Stay private or go dedicated? (Part 3 of 3)
Know when it’s time to switch from an in-house fleet to a dedicated fleet provider
Things change every day in trucking—it’s the nature of the business. The pros and cons of private in-house fleets are changing too. The model that has been the default for years can put shippers at a grave disadvantage in the face of new and growing challenges in trucking today.
An “if it isn’t broken, don’t fix it” approach may seem like a conservative path to achieving the Three C’s (customer service, cost control and control over the supply chain) discussed in Part 1 of 3 of this series, but in fact it can end up being the riskiest.
Yes, 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.
In Part 2 of 3 of this series we explored the fleet models shippers can choose from today. In this post, we’ll dive into the question of how shippers can know when it’s time to switch from the private fleet model that has served them so well for so long.
The warning signs that it’s time to look 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.[1]
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.[2] Even if a business with a private fleet hasn’t experienced an accident or been penalized for regulatory violations, those risks should concern them.
Through insurance, a dedicated fleet provider can shoulder the load, and through safety training, they can help reduce a fleet’s risks.
A dedicated fleet provider’s investment in truck safety technology like collision mitigation technology and outward-facing onboard cameras can also help mitigate risks.
Ambitious Sustainability Goals
Customers, authorities, and the public demand sustainability results. The right dedicated fleet provider is positioned to help shippers intelligently map out how they can make progress on their goals.
For companies ready to explore high-tech equipment solutions, some dedicated fleet providers 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 fleet providers can offer supply chain sustainability solutions that work toward their goals. Fuel-and carbon-saving equipment is one way. Other solutions fall under the heading of best trucking practices like minimizing empty miles and incenting drivers to get the best MPG possible.
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. [3]
A dedicated fleet provider can help insulate companies from the effects of the driver shortage by using their experience in trucking to hire and qualify good drivers.
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.
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.[4]
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.[5] Trucks in all fleets are getting older and new equipment purchases or upgrades are inevitable.
Dedicated fleets can provide a top tier equipment and maintenance program. Trucks in TA Dedicated’s own modern fleet have an average of 2-1/2 years. For businesses that foresee a big capital investment in equipment on the horizon, 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.
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. Dedicated fleet providers can support strict delivery schedules through proven processes and investments in software that aids in tracking, 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.
Essential Technology Upgrades
Private fleets find it increasingly difficult to invest in the latest technology. Technology ranging from the latest supply chain visibility software and safety hardware provides 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. Advanced analytics are essential and customers’ demands for shipment tracking are unrelenting.
Dedicated fleet providers can provide shippers with access to the latest to gain shipment visibility, improve route planning, consolidate shipments, and perform load optimizations.
On the safety front, 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 tracking and sensor technology that gathers real-time data to provide a seamlessly-integrated real-time view into load status and location.
Gathering the data is only the first step. Private fleets need the capability to generate advanced reporting and analytics and create accurate forecasts. 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 forecasting.
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.
Much of continuous improvement comes from expertise which a dedicated fleet provider 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.
Look Outside to Future-Proof Your Transportation Strategy
The only certainty in trucking is that there will be uncertainty ahead. 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 C’s actually lie with an outsourced, dedicated strategy.
Ready to learn more? Dive deeper into the warning signs and successful dedicated solutions in our recently published whitepaper Stay Private or Go Dedicated. Download it now.
Sources:
[2] https://www.fmcsa.dot.gov/safety/good-business/safety-good-business
[5] https://pricedigests.com/blog/truck-market-report-q4-2023-is-the-industry-on-the-road-to-normalcy/
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