C. F. Lynch & Associates

If You Want It Done Right...

By Clifford F. Lynch

DC Velocity, May 2006

Most people would tell you that when it comes to commercial trucking, the big guys – the Yellow, the Hunts, the Schneiders – rule the roads. But that doesn’t square with the facts. If you parked yourself along a major interstate highway and classified the trucks that roared by, you’d find that an astonishing 76 or every 100 trucks were actually privately owned.

Not only are there more private-fleet than for-hire trucks on the nation’s roads, but they also cover more territory. As a group, private carriers travel about three times as many miles annually as for-hire carriers do, even though 75 percent of their runs are shorter than 500 miles. (The average is closer to 75 miles.)

Why would any company want to bother with operating its own fleet? Different companies have different reasons. Some see their trucks as marketing assets – essentially as fleets of moving billboards that fan out across the country each day. It’s hard to argue with that. If you spend any time at all on the nation’s highways, you’re bound to receive constant reminders of the existence of Wal-Mart, Steelcase Furniture and Corona Beer.

Others see their private fleets as bargaining chips. For them, that fleet is an important source of leverage when they negotiate rates with for-hire carriers. Even in today’s seller’s market, they’d rather go into a negotiating session with this leverage than without it. Any many companies operate their private fleets as profit centers, making money by hiring out their excess capacity. Today, more than 50 percent of the nation’s private fleets operate with for-hire authority.

But the most common reason of all is service. Almost every company that operates its own fleet does so because it has unique service requirements that only a private fleet can reliably meet. For example, what common carrier do you call if, like Batesville Casket Co., you needed caskets delivered to some 16,000 funeral parlors twice daily? Where do you look if, like Walgreens, you need a carrier that can make daily just-in-time deliveries to 4,800 stores around the country? The answer is "You don’t." You do it yourself. For these companies and hundreds like them, there’s no substitute for having their own drivers – drivers who understand their business, who know their customers, and who are available day or night.

Operating a fleet has never looked more attractive than it does today, when truck capacity is in short supply. In the past few years, the balance of power between carriers and shippers has shifted. Carriers that once begged for shippers’ business can now afford to be downright choosy about whose freight they’ll haul. Some have actually walked away from business they consider unprofitable or not worth the trouble. That’s left some shippers without enough capacity, and the rest paying some of the highest rates in history.

Small wonder that companies that once toyed with the notion of starting a fleet have begun to ask themselves: If not now, when? But a word of caution is in order. Running your own fleet will not provide relief from soaring truck rates. Private fleets face the same problems and cost pressures that common carriers struggle with. In fact, they’re likely to find themselves at a disadvantage because they can’t match the big guys’ buying clout when they negotiate fuel prices or bid for new drivers. All that notwithstanding, there has never been a better time to consider mustering a private fleet. It would be well worth your time to conduct an analysis. Who knows, you may finally see the wisdom in the old adage: If you want it done right, you have to do it yourself.




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