Here is a great article about the different types of fleets in the industry. After reading this you should have a good understanding of the two and hopefully this will help to in your truck driving jobs. This article was run by LogisitcsViewPoints.com.
I recently had a discussion with Gary Petty, President of the National Private Truck Council (NPTC), and Gary Girotti, Vice President of Chainalytics’ transportation practice, about private and dedicated fleets.Why do companies have a private fleet? According to a survey by NPTC, eighty nine percent of the respondents cited “to achieve better customer service to key customers” as the primary reason. Cost reduction and improved flexibility was cited by 16 percent of the respondents, while 5 percent mentioned that they transported specialized commodities and had limited options to use third-party carriers.I was somewhat surprised that customer service, instead of cost savings, was the top driver for having a private fleet. Mr. Petty provided other statistics that shed additional light on this finding. Several years ago, NPTC’s survey showed that customers were demanding, on average, 98 percent on time delivery (OTD). In the latest survey, this metric has trended up to 99.5 percent. In addition, the definition of OTD is becoming more stringent: * 11 percent of the survey respondents are measured to a 1-minute delivery window; * 13 percent to a 10-minute window; * 9 percent to a 15-minute window; * 17 percent to a 30-minute window.Two-thirds of NPTC’s members benchmark the performance of their private fleets against for-hire carriers. According to Mr. Petty, private fleets usually perform better. As an example, he referenced one company that ships 10,000 loads per month via its private fleet, and about the same amount using common carriers and dedicated fleets. Using the same scorecard for the private fleet and the outsourced alternatives, the private fleet is the best choice for this shipper from a cost and service perspective, particularly for delivering to key customers on high-volume lanes.The large disparity in driver turnover between private fleets and common carriers is one possible reason why private fleet performance is better. According to Mr. Petty, private fleet turnover is 12-14 percent per year versus as much as 120-140 percent per year at some trucking firms.Imagine my surprise when I later talked to Mr. Girotti of Chainalytics, and he declared that if you were deciding between starting a private fleet versus hiring a dedicated fleet, you would have to be “crazy” to go the private fleet route. According to Mr. Girotti, there is usually no difference in performance between private and dedicated private fleets. However, if you already have a private fleet, it probably makes sense to keep it. One of Chainalytics’ services is transportation master planning, where it helps companies make transportation network decisions by analyzing various transportation options (private versus dedicated fleets, fleet sizes and equipment options, continuous moves, backhauls, etc). In order to accomplish this, Chainalytics reviews (line by line) a company’s transportation budget and conducts an activity based costing assessment. When a granular, “all in” cost analysis is completed, Chainalytics often finds little difference between private and dedicated fleets. While an LSP may have a margin of ten percent, the LSPs tend to do a better job at truck maintenance, can perform DOT compliance more efficiently, and tend to pay drivers less.Further, many of Chainlalytics’ clients believe that a private fleet achieves better customer service. However, in Mr. Girotti’s view, these are often qualitative, subjective impressions not backed up by any quantifiable proof. Finally, while he agrees that private fleet driver turnover is much lower compared to common carriers, it is not significantly lower when compared to dedicated fleet operations. Dedicated fleet positions are the most desirable driving jobs offered by LSPs because drivers go out and come back the same day. Girotti knows of firms that have had dedicated fleets for over a decade with little driver turnover.So, which is a better choice, private or dedicated fleets? If you talk to a practitioner, like Harry Haney, Associate Director of Transportation Operations at Kraft Foods, the answer is both. Kraft Foods operates both private and dedicated fleets, and it benchmarks them against each other and against “one-way” contract carriage. Kraft’s experience has been that private fleets, when sized and deployed properly, deliver a cost and service advantage.
Here is a link to the quoted logisticsviewpoints.com material from above.
http://logisticsviewpoints.com/2009/08/28/private-vs-dedicated-fleets/
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