Inside The World of Private Delivery Fleets

It is a good time right now to be a private trucking fleet.

Overall capacity is down, since both the number of Class 8 tractors and the number of drivers is low, while demand for transportation services is rising. Equipment capacity is recovering rapidly and should stabilize, soon, but the driver shortage is likely to persist long-term. The capacity crunch makes it difficult for shippers to find the carriers they need at a price they want in the for-hire world.

The solution is to fall back on dedicated, private fleets.

Besides plenty of work, private fleets have a number of advantages right now.

First, private fleets are in a better position to compete for the limited number of drivers because their driver pay is typically $20,000 to $25,000 higher than in for-hire companies. As a result, they have a 12% annual turnover rate, rather than the almost complete turnover experienced by the for-hires.

Second, most private fleets use on-board GPS tracking and related services, which dramatically increases their efficiency. Perhaps as a result, 79% of their return miles now carry paying loads—and since the per mile cost is almost as high empty as full, finding a load for both directions is really important. Telematics makes efficient routing much easier.

Many of the costs of trucking boil down to poor driving behavior. Abrupt stops, harsh accelerations, and excessive idling all waste fuel, wear down equipment, and indicate unsafe driver behavior that can lead to dangerous and expensive accidents. GPS tracking addresses these concerns together.

Tracking works as an important training tool by letting supervisors review incidents of unsafe, inefficient, or erratic driving in detail—the same information also makes it easier to identify the most skilled drivers and to reward them appropriately with a higher per mile rate. The result is happier, more loyal drivers and lower fuel and maintenance costs, sometimes even lower insurance costs.

Of course, for-hire companies can even the playing field somewhat by compensating their drivers at a higher rate and by adopting GPS tracking at greater rates. The smaller for-hires especially can benefit from this technology, since costs tend to be more of an issue for small companies.

As long as demand remains high and capacity low, private fleets are likely to have an edge. And economists predict that demand will remain strong at least for the next several years.