Moore on Pricing: Re-consider the private fleet option
April 01, 2013 - LM Editorial
Should more shippers be looking at the private fleet option for 2013 and beyond? According to the industry tracking web site truckinginfo.com report last June, private fleets represent 47.6 percent of trucking. They operate 75 percent of Class 4 through Class 8 trucks and two-thirds of all Class 8 trucks—including 50 percent of new sales. For truckload shippers, this has to get your attention.
The first question is whether fleets are onboarding or offloading equipment. Are those in the business investing or divesting? According to National Private Truck Council’s (NPTC) recent independent private fleet benchmarking survey, 60 percent of private fleets are expecting to add capacity in the short term. What do they know that you don’t know?
If you’ve looked at the private fleet option in the past and decided that it was not quite justified or a breakeven proposition for your company, it is time to look again. I like to explain it as the “Tons Up” opportunity, or TONSUP—an acronym outlining six areas of change in the industry favoring investment at this time.
T is for Tonnage Allowed: Private fleets are positioned to take advantage of state permits for heavier loads that exist or are in the development stage. For example, in Michigan about 5 percent of trucks are legally carrying more than the 80,000 lb. federal gross vehicle weight (GVW) limit according to the Michigan Department of Transportation. Generally, fleet operators who closely plan their loads and routes have more flexibility in loading to road maximums than shippers who load a carrier’s equipment assuming an 80,000 GVW maximum.
O is for Onboard Technology: The current state of the work management systems available for use in vehicle cabs is ideal for private carrier. Through this improved communication, fleet operators have the best chance of leveraging the skills of the operators to improve delivery performance and provide value-added services to customers to achieve the “wow effect” in customer service. Behind the cab is new technology in trailer wind resistance reduction that offers opportunities to reduce fuel consumption.
N is for Natural Gas: North America will be increasingly building out gas infrastructure and switching to this plentiful energy source. In fact, 75 percent of private fleet deliveries are less than 500 miles, according to NPTC, and corporations can reduce their carbon footprint and save money at the same time.
S is for Slip-Seating: Standardization of equipment and technology has eased the evolution of slip-seating where drivers take over equipment from each other in short-haul operations, enabling more miles and hours-per-day of equipment usage.
U is for Utilization: Shippers’ transportation management systems can now connect various legs of the truck route with available pending loads in order to keep a truck and operator connected with revenue-paying loads. The significant change is that this technology is available on cloud-based software as a service services for relatively low cost. The barrier to entry for optimizing equipment usage is much lower and not restricted to for-hire carriers.
P is for Pay: Private fleets tend to pay more and have lower turnover according to the NPTC. Gary Petty, president of the NPTC, has reported that where commercial carriers are experiencing 75 percent to 120 percent turnover, private fleets are at about 10 percent—with many in the single digits. Unlike commercial carriers, operators in private fleets tend to leave for reasons like retirement versus jumping around for another dollar per hour. This lower turnover means much lower costs in recruiting, training, and review of a constantly changing workforce.
To broaden your horizons on cost and service improvements I encourage you to investigate private fleet as an option for your logistics operations. The NPTC and numerous other potential service providers would be able to help you build a business case for taking more control of your transportation and doing more with less. Remember Tons Up!
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