3 Myths About Dedicated Fleet Management

Operating a fleet of delivery vehicles is a complicated and time-consuming task. From hiring drivers to managing routes, payroll, taxes, insurance, vehicle maintenance costs, safety compliance, and more, it can easily interfere with your core business operation’s efficiency.

Outsourcing your fleet management with a 3PL logistics company can lower liability and reduce transportation expenses – if you get the right vendor. 

With a strong dedicated fleet management partner, you can forget about dealing directly with recruiting, payroll, accidents, injury, no-shows, workers compensation lawsuits and countless other interruptions that can paralyze your business.

While the possibility of relinquishing control and choosing to outsource your fleet may feel worrying, a lot of your apprehensions could be based on common misconceptions about fleet management.


Myth 1: Outsourcing a fleet is too costly

Many companies believe their transportation needs are too specialized to let anyone else handle. But for most companies, transportation is simply not a core competency. That makes it hard to optimize your transportation efficiently, and that can be costly in itself.

Outsourcing your transportation to the right provider means handing your fleet needs over to someone whose core business is designing and executing custom fleet strategies. A reliable 3PL logistics company should have the scale and experience to make your transportation dollars go further.

There are many scenarios where this experience can pay off. For example, when you have unexpected shifts in demand, your 3PL partner has more expertise in sourcing extra trailers, workforce and other resources to quickly and efficiently pivot operations. Likewise, dedicated fleet providers have the expertise to consolidate new routes into existing schedules, producing cost savings for you and your customer. 

Myth 2: We must do it ourselves to ensure quality

When you outsource your transportation to the right provider, they will want to take your pre-existing expertise into account and develop a custom strategy that addresses your goals and challenges. Find a provider that is willing to do the up-front due diligence, including site visits and interviews with your team establishing safeguards that they understand your workflow and how your personnel and customers interact with it.

Larger providers don’t always have the flexibility to customize with your needs and may ask you to make some concessions to fit their “one size fits all” approach. Ideally, your transportation strategy should combine what you know about your business with best-in-class 3PL thinking. 

When vetting partners ask them how they continuously assess performance, including the ability to identify and solve recurring problems ensuring they are meeting service levels.

Myth 3: If we outsource, our current drivers will lose their jobs.

Safe drivers with experience and knowledge about your customers, routes and products are invaluable. Most dedicated providers aim to retain as many existing drivers as possible during a fleet’s transition. 

Drivers who transition to a 3PL role may even enjoy more job stability. Instead of being furloughed or laid off during times when you have fluctuating demand, drivers working for dedicated providers can be “loaned” to other jobs until you need them again. 

Arrangements like this can save you money while helping your drivers get paid even when your volume is low. In the end, you can retain the quality drivers you need — and their connection to your customers — while releasing many of the responsibilities that come with employing drivers.

 

The benefits of outsourcing fleet management

 

Cost savings: Outsourcing eliminates the time and expense associated with managing drivers and vehicles

Eliminate staffing hassles: Avoid driver staffing problems caused by high turnover and absenteeism

HR compliance: Eliminate training, legal, and other HR compliance costs from your P&L

Liability issues  Eliminate your contingent liability risk, including vehicle accidents, employee injury claims and lawsuits

Service consistency: Provide better, more consistent service to your customers

Fleet capital costs: No more investing in vehicle maintenance and appearance, including upgrading and downgrading

Supply chain security: Leverage experienced security, to ensure the chain of custody throughout the supply chain

 

What to look for in a dedicated fleet provider

 

Customized routes and fleets. A quality 3PL partner should be ready and willing to create a customized fleet, schedule and route to match your deliveries, when and where they are.

 

Brand Visibility. Don’t miss the opportunity to build brand awareness. Ask your partner to display company insignia or logo on every dedicated fleet truck, and if their drivers can wear uniforms that match. That’s all part of the customization process.

 

Flexibility and Scale.  Can your network-based fleet efficiently keep up with demand during peak seasons? Is it underutilized during off seasons? A dedicated partner provides you with a fleet that easily adjusts to the volume and number of deliveries – regardless of the season. No more struggling to meet demand, or missed opportunities.

 

Security and Compliance.  How do they ensure the chain of custody throughout the supply chain for your products? Are they up-to-date on insurance, compliance and regulations.

 

Customizable Technology. Do they have a customizable solution that meets your needs? Or do they try to provide you an off-the-shelf solution that requires your team to make changes? A good 3PL partner with customizable technology should be able to streamline processes, trouble-shoot problems and eliminate or reduce the need to solve the same problem multiple times.

 

The Bottom Line

With the growing complexity and expenses of operating a private fleet, companies must re-evaluate the costs. From increasing regulations, recruiting, and retaining safe drivers to higher liability risks, there can be significant benefits to partnering with a dedicated fleet provider, allowing you to focus more time and energy on your core business. 

Working with the right dedicated fleet partner can protect your bottom line in the short term and set you up for growth in the long run. 

 

 

Sources:
https://www.trucking.org/sites/default/files/2020-01/ATAs%20Driver%20Shortage%20Report%202019%20with%20cover.pdf

https://www.kornferry.com/content/dam/kornferry/docs/article-migration/2019-3PL-Study.pdf

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