Owning and operating a private fleet requires a lot of coordination, manpower and capital – and for some businesses, it might not be a very attractive option.
However, beauty is in the eye of the beholder, and companies that operate a private fleet as a strategic asset are likely to be more seduced by the competitive advantages it brings. With greater control over all aspects of the fleet, companies operating privately can deliver new customer experiences and positively impact business, society and the planet.
According to the ATA, more than half of the fleets operated in the United States are private. Many companies that operate private fleets do so to meet new customer demands with the right level of service.
Today’s market dynamics require great agility to deliver the right value to the customer and the business. This has been especially true over the past two years as logistics teams have had to find creative solutions to deliver goods while adhering to strict health and wellness protocols.
For those with private fleets, this quick transition was made easier, as they only had a two-way relationship to manage the change. For example, at the start of the pandemic, companies had to deliver goods and services unattended, which required a lot of trust and transparency.
This proved even more difficult with a third party operating the fleet, whereas companies with private fleets had an advantage with operations that were already part of the fabric of their businesses.
Accenture’s research found that customers are asking for “customized, end-to-end logistics services, a demand that has only been amplified by the events of the past 18 months.”
Customers ask four main things of logistics companies:
- end-to-end services;
- improved experiences;
- purpose aligned with their values; and
- proactive data-driven insights.
Private fleets are essentially “logistics companies” within a business, and as such, end-to-end services and experiences are areas that fleets can directly and positively affect. Obtaining this right can not only strengthen and protect the business by improving customer experience, service reliability and operational flexibility, but act as a platform to further extend services across the supply network.
Having a private fleet is a benefit to the end customer, as companies can quickly expand their service portfolio to meet changing customer needs in near real time.
Make drivers happy
As more companies turn to the private fleet option, they will need to attract and retain a workforce of drivers. Delivery drivers are the backbone of the transportation industry. At least the past two years have underscored the importance of a loyal and consistent driver workforce to cope with accelerating demand and overstretched supply chains.
Private fleets provide companies with a significant competitive advantage when it comes to driver satisfaction and job retention. Simply put, drivers who work for private fleets are happier, more comprehensively compensated, and more likely to be satisfied with their job than drivers from third-party “for-hire” delivery partners.
In fact, a benchmarking report by the National Private Truck Council (NPTC) indicates that over the past five years, driver turnover rates for companies operating private fleets have remained stable through the teens, while the American Trucking Association reported TL carrier turnover in 2020 90% for large fleets and 69% for small fleets.
Many factors contribute to this higher retention rate, including less stressful schedules, the flexibility to spend more time at home, as well as higher pay. According to the NPTC, about 71% of private fleet drivers drive home every night, and only 15% of private fleet drivers make multi-night trips.
Additionally, private fleet drivers historically received higher compensation than for-hire drivers. The 2021 Trucking Operational Cost Analysis conducted by the American Institute for Transportation Research (ATRI) found that in 2020, private fleet drivers received approximately $1.42 per mile in wages and benefits combined, nearly double the combined wages and benefits of “for-hire” drivers.
The turnover of private fleet drivers decreases slightly
Source: National Private Truck Council/2021 Benchmark Private Survey
This trend is expected to continue to grow as companies look to build private fleets and keep their drivers happy. For example, Walmart recently announced an increase in driver pay and launched the first-ever Walmart Private Fleet Development Program.
Perhaps most importantly, many companies operating private fleets offer drivers the opportunity to expand their skills to contribute to both customer service and business development opportunities. This extension of the driver’s primary job profile provides a much more rewarding and impactful work experience, literally putting them at the forefront of revenue generation for the businesses they serve.
Average remuneration of private fleet drivers 2008
Source: National Private Truck Council/2021 Benchmark SurveyAverage
lead the charge
Another major area of value that private fleets offer is the ability to work directly with original equipment manufacturers (OEMs) and aftermarket companies, all with the goal of being more sustainable and to better manage the resources they mobilize.
Typical Work Week for a Private Fleet Driver
Source: National Private Trucking Council/2021 Benchmark Survey
The transition from fossil fuel-based transportation assets to alternative fuels and electrified platforms is forcing the industry to open up new routes and deliver a more sustainable future. This gives private fleets plenty of opportunities to test and pilot new technologies, push new capabilities, and experiment to find the right dynamic mix of assets.
This enables companies to create business value and lasting impact for their customers and the communities in which they operate, and to meet the goals and needs of a sustainable future.
Private fleet operators are in a constant state of testing and experimentation, working with mixed fleets and long-term planning to achieve business goals. This gives these companies an advantage as they set the “curve” for the industries they serve.
As global preferences move ever faster towards these new platforms, private fleets have a clear advantage in continuing to drive this kind of innovation, leading the race to meet and respond to an ever-growing set of expectations that drive the customer experience. .
Private fleets deliver
Escalating fuel costs, competition for labor and a world demanding sustainable operations are the reality facing all businesses today. Private fleet owners who operate with a total cost of ownership mentality see this as another opportunity to lead and set industry standards.
Those who tailor offerings to their customers, improve the overall driver experience and pioneer new asset technologies will deliver a more sustainable future.