Economies change all the time and fleets are constantly looking for ways to stay competitive in market that could sway one way or another at the drop of a hat. You might be an intrepid investor looking to buy into your own trucking company, but what’s the best move in this environment?
Quite frankly, evaluating the type of fleet you use could have a major impact on everything from cost, service, reliability and technical aptitude and on down to your bottom line itself.
There are a great many differences between a private or dedicated fleet, so we want to take a moment to dig a little deeper into those differences, and what that means for your business. But first, let’s go through a brief primer of what each type of fleet consists of.
Private Fleets
Operating a private fleet essentially gives you full control over the fleet. Not only are you – pun intended – in the driver’s seat, but you can also take comfort in guaranteed capacity, full control over your supply chain and complete visibility across your organization.
Additionally, when you own a private fleet, you can brand it to say whatever you want it to, with that generally being the name of your company. The equipment in your fleet can be to any spec you desire, and that’s the beauty of it. Yet, it also goes far beyond simple aesthetics.
Running a cash crunch, yet have excess capacity? With a private fleet, you can sell off your excess capacity and add revenue to your business by hauling freight for other companies.
Still, that doesn’t mean there aren’t downsides to going with a private fleet. From maintenance to substitute vehicles, fuel, licensing and more, private fleets require a lot more up-front investment in both time and money.
Private fleets also face challenges in supply chain and customer requirement volatility. Regulatory burdens add to the weight.
Big rig tractors aren’t cheap, but when you run a private fleet, you may need to have an extra or two on hand so that you can be flexible when the time comes or demand rises faster than your initial expectations – a phenomena happening all around the country as the economy continues to chug along.
Of course, no one wants to have a vehicle sitting idle, so handling this aspect of running a private fleet can be a bit tricky. Since private fleets are nearly always planning for the peak period, vehicles sitting idle lock up revenue dollars as well.
Dedicated Fleets
A dedicated fleet allows a company to have the benefits of fleet-ownership without having to actually own the fleet themselves. There are a number good reasons to go this route as well.
Working with a dedicated fleet provides you with a near-constant and endless supply of capacity when you need it the most. You can even still get private branding with dedicated fleets and generate additional revenue streams through backhauling.
Customization is also available on a dedicated fleet. The good part? The fleet owner doesn’t have to worry about any risks associated with owning the vehicle. Instead, the provider takes it all on, with not an ounce of liability on your side.
Dedicated fleets also guarantee you truck drivers who are specifically trained for the application the fleet will be using them in. You can add and subtract from your fleet during peak periods without having to “own” a vehicle. Even better, with a dedicated fleet you won’t have to worry about vehicles sitting idle contributing nothing to your bottom line.
By signing a deal for a dedicated fleet, you’re also usually given maintenance and vehicle replacement coverage, direct from the provider themselves or their own vendors. The fact is, hiring a dedicated fleet is a huge cost boon.
Generally, dedicated fleets offer a bit more flexibility, access to more capital and fewer problems in the cab. Outsourcing compliance and liability headaches alone is enough to send any sane fleet manager into a strait jacket.
Still, this doesn’t mean dedicated fleets aren’t without their flaws. Whereas you had full control over your men and machines with a private fleet, dedicated fleets don’t offer the same amount of control, even if you can customize the vehicle the way you need it.
That control becomes a problem if your partner isn’t turning out to be a good fit. Let’s say their truck drivers have safety violations or are just plain rude to customers. These are things you have no control over. If you’re stuck eating a bad apple, it’s you that gets the stomach ache, not the apple.
Designing a Dedicated Fleet
Now that you know what each fleet type consists of, let’s dig a little more into one of them, and how you might go about building up a new relationship with a dedicated fleet provider.
Of course, a great many companies utilize dedicated fleet trucks, still, very few give enough credence to fleet configuration. Yet, they should be, because configuration and application can have a huge impact on how they receive services, manage costs and control growth.
Although the motor carrier operating the dedicated fleet may still own or lease the vehicles under its watch, the motor carrier then hires a provider to manage fleet operations, from route-planning on down through flat tires and other routine maintenance checks.
The term “dedicated fleet” is itself also known as a “dedicated contract carrier/carriage”. The term refers specifically to tractors, trailers, truckers and other resources, whether human or mechanical, that is specifically devoted to operating between waypoints and headquarters within a shipping network.
Dedicated fleets can usually be broken up into two specific categories:
- Network-based
- Depot-based
So, what’s the difference?
A network-based fleet uses a transportation network and balances the freight movement between it. The dedicated supply chain is managed through network nodes.
A depot-based fleet operates on the principle of a hub-and-spoke, where the freight rotates around specific key truck terminals and fleet-authorized destinations.
So, now that we’ve uncovered two surface layers, let’s dive into another layer of dedicated fleets. Many think dedicated fleets are the better option simply because they offer a greater potential for better service and lower costs.
Determining Dedicated Fleet Suitability
Of course, a dedicated fleet is not suitable for all circumstances. We want to be clear on that point. In today’s post, we are devoting time to discussing dedicated fleets, but in our next post it may be private fleets. Here at the QuickTSI Blog, we are here to merely provide you with the information. You then go on to decide what to do with it.
We’ll start with determining suitability for a dedicated fleet. You need to take close look at your distribution networks.
As an example, the costs associated with one-way freight flows don’t justify the benefit of having a dedicated fleet. If you combine:
- Low service requirements
- High carrier capacity
- High average length of haul
Then there are few benefits to running a dedicated fleet, outside of keeping an absolute guarantee that there will always be capacity within the supply chain.
Where dedicated fleets offer the most benefit is when the freight is flowing in multiple directions. Of course, it’s easy to talk about complex models designed to determine the type of fleet you use, but putting it to use is even harder, especially for large motor carriers operating across dozens of routes and with significant freight flows.
Generally, large motor carriers will resort to an analytical model or third-party provider to help them determine maximal opportunity with a dedicated fleet on duty.
When analyzing this model, you’ll also want to ensure you do your due diligence on finding a partner who will ensure your reputation stays intact without negatively impacting your bottom line with an exorbitant expense sheet.
It doesn’t hurt to look up historical information and run comparisons on providers who are offering dedicated fleets for hire. Even if the fleet has to come up with a hypothetical model to determine cost-per-load, it’s well worth it.
Also, remember not to skimp on quality for the sake of quantity. Just because you want to see a net savings on your overall operating costs doesn’t mean you can take chances working with a dedicated fleet provider that cannot be relied upon for one reason or another.
Here’s the model you should use in determining which dedicated fleet is right for you:
Your net savings should equal the cost of using the common carrier, minus the cost of a dedicated move, minus the cost of empty moves. Overall, you should come out in the positive on either side of that equation. If you do, then it’s likely you’ve landed on the correct model or dedicated carrier partner for your particular business.
In the end, establishing a good working relationship with your dedicated fleet provider will be essential to ensuring the rubber stays on the road and the shine stays on your company’s reputation. Or, go with a private fleet and take matters into your own hands. In the end, the decision is yours alone.