The Fort Wayne Journal Gazette published an article recently about how the impact of driver shortages has led large shippers, particularly in retail and perishable food to look closer at having dedicated fleet services. Stores Favor Dedicated Fleets points out that constraints on supply chains have pushed large shippers towards dedicated fleet services to ensure capacity.
With the economy struggling to heal itself and shortages of drivers still prevalent many retailers and grocery chains are moving to lock up guaranteed capacity via dedicated fleet services. Shippers benefit not only from guaranteed capacity but also through better cash flow management as the transportation expense is typically understood in advance. This also follows the trend of outsourcing what is not core to a business and for many retailers, though not all, logistics and transportation is not a competitive advantage. Being able to leverage the core expertise of a dedicated fleet allows the customer to focus on it’s core business and removes some of the risk of managing their own fleet.
The result of all of this is an increase of driver hiring, which is overall good news for the industry. As housing markets warm up and economic conditions improve, albeit at a painfully slow pace, the demand for more drivers is increasing. J.B Hunt reports that they grew their dedicated truck fleet by 4.8% in Q3 2012. That growth was slower than prior year growth but is still an overall positive marker for the industry.
Perhaps the most important aspect is the ever-tightening time lead times that customers are demanding to move loads. As supply chain management improves the efficiency of many operations the transportation component will become a larger constraint and focus area for shippers. Large shippers will demand shorter lead times which ultimately requires more capacity and/or more dedicated fleets to address the need for improved timeliness.