Some companies that make their own products choose to have their own private fleet deliver those products. Many do so based on some common misperceptions about the alternatives, including dedicated contract carriage.
Speaking at a recent meeting, Joe Gallick, SVP of sales at NationaLease, talked about some myths surrounding the benefits often touted in operating a private fleet.
Myth: Private fleets make more economic sense than using a for-hire carrier
Reality: There is a large capital cost investment to own and operate a private fleet including increased cost of liability insurance. And don’t forget about the increasing size of plaintiff award verdicts following an accident.
Myth: Private fleets provide better customer service and greater brand visibility
Reality: A dedicated contract carriage model, structured properly, can provide the same level of customer service and brand visibility as operating a private fleet.
Myth: The driver shortage hardly affects private fleets
Reality: All fleets are affected by the driver shortage, but dedicated carriers invest in developing large scale recruiting, training and retention programs. And finding and retaining drivers is a core competency of a dedicated carrier. In essence, for dedicated carriers drivers are akin to the necessary raw material a manufacturer needs to create its product.
Myth: Dedicated carriers have incremental margin to cover vs. private fleets
Reality: There is no doubt that cost and control are big factors for dedicated carriers. However, the necessary investments in technology — ELDs, dynamic routing and scheduling software, equipment safety items and telematics — are cost prohibitive to most mid-size private fleets. Dedicated carriers have invested in state-of-the-art logistics engineering tools and knowhow, including network optimization, transportation management and process management.
Myth: Private fleet conversion means local drivers will lose their jobs
Reality: The employee drivers of the private fleet are usually welcomed by the dedicated provider. In fact, working for a dedicated carrier typically provides drivers with more options when it comes to time at home, route flexibility and the ability to move to other shipper accounts or other geographic areas.
For every myth about running a private fleet, there is a corresponding reality of how dedicated contract carriage can step in and perform just as well as the private fleet while at the same time eliminating some of the headaches of operating a private fleet.
Jane Clark focuses on managing the member services operation at NationaLease as vice president of member services. She works to strengthen member relationships, reduce member costs, and improve collaboration within the NationaLease supporting groups.
