I had a call recently from a U.S. based writer who wanted to talk about private trucking in Canada and compare notes with what he is hearing in the United States.
This individual knows about trucking, having worked for a Canadian trucking magazine for a number of years before returning to his roots in the U.S., so he didn’t need a primer on the basics. The discussion, which was planned for 10 – 15 minutes, became quite interesting and rolled on for quite a bit longer as we exchanged views.
The conversation began with the question “Why use private fleets in today’s trucking environment?”
In response I painted a verbal picture using the subject of Control as an umbrella and then spinning off – just like the spines of that umbrella – some of the many aspects of control that are important in trucking. That picture prompted a number of reasons for operating a private fleet.
In no particular order, I began with Control of Costs. Private fleet managers have historically had cost control as not only an objective, but also a definite mandate. During the early part of the 1990s it was popular for CEOs to make bold statements about concentrating on their “core business” as they contracted out the company’s trucking requirements. This was often no more than a gambit to re-arrange some financial statements.
Identifying what could possibly be more core to your business than ensuring that your products get delivered to your customers economically and on time is a discussion for another day, but in many cases it was the rationale used for outsourcing the fleet.
In today’s environment an about face is taking place in the traditional customer/supplier relationship. For-hire carriers are emerging from a decade or more of competitive stresses that drove freight rates down to levels unseen for many years.
Many of these carriers are now re-assessing their customers. For example, an extremely demanding customer that provides only a marginal or even a negative return to the bottom line might be considered for de-listing. For sophisticated carriers it’s no longer a case of gaining market share at any cost.
Carriers are now being encouraged by their associations to implement fuel surcharges and charges for delays, over and above the agreed upon freight rate. They are also being encouraged to raise freight rates to compensate for what they see as the costs of running an efficient operation with a reasonable return on investment.
Any shipper that cares to develop a long-term relationship with its carriers needs to consider these additional charges fairly. Shippers cannot expect carriers to absorb endless cost increases, and simply jumping from carrier to carrier in search of ever-lower freight rates is a mugs game if you value your freight and your customers.
Having said that, shippers need to control the escalation of those additional charges. They need to ensure that they are fair and that the carrier is doing everything possible to contain or control them.
Experienced private fleet managers have a handle on these costs and by operating their own fleet they can exact better controls on the causes, or at the very least incur the actual cost rather than a third party’s cost plus billing.
Control of service, a principal reason for operating a private fleet, is another spine on the control umbrella.
Who could possibly have more interest in ensuring that your goods are delivered on time than your private fleet manager? And who is in the best position to ensure that your freight will take priority over that of any other shipper? The private fleet’s company is its prime customer and there is never any doubt about which freight is the most important.
Control of security in trucking has never been more important than it is today. Any company engaged in cross border transportation knows all about the security regulations on either side of the Canada/U.S. border. There are security issues with the driver, the carrier, the shipper, the freight and the consignee.
Private fleets control all aspects of this equation with, in some cases, the possible exception of the consignee. What better way to ensure that all the controls are in place to affect a smooth border crossing, on-time delivery, and a happy customer?
Most private fleet operators understand all of the above intuitively, but from time to time it is worth reminding senior management about the benefits of operating a private fleet and of the contribution that the private fleet makes to the parent company’s success.
– The Private Motor Truck Council of Canada is the only national association dedicated to the private trucking community. This column presents opinions on trucking issues from the perspective of private carriers. Comments can be addressed to firstname.lastname@example.org