PrivateFleets.com

About five months ago, I interviewed Mike Voelk, vice president of information technology, for Greatwide Dedicated Transport, a division of Greatwide Logistics Services. While Mike does not work for a private fleet, I want to share my thoughts on what he developed–an innovative, technology-driven business model for dedicated transportation services.

Here is a brief description: Greatwide developed a software interface to link its McLeod dispatch system to “outside” dispatch packages that shippers use to operate their private fleets. The software interface allows Greatwide to provide its customers with visibility of Greatwide trucks and, through a separate piece of vendor software from IDSC, to make optimal load assignments and routing decisions for all assets in the system. The solution is original in that Greatwide is operating its trucks on the client’s system for “one single solve.” In essence, capacity from Greatwide becomes a “virtual” private fleet.

If the system determines the freight can’t be hauled economically with its own private fleet or by Greatwide’s “virtual” private fleet, then it is given back to the shipper to give to common carriers.

If this model plays out in reality like it sounds on paper, this could have a major impact on the relationship between a private fleet and common carriers, such as Greatwide, that provide dedicated transportion.  I think this type of technology offers a compelling reason for a private fleet to increase its use of third party, dedicated capacity in its system. However, I want to mention that I believe this new business model has several flaws from the perspective of a private fleet.

Power-to-load optimization software from IDSC and other providers produces an “optimal” dispatch solution using measurable inputs such as costs, lane rates and the current position of assets in the system. However, it largely ignores the core advantages of using the private fleet versus a common carrier in one or more lanes: dependability, reliability, efficiency, customer service, and the ability for a private fleet to find its own backhauls and/or to partner with independent logistics firms that can provide backhaul solutions.

Greatwide has purchased a couple of large brokerage firms that, among other advantages, may help fill in the backhauls for assets in the system, both for the private fleet and for their own assets. Yet who really wins in the case where they provide a backhaul to the private fleet? While the private fleet picks up some extra revenue, Greatwide gets a bigger slice of the pie by using the private fleet’s capacity to generate more revenue. It also knows what to pay for a backhaul to make it “fit” within the system–which may be below the rate a private fleet could get from an independent broker or provider of backhaul solutions. 

To see the full article I wrote in CCJ Magazine about Mike Voelk and the new technology-driven business model, click here.