Shipper | Research and reports 4 min. read
Three misconceptions about running a private fleet
Learn how to determine if you should operate a private fleet or use a dedicated transportation carrier.
Perceptions about private fleets aren’t always true
The decision whether to operate a private fleet or use a dedicated transportation provider is often complicated by pervasive misconceptions about private fleets, such as these:
- Capacity is guaranteed for shippers that run private fleets.
- Private fleet drivers provide better service than a for-hire carrier.
- Owned assets help shippers save money on transportation.
- My (small) staff can handle all my transportation needs.
- Freight efficiency means managing backhauls.
On the surface, private fleets may appear to be the hands-down better option, but that’s not always the case. To evaluate which option is truly the right fit, a shipper must understand the reality behind running a private fleet as compared to what an outsourced dedicated provider can offer.
Misconception: Capacity is guaranteed for private fleets
It appears as though a shipper with a private fleet would have guaranteed capacity, with the ability to deploy its fleet to move freight as needed. In reality, private fleet capacity is fixed, with little to no flexibility to scale with business needs as demand changes.
Shippers may have too much equipment, which then sits as an unused fixed asset, or they don’t have enough equipment, causing them to look to the spot market when capacity needs fluctuate. The same issues can apply to driver capacity.
Misconception: Private fleets save shippers money
Shippers need to know that a private fleet requires a high level of management and administration. Maintaining a private fleet comes with its own set of challenges and requirements — all of which can divert time and assets away from the main business function.
While a private fleet can provide a company complete control of its entire operation, it also generates additional costs — which are hard to plan for and can negatively impact the bottom line. Those costs can be related to vehicles, drivers, regulation compliance and more.
Misconception: It’s better to directly employ our private fleet staff
Private fleet staff can consist of many roles including drivers, managers, safety, regulatory compliance, legal, training, equipment maintenance and more.
When considering the management of a private fleet, it’s easy to assume you will need drivers for the fleet. Of course, the function of hiring and retention of drivers requires staff. But there are also many other roles that are needed to support the drivers, equipment and compliance of the fleet that should also be considered.
Adhering to the many regulations that govern the transportation industry increases the burdens placed on shippers opting to run and maintain a fleet. When utilizing a private fleet, shippers assume all the risks and liabilities inherent in transportation, which can be complex terrain to navigate.
An ever-changing regulatory landscape requires constant vigilance to ensure adherence to the rules. With a diverse number of specialized issue areas, effectively managing compliance necessitates a dedicated staff of full-time employees (FTEs).
Employing staff who specialize and manage a particular issue aids in maintaining industry compliance. Because compliance is a necessity to keep freight moving, it’s also an important factor to consider when determining whether running a private fleet is beneficial.
Essential responsibilities that staff must manage
On average, dedicated transportation providers employ 13 FTEs — in addition to drivers — to assume the oversight and responsibility of the different issue areas, which include:
|
|
Reality: Working with a dedicated carrier delivers results
Shippers that transition from a private fleet to a dedicated carrier can often achieve the same visibility and commitment to quality at a lower cost. Transportation providers with a large, varied network of drivers and equipment ensure that every shipper receives the prioritization and service it deserves.
To make a conversion to dedicated shipping flawless, most carriers can absorb a shipper’s existing fleet and drivers. In other words, the shipper retains most of its experienced driver base without having to oversee its management.
This transition also means that shippers will have guaranteed capacity and the ability to add capacity during peak periods. This division of responsibilities between shipper and carrier allows each party to focus on and implement what it does best, maximizing efforts and resources.
Plus, the dedicated provider assumes any risk, allowing the shipper to focus on the foundation of its business — and the next decisions necessary for growing the bottom line.
Drive your business forward
Sign up to receive our industry leading newsletter with case studies and insights you can put to use for your business.
