The fortunes of private fleets will continue on the upswing for 2006, with many planning to expand capacities. Several companies that outsourced transportation in the past are bringing back a private fleet in some key routes. The advantages of a private fleet are catching the attention of many businesses, which realize their role in controlling transportation capacity, customer service and costs.
Private fleets have an enormous presence in America's commercial transportation system. Private fleets are represented in three out of every four vehicles on the road among Class 4-8 trucks. Slightly over 50% of all Class 8 trucks are sold to private fleets. As the largest sector of the U.S. trucking industry, private fleets represent 76% of all U.S. registered medium, light-heavy, and heavy-heavy duty trucks, or 3.2-million vehicles.
To put this number in perspective, there are about 4.2-million medium, light-heavy and heavy-heavy vehicles on the road in America, according to research by Ron Roth, Executive Vice President of Transportation Technical Services, which produces the National Private Fleet Directory and FLEETSEEK, the online directory of trucking operations. For-hire trucking companies, Roth reports, account for nearly 25% of these 4.3-million vehicles
Private fleets have impressive payloads. They haul 3.92-billion tons of freight annually, with a value of $2.3 trillion. Although many conduct successful long-haul operations, most specialize in short-haul shipments. About 75% of private fleet deliveries are less than 500 miles, with the average length of haul 71 miles.
This short-haul feature of private fleet deliveries is a tremendous advantage in driver retention, providing many drivers the opportunity to spend more nights in their own bed. This is just one reason why private fleet driver turnover averages 16%, compared to well over 100% for trucking in general.
Private fleets overwhelmingly lead the trucking industry in safety. A survey conducted by NPTC in 2005 disclosed a 45% better safety record for private fleets operating heavy-duty trucks. This survey compared private fleet safety performance with U.S. Dept. of Transportation recordable accidents per million miles for the rest of the trucking industry operating large trucks.
About 70% of private fleets are operated as cost centers, with the balance managed as some form of profit center. Regardless of the option used, the business model test is generally whether the cost of operation and the quality of service are superior to outside alternatives.
Private fleets are also used as a leveraging device in negotiating for-hire contractor pricing or comparing market rates. Some 41% of private fleets are “blended” operations that also use dedicated and/or owner-operator trucking services.
Many private fleets also operate as for-hire trucking companies. By selling excess capacity as backhaul loads, they achieve additional optimization of efficiency and cost reductions in their private fleets.
Companies that see the private fleet as a core competency have an advantage that's as important as high manufacturing standards or a strong market share. Private fleets have significant net-gain impacts — creating captive transportation capacity and top customer service at a competitive cost. Many private fleets also use their trailers for brand advertising — a high impact, low cost benefit that further enhances shareholder value.
Gary Petty is President and CEO of the National Private Truck Council. The council's web site is www.nptc.org. His column appears monthly in FLEET OWNER.