Opinion: Benchmarking Private Fleet Success
This Opinion piece appears in the Aug. 18 print edition of Transport Topics. Click here to subscribe today.
By Gary Petty
President and CEO
National Private Truck Council
Private fleets stand out as a dynamically growing transportation market. The largest sector of the trucking industry, they account for approximately 50% of all Class 8 truck sales, and own or lease some three out of four Class 4 through Class 8 trucks on the road. Around 40% of all leased trucks are to private fleet companies.
In 10 years, the private fleet vehicle count has risen by 50% among the top several hundred companies, even as the existing fleet population has become more efficient. And, a majority of private fleet managers (more than two-thirds) plan to add trucks to their fleet capacity in the years ahead.
This growth reflects advantages in private fleet ownership: ensuring consistent quality customer service; gaining direct on-demand control of transportation capacity; controlling cost curves; and benchmarking services provided by outside dedicated carriers and 3PLs.
Accomplishing these objectives requires an expertly trained professional team of in-house transportation fleet managers and a “best-in-class” team of professional drivers with an intense customer service focus.
Drivers are the gold standard of the industry. They receive top benefits, the highest pay (averaging more than $62,000 a year — with senior drivers making $75,000 to $80,000), the best equipment, safety training and technology, and generally work in a better quality-of-life job.
Whether they are employees or full-service leased drivers, they meet high qualification standards and rank among the best and safest.
Minimum hiring standards typically are: 23 years of age, experience of two years or more with a safe driving record, “people skills” and good character. Years of service with the same company averages 14 years. The average age of new hires is growing — over 38 — and the average driver age rising, 50 years. These facts help explain why private fleets are three times safer, according to CSA data collected by FMCSA.
This type of premier-grade driver makes exceptional customer service possible. More than one-third of the driver’s day is spent in non-driving functions, acting as a front-line customer service representative.
They uniquely combine safe and efficient driving competencies with effective customer-service skills. Customers come to think in terms of “my driver” — a source of dependability and trust.
Great drivers, however, are just part of the success formula.
Long-term viability of a private fleet depends on three major elements working in unison: upper management support; a strategically targeted business model; and tactical execution.
• Upper Management Support
Like any department or administrative function within a company, the private fleet must have affirmation and financial commitment from upper management. Without such support, the private fleet faces a tough hurdle. Today’s private fleet professional must stay attuned to management shifts and expectations, and make it a priority to constantly communicate the rising value of the corporate investment in the private fleet.
As a practical matter, however, more senior executives see the incumbent private fleet as an enormous advantage in today’s business environment — given the increased cost and shrinking capacity constraints in the open market.
• Strategically Targeted Business Model
The business model of a private fleet is best understood as one component in a matrix of other transportation solutions. In addition to the private fleet, this matrix may include use of dedicated carriers; third-party logistics providers; and rail. To optimize equipment utilization, nearly two-thirds of private fleets also operate as a for-hire carrier.
Where does private fleet capacity optimally meet company objectives — one-third, one-half or 80% of the corporate transportation spend? A strategically targeted “right-sized” fleet may be a bigger or smaller percentage of capacity. A fleet capacity at 25% might be underutilized and better set at 40%, whereas the 87% fleet may be more effectively “leaner” when reduced to 82%. When the percentage is correctly balanced — seasonally adjusted and constantly fine-tuned to best fit changing company needs and customer expectations — the fleet has a sustainable business model.
• Tactical Execution
Every day, on every run, successful private fleets rate and justify their existence. They use NPTC national benchmarking data and internal metrics to score their fleet’s comparative performance.
Among key metrics reviewed are: empty miles (now 22%, down from more than 30% just five years ago); driver turnover (around 12%); miles per gallon (6.7 mpg for top fleets); equipment trade cycles (just reduced to 712,000 miles from last year’s record-high of 903,000 miles); activity-based driver pay (25%); and ratios of outbound (67%) and inbound (33%) shipments.
The best private fleets look to enhance their utilization through the use of slip-seating, the near ubiquitous deployment of onboard technology and optimized routing. They increasingly are using active safety technologies and predictive analytics to drive their safety performance to even higher numbers. And they are involving their professional driver workforce in the process — scorecarding performance, providing performance incentives, and offering health and wellness benefits.
With these metrics and more, private fleets master continuous improvement. They analyze data, adjust policies and transform behavior. Today’s best scores are tomorrow’s starting point.
NPTC is an independently governed and managed national trade association that is neither affiliated with American Trucking Associations as a council or conference nor part of ATA’s federation of associations. NPTC cooperates with ATA through coalitions and official policy positions in support of many issues of interest to the entire trucking industry.
