As capacity tightens in the trucking market, especially in the United States, it may be time for supply chain executives to give new thought to an old idea—private truck fleets.
Prior to the United States' deregulation of the trucking market in 1980, a lack of competition kept truck rates high and service low, so many companies took matters into their own hands, operating their own truck fleets to ensure dependable pickups and deliveries to customers.
After deregulation, it became easier for new motor carriers to enter the business and for existing trucking companies to expand their service territories and offerings. Fierce competition drove down rates, making it less attractive for companies to endure the hassle and expense of operating their own trucks. As a result, many of them abandoned their private fleets. (Wal-Mart Stores, which expanded its private fleet operations, was one notable exception to that trend).
Despite today's high unemployment rates, the truck driver shortage continues. That's causing trouble for many shippers. When trucking companies can't find qualified drivers to put behind the wheel, shippers have a hard time getting a carrier to take their loads.
But a private company may be in a better position to recruit truck drivers than a for-hire carrier, and that's why now's the time for supply chain executives to take another look at the pros and cons of running a private fleet. Sure, drivers often jump from one for-hire carrier to another in search of higher pay or better benefits. But private fleets generally have something to offer that many for-hires cannot: a more hospitable lifestyle. Private fleets are more likely to operate regular routes, and therefore they often can offer driver employees a predictable schedule and more time at home.
Granted, a private fleet comes with headaches and costs. Besides the expense of diesel fuel and salaries, there are truck purchases and maintenance, used-tire and waste-oil disposal, and insurance to deal with, among other concerns. But shippers that want the benefits of a private fleet without the challenges have another option. They can contract with a third party to manage a fleet and drivers that are dedicated to their distribution operation.
So don't dismiss private fleets out of hand. As the driver shortage worsens, contributing to higher freight rates and reduced capacity, a return to private fleet operations may be the best way for some companies to ensure steady, reliable delivery to their customers.