Creating or maintaining relationships with dedicated contract carriage (DCC) providers in today’s highly uncertain business environment is a priority for virtually all heavy private fleet operators, according to a series of fourth-quarter, 2007, in-depth interviews with major shippers conducted by 3PL industry market services firm SB Hirsch Inc, Newport Beach CA.
In the study, two-thirds of the group of participating executive-level decision makers, controlling more than $2.7 billion in transportation spend in the food processing, retail/wholesale, and manufacturing sectors, discussed a willingness to consider converting a portion of their private fleet to DCC providers.
Leading the list of considerations that contribute to expanding interest in DCC among users of private fleets is better management of liability exposure for the shipper, outsourcing of non-core business processes, and provision of flexible shipping solutions. While driving down costs and/or increasing backhaul gain sharing continue to be key reasons to use DCCs, companies are looking to team with carriers that will make them more competitive in their respective markets and provide capacity as overall driver and equipment availability declines later this year. These emerging, collaborative relationships require DCCs to build their services around client needs, rather than forcing shippers to using a one-size-fits-all approach that generates criticism toward some asset-based DCCs.
“We learned that DCC shippers have historically placed a high value on operating private fleets, but are identifying with advantages provided by DCCs that can supply the necessary level of flexibility,” said Bennett Hirsch, president of SB Hirsch. “The decision to utilize private fleets has traditionally been driven by end-customer marketing perceptions and perceived economic advantages. In good economic times and bad, private fleets are being justified and rejustified in the board rooms just like any other major capital expenditure. Even those shippers that have large private fleet operations are testing some routes with outsourced DCC solutions. From our discussions, unyielding attachment to any single model appears to be disappearing, presuming requisite expectations of maintaining high levels of service and safe delivery of freight are met.”