When To Use Dedicated Fleet Services

The term ‘dedicated fleet‘ (also known as ‘dedicated contract carriage’), refers to having truck tractors, trailers and drivers that are devoted exclusively to serving a specific facility or route for a shipper’s transportation network. They are usually owned or leased by a carrier but can also be provided through a dedicated fleet services provider that is hired by the shipper to manage its transport operations. Alternatives to a dedicated fleet include maintaining a private fleet, hiring common carriers when necessary or contracting with external logistics providers.

For some shippers, a dedicated fleet contract offers significant benefits. The principal benefit is that dedicated transportation can guarantee capacity when required. Dedicated fleets can also reduce transportation costs and have the potential to improve timely delivery performance by up to 10 percent. In addition, shippers that have dedicated contract carriage arrangements can negotiate fuel surcharges more effectively and can reduce their regulatory liability than shippers that have private fleets. Dedicated fleets enable shippers to focus their resources on core business operations rather than on transportation management.

A dedicated fleet, however may not necessarily be the best option in all circumstances. The cost and service benefits of dedicated fleets in transport networks that feature only one-way flows, for example, are limited. If service requirements are low and carrier capacity is high and the average length of hauls is also high (that is, in long-haul freight situations) then the only benefit to implementing a dedicated fleet is to guarantee capacity in for supply chain. Dedicated fleets offer better advantages when there are bi-directional flows of freight. This assumes there is no seasonal freight flow that occurs in a transport network; where this is the case it is better to contract short-term dedicated capacity when required.

To identify opportunities for a dedicated fleet an analytical model is typically used that shows how cost savings are maximized by the adoption of a dedicated fleet solution. To be effective shippers should have historical data about the transport rates offered by common carriers for their services which are then compared against data about the cost of dedicated fleet services; although sometimes these can be difficult to determine. Essentially the net savings are produced by calculating the cost of using common carriers and subtracting the costs of dedicated moves as well as empty moves. This helps to identify routes that are suitable for dedicated contract services and those that should remain as one-way moves.