Backhaul survey complete
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One of the common denominators among private fleets is the need to continually justify their existence against other would-be transportation and logistics providers.
First and foremost, a private fleet must service the needs of its primary customer. Because of this unique structure, private fleets do not set out to change their operations to compete for freight from other shippers. Yet, ironically, they often have marked advantages over for-hire carriers in pricing, safety, and service for certain lanes that fit their backhaul network.
Trying to benchmark the performance of private fleets suddenly makes comparing apples to oranges seem doable. Every fleet has a unique size and operational design, but that is expected. The real complexity is in comparing private fleets’ strategies for “backhaul” operations to increase revenue, thereby decreasing costs and securing a competitive advantage.
Despite the difficulty of such an endeavor, I have attempted to lay the groundwork for what will become a regular study on the trends, best practices, and performance among private fleets in backhaul operations.
Sources for my inaugural Private Fleet Backhaul report came solely from an online survey distributed to private fleets. The survey started in March and was completed in April, 2008. The total number of responses was 51.
The number of respondents in the survey is not statistically significant by any stretch, but it is enough to showcase how some of the best private fleets perform their backhaul operations.
Perhaps the most important distinction among private fleets that relates to backhaul performance is whether they operate principally as a profit center or a cost center. Thirty three percent (17 out of 51) respondents said they operate primarily as a profit center. The rest operate as cost centers and very few of these fleets had many miles available for third party backhaul. Several fleets had unusually high deadhead mileage as well, and revenue from third party backhaul was minimal
In either case, according to the survey, private fleets have an average length of haul that is much shorter than for-hire carriers. This is to be expected, as the longer the length of haul, the better the asset utilization and pricing advantage of “for-hire” carriers versus private fleets.
To offset rising fleet operating costs, the survey showed that nearly all private fleets are looking to increase their competitive position with their principal customers. Seventy-seven (77) percent of private fleets said they are looking to increase the share of company freight that is hauled by their private fleet. One of the ways to do this is to be more cost competitive in lanes. And to be more competitive, many private fleets are looking to bring in more revenue from backhaul so as to offset their additional transportation costs.
If you would like more information about the backhaul survey, please let me know and I would be happy to email you a copy. Hopefully this is a good start of what will become the only source for in-depth information about how private fleets–both profit center and cost centers–are increasing their value through third party backhaul.
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