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Private Fleet Optimization and 3PLs

Private Fleet Optimization and 3PLS

Private fleets

In the quest to improve performance, productivity, and utilization, today’s professional private fleet manager is looking to eliminate non-productive miles from the operation by filling empty backhauls, reducing out-of-route miles, and improving inbound freight management.

According to the 2013 NPTC Private Fleet Benchmarking Survey Report [1]:

• The average percentage of private fleet empty miles has gone down dramatically in four years: from 30% in 2010 to 21% last year.

• This trend in reduced empty miles happened even though for a majority (87%) of private fleets, internal company freight takes precedence over outside freight. In other words, they achieved significant reductions in empty miles despite a “not all freight is equal” company policy.

• A majority (two-thirds) of private fleets have for-hire authority and these fleets have on average the most successful backhaul programs.

• A majority (67%) of these private fleets use third party logistics providers (3PL) or act as their own brokers (44%). Many use a combination.

Therefore, a successful, private fleet operation provides premium/priority service to internal customers. This type of operation meets expectations of outside customers and optimizes driver and equipment utilization using a strategically designed backhaul program. These programs typically combine:

• An optimal combination of strategic policy, tactical practice, and established partnerships

• For-hire authority

• The expertise of an established 3PL

This arrangement typically produces significant return on investment (ROI). In fact, these private fleets operate at a 22% less-per-mile cost without any reduction in customer service. [2]

Before making the decision to establish and maintain an ongoing backhaul program, there are several preliminary questions you should consider.

• Can drivers and equipment be delayed long enough to accommodate the pickup and delivery of backhaul loads? Unfortunately, many loads are not always ready for pickup when drivers and equipment are available to load. This could result in driver and equipment downtime, or extended layovers. The private fleet operation must have the scheduling flexibility to handle such a situation. It may even require an increase in the number of drivers or equipment to meet these demands.

• Who is the customer? Once a private fleet commits to haul for others, it must be prepared to deliver what is promised. One service failure can result in the loss of that business. But failing to serve the primary business to the exclusion of revenue-producing customers causes real trouble.

• Is the equipment suitable for implementation of a backhaul program? Some fleet equipment is too highly specialized to meet the specific operating needs of the company. If this is the case, it may be difficult to find compatible loads.

In short, successful capacity management depends on an intimate knowledge of the customer, a fully engaged workforce, leading edge technology, top-flight equipment, and solid business relationships with 3PLs to gain the capacity for strategic planning and execution that goes well beyond the day-to-day, transactional load perspective.

Expanding service beyond the scope of the in-house private fleet should be approached like any other business proposition—with analytical vigor, intellectual honesty, and a well-developed strategy. Have you implemented a successful backhaul program? What worked? What didn’t? Share your story in the comment section below.

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[1] National Private Truck Council. “NPTC Benchmarking Survey Report 2013.” 2013
[2] Ibid

- CEO, National Private Truck Council

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