The Wall Street Journal recently featured Ashley Furniture Industries and the role an 800 truck private fleet plays in the manufacturer/retailer’s success story. Ashley captures numerous benefits by maintaining their own fleet including exceptional customer relationships (driver/brand ambassadors delivering more efficiently than their outsourced counterparts), more predictable access to capacity and backhaul rates approaching an eye-popping 90%. We interviewed private fleet expert and Collaborator contributor, Ed Burns about the many benefits of maintaining a private fleet and when it makes sense to do so.
SCC: Is customer experience by itself enough of an argument in favor of going through the expense of building and staffing a private fleet?
EB: Customer service improves dramatically when a shipper can consistently deliver on or ahead of schedule. Think of the places you shop online as a consumer. The ones that get your package to you quickly and efficiently are the ones you return to over and over. The same is true with large volume shipments inbound for manufacturers or outbound to their customers. Having the private fleet piece in place also puts the shipper in better control of their destiny as they are not entirely reliant on sourcing trucking capacity in today’s very tight market.
The WSJ article illustrates how Ashley increased ownership of their accounts and improved market penetration by making product evangelists and mobile customer service reps out of their fleet drivers. That “boots on the ground” capability is one of the value-adds a savvy private fleet operator can capture.
In a tight environment, not only will the fleet shipper be more reliable to his customers, but he’ll also have a commodity in high demand to leverage as a revenue generator.
SCC: Do drivers respond well to being pressed into service as CSRs? Given the shortage of qualified drivers, is this something that makes it harder to source drivers?
EB: Actually, and I think the Ashley example confirms, the well-run private fleet actually helps to attract qualified drivers. Properly managed using efficiency-boosting logistics planning and management tools like some TMS solutions (not all TMS platforms support private fleet functionality), optimizer tools and other software, the private fleet can actually become a profit center. Ashley’s 80% backhaul rate generates quite a bit of revenue. That’s how they’re able to field new Volvo and Kenworth tractors (versus the six to seven year old equipment that is the current industry standard) with the amenities that attract more and better drivers. The whole concept provides a positive feedback loop for the companies that do it well.
SCC: Wait a minute. Private fleet operators may be generating impressive revenues offering their unused capacity out “for hire”. And better customer service has a positive effect on overall business operations. But doesn’t it also cost more for a shipper to purchase their own equipment and pay their own drivers with the benefits etc.?
EB: Yes, it’s true. But let’s not forget there is a significant cost involved in using common carriers to move the freight too. Most organizations with private fleets use a mix of fleet and common carriers to move their freight. Having a fleet gives a shipper more control over their destiny and more options to move their freight, especially as capacity shrinks. In a tight environment, not only will the fleet shipper be more reliable to his customers, but he’ll also have a commodity in high demand to leverage as a revenue generator. Some fleets even wrap their equipment in advertising – making de facto billboards of their tractor trailers. The advertising value alone can be significant.
Ed Burns is the founder and president of Burns Logistics and an acknowledged expert in transportation and logistics. Ed is also a sales agent representing several notable private fleet operators. Visit www.burnslogisticsinc.com.