Distraction From Core Competencies: In additional to normal business activities, private fleets must also manage a trucking company. Trucking is not their primary expertise, so this is most likely a distraction and a loss of focus on the core business.

Lack of Trucking Expertise: Most private fleets lack the transportation proficiency found in experienced carriers. This could include management, computer systems, technology, maintenance networks and infrastructure, driver training and safety programs, sales networks, and general operating efficiencies.

Insurance Costs and Liability: Smaller private fleets have huge exposure to accidents and potential liability of claims. The substantial cost of insurance often makes small private fleets cost prohibitive. When these shippers have their logo on the side of the truck or trailer going down the road, it can increase their liability and potential for exposure in litigation.

Asset Flexibility: Carriers can typically adjust the fleet size to accommodate peak season demand and fluctuations and the periodic need for more tractors or trailers.

Balance Sheet: When private fleets own tractors and trailers, that ties up company capital on items that aren’t directly related to core business operations, and now with ASC 842 lease accounting standards in place, leasing equipment impacts company balance sheets. Utilizing a dedicated carrier allows the shippers to free up capital and clears the balance sheet.

Backhaul Network: Most private fleets do not have a sophisticated backhaul network to fill the trucks up with freight on the return trip home. Carriers have a larger network for backhauls, and their expertise in the freight market will almost always be a higher revenue levels than what is obtained by a private fleet operator.

Customer Service: Most shippers who operate a private fleet believe that the fleet allows them to provide a higher level of customer service and the ability to offer consistent on-time delivery. This may be true when comparing other non-dedicated modes of “outsourced” transportation services, but a dedicated carrier becomes an extension of your business, and the fleet is tailored to accomplish your needs. A dedicated carrier, such as JRC will also have backup coverage options to ensure on-time delivery if there is a driver who calls in sick or a truck breaks down on the road.

Company Image: Many companies have always had a private fleet and believe that the trucks and drivers play a positive role in the company image. It is very common to see marketing materials with company logos on the trucks, and people recognize these logos on the road. This same image can be accomplished with a dedicated carrier, and JRC drivers are trained on your business, they can wear your logo on their uniform, equipment can have your branding on the sides, and in most cases the dedicated drivers can play a positive role in your company culture and image when delivering your products.

Take out the Middleman (Carrier): At the surface level, “the carrier is just the middleman making all the money.” However, the dedicated carrier offers various methods to reduce the shippers’ costs and improve the service offered to their customers. JRC has access to equipment and parts at a better price, infrastructure to manage the equipment, resources, and expertise to maintain efficiency and compliance, and the support staff to handle the unforeseen challenges.

Equipment Legalization: Cost of permits and other registration for the tractors and trailers required by the DOT.

Insurance Liability: Direct costs of insurance premiums that are many times included in policies with other exposures in addition to the liability and exposure to accidents and potential litigation.

Driver Benefits: Need to consider total cost of drivers’ health insurance, retirement plans, and other fringe benefits.

Administration Costs: the day-to-day management team who oversees the activities of the private fleet have a significant cost that is often not included in the overall “transportation” costs. Some of the activities managed by this group could include duties such as driver recruiting and retention, equipment lease and maintenance management, DOT compliance, safety, customer service, planning, dispatching, recordkeeping, fuel purchasing, fuel tax reporting, and many other hidden logistics and trucking related costs.

Equipment Replacement: If the current equipment used in the private fleet operation is outdated or nearing the end of its useful term, costs will need to be adjusted to accurately compare with the higher costs of new equipment. If less costly and outdated equipment is not replaced, there should also be adjustments made for increased maintenance expenses and breakdown failures. There is also a residual risk on the future value of equipment that is owned by the company (this doesn’t apply if equipment is leased).

Cost of Capital: Whether the Private fleet borrows money and pays interest to invest in tractor and trailer equipment or pays for that equipment with cash, there is a cost associated with allocating that capital on these assets. If the fleet was outsourced to a dedicated carrier, that capital could be invested directly into improving the core business, paying off debt, or increasing the investment in other areas of the business to increase profits.