The transportation industry is evolving as shopping trends and shipping needs change with time. E-commerce and rapid delivery have resulted in varying shipping capacities and unexpected industry twist and turns. Capital expenditures, the driver shortage, and changing regulations can pose challenges to shippers, especially to those that operate private fleets. To address these challenges and increase focus on their products, more and more shippers are implementing outsourced dedicated fleets and utilizing end-to-end solutions.
In a 2016 Third-Party Logistics Study, 83 percent of shippers said the use of 3PLs has contributed to improved customer service1.
Dedicated Fleets Drive Down Capital Expenses
Operating a private fleet requires significant investments. Necessities like tractors, trailers, fuel, maintenance, and many other aspects can quickly add up, resulting in increased operating expenses and tightened margins. The cost of trucks have consistently risen year over year, with asset operating expenses typically around 50 percent to 60 percent of total expenses2. Dedicated fleet providers continually update their fleets, ensuring that operations run on the latest models often accompanied with technological advancements and improved fuel efficiency. The average cost to maintain equipment hovers around $185,000 annually3. When operating a private fleet, shippers have to account for how their fleet will be maintained. With a dedicated fleet provider, carriers will already have infrastructure, personnel, and processes in place to keep products moving.
The Driver Shortage Challenge
The supply chain can present several hurdles to overcome, including the issue of driver shortage. The need for drivers is far greater than the applications coming in. In last quarter of 2015, driver turnover was at a remarkable 102 percent. Numbers are up not by a mass exodus, but by constant replacement of a small number of drivers4.
The average cost of turnover per driver for all companies in a Upper Great Plains Transportation Institute study was $8,2345. With expertise and on-staff driver recruitment and retainment professionals, a dedicated fleet operator can address driver needs and provide consistency in your supply chain, guaranteeing your products move on the road.
Keeping Up with Industry Regulations
Transportation and the supply chain become increasingly complex with regulation management and could result in substantial fines if not adhered to. In 2015 alone, the Federal Motor Carrier Safety Administration issued more than $33 million in fines6. Partnering with a dedicated fleets provider gives relief in knowing that products are moving in compliance and safely.
The Food Safety Modernization Act (FMSA) went in effect this year, requiring shippers to comply with new food safety requirements from additional training to sanitation policies7. The guidelines apply to any food grown in the United States or entering the county from importers. The act is meant to increase food safety and prevent food borne illness.
Hours of Services for drivers is a regulation put in place recently, requiring longer rest periods and regulated drive times. The policy is meant to increase driver safety and allow for proper rest. The regulation requires increased documentation and support from carriers.
This year, law makers are evaluating speed limiters, which would regulate how fast a truck can drive. Working to increase safety, law makers are consistently looking at improving regulations and a 3PL can ensure that regulations are consistently met and that operations continue undisrupted.
Finding a Solution in Dedicated
Partnering with a 3PL with end-to-end solutions can help streamline your business and address the complexities of your supply chain. By implementing a dedicated fleet with a 3PL that offers additional services like warehousing, global logistics, brokerage, and intermodal, shippers can enhance communication, visibility, and confidence that products are delivering as efficiently as possible. Whether your goals are to improve ROI or reduce costs, dedicated fleets can help shippers continue to grow.