How to Avoid Running Your Private or Dedicated Fleet With Empty Miles
Navigating the freight industry is complicated and filled with challenges, empty miles being one of them. Whether you’re a shipper, carrier, or broker, you have a lot of factors to take into consideration when deciding how to move goods efficiently. The past few years have shown companies are opting for private fleets and/or using dedicated fleets more and more. According to the American Trucking Association, 53.3% of all fleets are private, for a total of about 620,000 in the United States. In fact, some studies show that the average truck count for a dedicated fleet versus one-way truckload is growing, and will likely continue to do so for the next few years, as presented in Exhibit 1.
Private fleets are a major economic force in the USA. According to the 2020 State of Logistics Report by the Council of Supply Management Professionals, private trucking is responsible for almost half of the $635 billion in revenue that the trucking industry brings in, at just over $308 billion.
To understand the pros and cons of private and dedicated fleets, let’s start with the basics.
A private fleet is a trucking operation run by a business whose primary purpose is not trucking, take Coca-Cola, for example. Coca-Cola is a soft-drink manufacturer, but their operation is so large they run their own trucking company to distribute their beverages throughout the country.
Why run a private fleet?
Having a private fleet allows manufacturers to have access to guaranteed capacity while having better control over the delivery service. In many cases, a private fleet is more predictable when it comes to cost and work schedule, which makes hiring and keeping drivers easier—a huge win in the freight world.
A dedicated fleet is run by a company whose sole purpose is trucking. It is generally operated by a shipper where a set of tractors, trailers, drivers, and other resources are assigned exclusively for shipping operations serving a set of facilities or lanes in their transportation network. The assets are generally owned or leased by a motor carrier or logistics service provider, and then hired by the shipper.
Why use a dedicated fleet?
With a dedicated fleet, shippers can avoid searching for capacity from multiple logistics service providers. Instead, a dedicated fleet provides shippers with captive capacity that is exclusively theirs to use as they wish.
The similarities between private and dedicated fleets are obvious. In fact, their similarities extend to the one main disadvantage they both share: empty backhaul miles.
What are backhaul miles?
Backhaul miles refer to the trip a truck makes when returning from a delivery. More often than not, these miles are driven with no cargo, traditionally referred to as empty miles.
The problem with backhaul
Driving an empty truck on a return trip is not only lost revenue, it’s unsustainable and even unsafe for drivers. Unfortunately, a large number of both private and dedicated fleets end up driving empty backhaul miles. Some fleets use a variety of resources to locate backhaul loads to create revenue and cover operational costs, but aren’t always successful. Others don’t even attempt to look for backhaul opportunities because the act of finding them, contracting them, and then managing it all can be too cumbersome and time-consuming for private fleets. For most private and dedicated fleets, finding an appropriate backhaul lane to fit their needs can seem like more trouble than it’s worth. The concept of utilizing truck space on the return journey to recoup costs isn’t a new new one, but the reason it hasn’t worked in the past is because of common logistical challenges:
Matching the supply with demand in a specific shipping lane
Collaborating outside of existing relationships
Honoring existing financial and contractual relationships
Lack of transparency within the industry
The Solution? SemiCab.
SemiCab is a digital ecosystem that builds trust and stronger relationships between shippers and carriers by creating a transparent and equitable network that helps all members realize shared value.The SemiCab algorithm allows shippers with both private and dedicated fleets to market their available capacity to other shippers on the platform. This is how one shipper with a dedicated or private fleet can get paid for previously unused capacity, and another shipper can move their goods for less than if they had used the spot market.
Shippers, carriers, and drivers on the SemiCab platform are effortlessly eliminating empty backhaul miles and sharing the value created across the network. The result? Increased capacity and lower costs for one, and reduced risk and greater profitability for the other.
For more on this topic, watch a recording of our webinar, How to Monetize Empty Miles in a Private or Dedicated Fleet by clicking here.