Is Dedicated Fleet Service Right for Your Company?
Implementing a dedicated fleet—assigning a group of tractors, trailers, drivers, and other resources exclusively to carry out operations for a chosen set of facilities or lanes in any transportation network—offers a number of potential advantages.
Among the benefits shippers may derive are improved on-time delivery performance, guaranteed capacity, and reduced freight transportation costs. Relying on dedicated carriers’ transportation management expertise also frees shippers to focus personnel and financial resources on business operations, such as manufacturing.
IF THE FLEET FITS
To determine whether a dedicated fleet program is appropriate for its business, a shipper should consider the following factors:
- Freight flow seasonality.Shippers serving networks where seasonality is an issue could face significant under-utilization of dedicated fleet resources during the slack period, especially if all the network’s lanes are affected.
- Direction of freight flows. Networks with significant inbound and outbound flows typically benefit more from a dedicated fleet than those with exclusively inbound or outbound flows.
- Local, regional, or long-haul deliveries.Dedicated fleets can pay off when a shipper’s local transportation requirements are fewer than 100 miles, because common carriers often apply minimum charges. Depending on the haul length, some regional deliveries could also benefit from using a dedicated fleet, but both regional and long-haul deliveries are suitable for dedicated fleets only when there is backhaul opportunity.
- Network characteristics.A dedicated fleet is most beneficial when the shipper sends a large number of loads through a large number of lanes. Networks with short hauls (local deliveries) should have at least one load per day. Networks with regional deliveries averaging 500 miles may benefit from using a dedicated fleet even if they have only one load per week as long as sufficient backhaul opportunities exist.
- Transportation mode.Dedicated fleet operations are typically used for truckload and multi-stop deliveries. It is possible to find pooling opportunities in any LTL and small package network and employ dedicated carriers to execute line-haul and local deliveries in the pooling network. But if there are no backhaul opportunities in the network on the line-haul portion, using dedicated carriers could be cost-prohibitive. Intermodal shipments involving rail and truck carriers present a good opportunity for adopting dedicated carriers. Typically, the rail portion of the network is long, and the dray portion executed by truckload carriers is short. Employing dedicated carriers on the dray portion can provide network cost and service improvements.
- Freight transportation rates available through common carriers.These tend to be very expensive on some lanes and geographies. Implementing a dedicated fleet presents an opportunity to reduce costs in those markets.
- Specialized equipment. Using a dedicated fleet can make it easier to acquire specialized capacity such as flatbed or refrigerated trailers.
After evaluating these factors in relation to their needs, shippers will be well equipped to decide whether implementing a dedicated fleet program is in their best interest.