Private trucking fleets make up over 50% of the Canadian medium- and heavy-truck industry. Many companies operate their own fleet of trucks and drivers as they believe it is the most cost-effective way to deliver products to their customers, and many feel that the unique needs of their business could not be met by a 3rd-party trucking provider.
However, the fleet outsourcing model is becoming increasingly popular in North America. Companies who outsource their private fleet are seeing positive results from both a cost and a customer service standpoint. Fleet outsourcing firms, like Canada Cartage, provide dedicated, contract services to companies and assume the equipment, the drivers, and the responsibility of safely and consistently delivering high levels of customer service.
Fleet outsourcing isn’t the right solution for all companies, but many successful Canadian firms are reaping the benefits of improved customer service and reduced corporate risk by converting their private fleet. Let’s take a closer look at fleet outsourcing and dispel some common myths to help you better understand which model makes strategic sense for your company.
Myth #1 – Customer service will suffer
Fleet outsourcing providers such as Canada Cartage partner with their customers by supplying branded trucks and drivers that are 100% dedicated to their account. These drivers get to know customers on a personal level. They travel the same routes and make the same deliveries on a daily basis, giving them the ability to build strong relationships with customers. According to Clifford Lynch in Why Shippers Can’t Afford NOT to Convert Their Private Fleets, “…many companies find that service levels measurably improve after a private fleet conversion.” (Logistics Quarterly, Volume 13, Issue 3).
Myth #2 – Loss of control
Companies can maintain the same level of control when using the right outsourced fleet provider. At times, they will gain even more control by having additional drivers and equipment at their disposal for emergency deliveries that can be made with very little notice. Canada Cartage’s customers have full control over their drivers’ schedule if they choose to. Some customers prefer to manage routing and dispatching of drivers, while others prefer not to. And with customized KPIs and delivery details from on-board technology systems, customers are always fully aware of driver and delivery statuses.
Myth #3 – Outsourcing is more expensive
When the private fleet total cost of ownership (TCO) is considered, fleet outsourcing often proves to be less expensive than insourcing. When private fleet owners consider the time and money dedicated to their transportation management, they find that focusing on their core competency and outsourcing their fleet becomes very cost competitive.
The majority of fleet operators have a good understanding of their direct costs (lease, fuel, labour, maintenance, insurance, licensing) but estimating their indirect costs (recruiting, hiring, training, regulatory compliance, safety, diversion of capital away from growth, financial risk and liability, etc.) is more challenging. Canada Cartage provides complete visibility into these costs, giving customers 100% confidence in their fleet’s total cost, and more certainty in their fleet spend going forward. Once companies understand their TCO, the Canada Cartage value proposition, and available tools to reduce overall fleet spend, makes a compelling business case for private fleet operators.
Myth #4 – Current drivers will be laid-off
Reputable fleet outsourcing firms will look to hire the existing roster of drivers when a private fleet owner transitions to an outsourced model. In most cases, it’s in the carrier’s best interest to retain drivers that are familiar with the account, the customer, and the routes. With the ever-increasing driver shortage in the industry, reliable and experienced drivers are highly valuable to any company.
Myth #5 – Fleet outsourcing is too risky
Many private fleet operators continue to run their own trucks and drivers because they are unsure of the outcomes of converting to a fleet outsourcing model, and feel that outsourcing to a 3rd party might be too risky. However, Canada Cartage has over 100 years of experience providing outsourced dedicated fleet services, and has full-time project management teams that specialize in converting private fleets to our outsourced model. One customer commented that “…the day we converted to Canada Cartage, it was a seamless transition. Our customers didn’t even realize that we had outsourced our fleet.”
The biggest risk associated with fleet outsourcing is choosing the right partner for your transportation needs. Before working with a provider, carefully evaluate their resources, experience, and track record of successfully managing similar fleet management implementations.
With fleet outsourcing, private fleet owners might feel like they are giving up control of their fleet and worry that their customer service will suffer, but that isn’t the case. By freeing up resources, private fleet operators can focus on their core business and leave the transportation of goods to the experts, like Canada Cartage, who’s been perfecting the model for over 100 years.
Interested in learning more? Contact firstname.lastname@example.org or download our Fleet Outsourcing Evaluation Guide for an objective viewpoint on the advantages and disadvantage of insourced versus outsourced fleet management.