Private fleets have been a staple in the distribution strategies of American companies in the last century and they continue to play an important role in the current, young century. According to industry data, nearly a quarter of the total truckload marketplace is composed of private fleets, making it a $124 billion industry. In spite of these significant numbers, many companies are seeking outsource solutions as alternatives to operating private fleets. This is caused in part by the recent economic crisis which has forced those responsible for making financial decisions to consider methods to reduce spending and limit liability within their respective companies.
Some company chief financial officer’s (CFO) feel that maintaining a private fleet is a necessity because it saves money but often times they fail to consider all the actual expenses of a private fleet. Further, they may be unaware of how affordable a Dedicated Contract Carrier (DCC) is. Others may not understand all of the duties a DCC can perform. Many businesses started off small and they could handle everything in-house. As the business grew, they simply expanded their fleet until they had to develop a special branch of the company just to oversee logistics. Since the company began with a fleet, it was never questioned whether outsourcing to a DCC was a viable option. Instead, the decision was made to simply continue to do business “the way we always have”.
Unfortunately, many companies fail to consider the expense of items such as the driver’s salary, benefits paid to the driver including medical insurance, vacation, the cost of insuring the equipment, insuring the drivers for workers compensation, the cost of capital equipment, etc. and these expenses accumulate rapidly as the fleet grows. In addition, many companies forget about expenses such as paying mechanics to maintain the fleet or including the salary of the employees responsible for monitoring the fleet.
In recent interviews with CFO’s from a wide variety of companies, they admitted to not knowing all of the benefits which were available via a DCC. They also admitted that they would be much more likely to outsource logistics work now that they understand the numbers better. Companies would be wise to make the comparison to how much they spend running a private fleet versus how much it would cost them to outsource the work; and should consider devising a viable exit strategy for switching from a private fleet to a DCC when the time arrives. When all the factors are weighed many companies find that they would be better served to use a DCC.
The analysis should be revisited as well with changes in the fleet needs. As new equipment is required or the issue of space to store an expanding fleet becomes an issue, a DCC may solve issues the company did not have before. Just having a yard expanded to accommodate more trucks can be expensive and the price of hiring new drivers and buying new equipment has to be factored into the decision as well. This is why some companies utilize a hybrid approach and rely on a DCC for their new clients and still run a private fleet for their existing customers. This allows them to maintain their current structure but avoid the expense that comes with a larger fleet.
Veltri incorporated is one of the more trusted DCC’s in the northeast- specializing in Pennsylvania, New Jersey, Delaware, and the surrounding areas. Veltri provides quality dedicated trucking services as if it was the company’s own private fleet. In this economy, or any economy, anything that saves money may make the difference in profitability; and a DCC can make the difference insuring capacity and great customer service.