. TA Dedicated is a TFI International company. For more information on TA Dedicated, visit www.tadedicated.com.
[v] https://www.fmcsa.dot.gov/safety/good-business/safety-good-business
[viii] https://pricedigests.com/blog/truck-market-report-q4-2023-is-the-industry-on-the-road-to-normalcy/
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