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somewhere between $55,000 and $60,000—although some
of these jobs can reach six figures as well.
Private fleets also typically offer a more predictable work
schedule, which is highly desired by drivers, and they’re
able to get home to their families on a more regular basis, all
of which contribute to a better work-life balance. The drivers also tend to stay with their employers longer. Petty cites
a study the NPTC did last year that revealed that the private
fleet driver-turnover rate was about 14 percent annually,
whereas the driver-turnover rate for commercial over-the-road truckload carriers was 94 percent. The average tenure
of a private fleet driver is 10 years, the study showed. Lastly,
Petty says the NPTC’s research found that private fleet drivers are generally three times safer than commercial industry
drivers as a whole.
“They stick with their compa-
ny,” Petty noted of private fleet
drivers. “The driver becomes
a permanent part of the team,
the face and personality of the
company. That’s a tremendous
upsell value to the customer.”
Bart De Muynck, research
vice president for transpor-
tation technology at market
research firm Gartner, agrees
that demand for private fleets
and dedicated operations is on
the upswing, echoing the stra-
tegic advantages and potential benefits outlined by the
NPTC’s Petty and others. But, says De Muynck, even with
the lure of guaranteed capacity, private fleets do come with
some risk. It’s a lot more than just buying trucks, hiring
drivers, and sending them on their way.
“You need an entire dedicated organization that can procure the equipment, design the network, do the scheduling
and routing, and manage all the aspects—maintenance,
safety, HR, regulatory compliance, and driver recruiting
and retention,” he says. Essentially, it’s establishing and
running an in-house carrier, which may not be a core competency for a company whose primary business is making
and selling products.
“If you are not that specialized [in transportation opera-tions] and don’t have the expert personnel and resources to
manage it, you run the risk of exposing yourself to higher
costs,” De Muynck says.
A LOWER-RISK OPTION
One way to mitigate those risks—and achieve the goal of
guaranteed capacity—is by setting up a dedicated contract
carrier operation with a fleet or a third-party logistics service provider (3PL).
In this model, all of the aspects of managing and running
the fleet are handled by the contractor, who may also pro-
vide additional services such as network design and opti-
mization to help the client come up with the most efficient
dedicated solution for its operating footprint. Often, a ded-
icated solution can provide the same benefits—guaranteed
capacity and reliable service—as a private fleet, at roughly
the same cost, but with less risk and direct investment on
the part of the shipper.
“The big dividing line is having responsibility for your
operating authority or not,” explains Andy Moses, senior
vice president of global products at Penske Logistics,
which has a large presence in the dedicated market. “If you
are private and operating under your authority, you are
responsible for insurance and safety. A dedicated solution
tends to offer a similar level of control as a private fleet but
turns the operating authority and responsibility completely
over to the [contracted] carrier
[or 3PL].”
Well-run fleets and dedi-
cated operations tend to have
common characteristics, Moses
points out. “A strong focus
on safety. Good control and
management over fuel and
personnel. A high percentage
of loaded miles. Ongoing dia-
logue around KPIs [key perfor-
mance indicators]. And they are
metrics-driven,” he says. For
Penske, that’s led to a certain
amount of crossover among
customers, according to Moses. “We recognize that cus-
tomers for various reasons want to play back and forth
across the spectrum [of private versus dedicated],” he says.
“Our approach has been to be that solution regardless of
where they stand in that spectrum.”
It’s a similarly fluid picture over at Ryder System Inc.,
where nearly half of new dedicated business wins have been
private fleets converted to the dedicated model, according
to John Diez, Ryder’s president of dedicated transportation
solutions.
Speaking to the appeal of dedicated, he says a dedicated
solution can help maximize savings and boost service levels,
while giving the client access to up-to-date equipment and
the expertise of a well-resourced dedicated provider. As an
example, Diez notes that Ryder’s customers can leverage its
investments in modern fleet equipment with the latest safety technologies, its team of expert personnel, and a strong
safety program and planning technologies that can help
the shipper design the optimal dedicated operation. The
overall package of capabilities represents an investment that
shippers can leverage to secure a workable solution and gain
the desired guaranteed capacity, at minimal risk, Diez says.
“When we talk about service, it’s about securing capacity and having control so you can be assured you will
deliver the product on time to the customer,” Diez says.
“Consistency in the network is the key.”
