From manufacturers to wholesalers, the competitiveness of today’s markets escalates the role of logistics to the top of management concerns. From automated warehouses to greater expectations for on-time performance, supply chain management (SCM) requires a disciplined commitment to obtaining efficiencies. For many shippers, the issue of trucking and transportation are central to their concerns. That concern is a core element of decision-making when choosing between a private fleet and use of third-party vendors.
The Inherent Advantages of a Dedicated Fleet
Studies validate the use of a dedicated fleet often provides numerous advantages, from savings to enhanced performance to guaranteed capacities. They also help maintain compliance with federal and state CSA regulations. While the advantages may be apparent, the choice between a private operation and a 3PL-dedicated fleet is a struggle for many shippers.
The final decision is driven by the characteristics of a given shipper’s market and industry. The use of certain facilities or shipping routes can dictate requirements that often favor a dedicated fleet. A company shipping dry bulk cement in central Florida faces a different supply chain challenge than a fresh produce shipper in southern California.
Building the Decision Matrix
In spite of differences between shippers, there are common factors that go into evaluating the decision to use a 3Pl dedicated fleet. To assess the best industries for the use of dedicated fleets, these factors must be considered. Some of the major items include:
Seasonality of Demand
Meeting peak demand while avoiding expensive under-utilization is a primary goal of any shipper. Owned, internal fleets present real challenges in managing seasonal demand.
Mode of Transportation
Truckload factors, backhaul opportunities and the number of stops/deliveries are key factors in SCM. Dedicated fleets are usually part of a larger trucking pool that can decrease the cost of LTL and small package shipping. If an industry has a chaotic mix of these factors, then a dedicated fleet becomes highly beneficial. Maximum efficiency is achievable only when truckloads and the total number of stops are managed effectively – a specialty of 3PL provided truck fleets.
Type of Network
If a shipper uses a large number of shipping routes and sends a large number of loads through them, the dedicated fleet can provide major advantages. Heavy use of local transportation will pay off with a dedicated fleet, as most common carriers have minimum charges in these situations. Longer hauls of over 500 miles, or regional deliveries, can also provide major cost savings as long as backhaul opportunities are present.
Need for Specialized Equipment
What if a shipper has a sudden need for a reefer or flatbed trailer? The decision process becomes even less complex. It is especially difficult for private fleets to respond to demand spikes that are dependent on equipment they don’t own. Dedicated fleets can easily acquire these trailers helping to secure new business opportunities that hinged on specialized transportation equipment.
This is often the determining factor for many shippers. The use of a dedicated fleet through a 3PL vendor often overcomes the expensive common carrier rates on many lanes and in certain geographical areas. Rate savings alone in such situations are often as much as 15 percent.
The Right Solution for the Right Company in the Right Industry
As the above discussion illustrates, the advantages of a dedicated fleet make it a preferred option for many different companies and industries. Determining the best fit and the selection of a 3PL vendor requires a careful analysis of a specific shippers logistical environment and needs.