Advantages and Disadvantages of a
Private Truck Fleet

by Mike Starling

Leadership challenge: what represents the largest operating expense for the typical privately-owned or family-owned distributor business? Their private truck fleet. Typically, this assets operating expense can be expected to run 50–60 percent of total operating expense. So, the question becomes, is it worth the actual expense?

Motivations vary for maintaining a private fleet:

⦁ To provide better service to customers

⦁ To be able to control your own destiny

⦁ Less hassle than dealing with for-hire carriers

⦁ Projects a certain company image in the marketplace

But, when was the last time company management took time to realistically review the pros and cons of having that private fleet? Maybe it’s justified. Maybe not. How efficient is it? How effective is it? How productive is it? Is it really helping me generate a return on my investment?

As food for thought, listed below are criteria that can help facilitate such a periodic review process. Just remember, you’ll get out of it what you put into it.

ADVANTAGES:

IMPROVED SERVICE-

⦁ Convenience

⦁ Flexible Operation

⦁ Greater Control

⦁ Lower Transit Time

⦁ Reduced Damage

⦁ Driver as a Salesperson

⦁ Last Resort (special need)

DISADVANTAGES:

HIGHER COSTS-

⦁ Empty Backhaul

⦁ Lack of Management Talent

⦁ Added Overhead and Burden

⦁ Capital Requirements

⦁ Liability for Cargo Damage and Theft

⦁ Liability for Accidents

⦁ Increased Paperwork and Administrative Costs

⦁ Labor Unions

EXTERNAL FACTORS:

⦁ Volitile Fuel Prices

⦁ Regulatory Changes

- Hours of Service

- Restrictions on Equipment

⦁ Driver Shortage

⦁ Technology Innovations

⦁ Changing Emphasis on Environment

⦁ Congestion

⦁ Deteriorating Infrastructure

Acknowledgement: List Adapted from Coyle, John J., Edward J. Bardi, and Robert A. Novack (1994), Transportation, 4th Edition, St. Paul, MN: West Publishing Company.

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