PrivateFleets.com

Today, I had the chance to interview a fleet manager for a large private fleet based in North Georgia. I would rather not give their name, but I will tell you who they are privately if you really want to know. Last year, the company made a remarkable achievement: it increased overall revenue by 25 percent without growing the size of the fleet.

If any for-hire carrier had an increase in revenue by 25 percent in one year, especially amid a stagnant freight market, it would be a notable accomplishment. But you wouldn’t expect to hear this from a private fleet. What is a private fleet to do, ask for rate increases from its parent company?

“Sure, you can have your rate increase–I’ll take it out of your salary,” would be the response from corporate. The company accomplished this feat by reviewing all of its lanes in detail and increasing backhaul revenue where possible.

The fleet increased revenue from one shipper alone by 78 percent, reaching $1 million in backhaul revenue, by finding more backhaul opportunities and by demonstrating its technology prowess by moving to all EDI transactions versus using a labor-intensive process of retrieving loads from the shipper’s website and entering shipement status updates online.

Fleet managers created reports to show revenue by lane and the percentage of overall revenue by lane. By looking at graphs, they were able to identify many lanes where 60 percent or more of its revenue was internal revenue from hauling raw materials inbound to Georgia. The fleet couldn’t do much about some of the lanes that were already heavy in internal revenue.

But, by identifying lanes where backhaul opportunities were available and by talking to area supervisors, fleet managers in the central office were able to identify what constraints were limiting opportunities to improve backhaul revenue. On a weekly basis, the fleet uses a report to compare external and internal freight for each lane. Revenue totals and percentages are put into a control chart and statistical software package, MiniTab, to capture trends up or down with overall percentages.

“We are trying to avoid making point-to-point decisions, such as ‘where were we this time last year or this time last month?’” my contact told me. “You can’t see a good picture if you are not looking at the change of the process over time.” You have to see 6 or 7 weeks of data to see what direction backhaul revenue is trending, he said.

Based on the trending information, they can determine the best lanes for growing backhaul revenue by marketing its excess capacity to external shippers. Their area supervisors are able to focus more of their energy on sales and marketing in specific lanes versus comparing budgets and looking at the overall picture. For example, one area supervisor may only need to focus on growing revenue out of Columbia, S.C.

“Without these tools, and this reporting, there is no way to judge the health of a lane as a whole,” he said. “You become overwhelmed unless you can dissect and manage.”