After successfully overcoming two tumultuous years shaped by the pandemic, private fleets have emerged with a greater share of freight, a sharper presence in the supply chain, and a focus on management disciplines needed to drive results and solidify justification as a corporate investment.
“The state of the private fleet market is strong and getting stronger,” says Gary Petty, president and CEO of the National Private Truck Council (NPTC). “Not only did the pandemic reinforce the existential necessity of capacity control in corporate trucking, but also the differentiating value and competitive advantages of the private fleet.”
According to Petty, over the past couple years companies overly dependent on outside commercial carriers found themselves at the mercy of the market. “Often-needed capacity was not available at any price,” he says. “Or, if available, it came at staggeringly higher costs compared to reasonable rate adjustments of the past.”
In the face of these capacity constraints, many companies responded by expanding their private fleet operations to gain better control over their supply chain. The results proved to be an added safety net and a viable hedge against the future uncertainties in service and price of the outside provider market.
That, according to Petty, is because the private fleet guarantees more safe, reliable and cost-effective transportation that may not be available. Even though the for-hire carrier market has excess capacity and falling freight rates for the time being, private fleets are not giving back the gains they made during the peak pandemic years.
“More than ever before, private fleets have become the core component in the supply chain strategy of many companies,” says Petty. “Corporations that were adamantly against having in-house transportation have now enthusiastically embraced the private fleet model. We’re now seeing companies with a long-standing commitment to their private fleets adding drivers and equipment.”
As we head toward this year’s peak ground freight transportation season, let’s examine how private fleets perform compared to their common carrier rivals—and what shippers can learn from some best practices of the best-run fleets.
Benchmarking against the best
Petty draws much of the support for his perspective from the group’s annual Benchmarking Survey Report. This past year, 114 companies submitted data for the NPTC Benchmarking Survey.
The results of NPTC’s latest survey underscore that today’s best private fleets are positioned for control and stability. In other words, the private fleet is designed to handle that freight and those lanes where it can provide the most cost-effective customer service-related solutions.
Rarely, if ever, does the private fleet handle the parent company’s peak demand or volume levels. NPTC vice president Tom Moore uses the following analogy: “You don’t build a church for Easter Sunday.”
Attesting to the strength of their supply chain strategy, private fleets continued to position themselves as a cost-effective transportation solution. That’s whether measured by the number of shipments, freight volume or the value of commodities hauled. In all three cases, respondents in this year’s survey report bullish—if slowing—year-over-year performance.
Specifically, participants in the survey report that private fleet shipments increased at a rate of 4.6%; volume was up 8.4%; and the reported value of these shipments came in at 2.8% year-over-year growth rate.
The survey reported nine consecutive years of growth in shipments, volume and value. And as high as the bar is set each year, private fleet respondents continue to elevate performance to a new plateau.
Despite continued exceptional performance, it’s hard to quantify the total size of the private fleet market. While Petty believes that the overall market favors the professionally managed and operated private fleet, it’s hard to quantify the growth and demand for in-house transportation in raw numbers. Rather, we fall back on general trends:
- trucking accounts for 80% of the nation’s freight bill;
- trucking accounts for 78% of all freight transported in the U.S.; and
- private fleets account for about half of trucking’s share, or about $450 million.
According to NPTC, the top reason that companies report operating a private fleet remains to provide exceptional levels of customer service and increased control that are unavailable or cannot be guaranteed on the open market.
“Operating a private fleet provides control over service levels, guarantees availability and assures cost competitive transportation alternatives regardless of market conditions,” says Moore. In this year’s survey, customer service was cited by almost every respondent.
However, the report says the fastest growing elements of private fleet justification are cost control; revenue enhancement; leverage against higher rates; and even measurable competitive advantage.
Private fleet challenges
According to Petty, the ability of today’s private fleet to deliver exceptional customer service at a competitive cost advantage is complicated by numerous issues.
“Despite the fact that the driver shortage has eased somewhat, challenges of an aging driver workforce population, recruiting, turnover, hiring, retention, and the overall shrinking pool of experienced and safe drivers are universal concerns that will only worsen,” Petty says.
However, Petty is quick to note that to call the typical private fleet driver “just a driver” is a bit of a misnomer. The private fleet driver’s job typically involves much more than just time spent behind the wheel.
Private fleet drivers spend 62% of their time driving, working an average of 51.9 hours a week, down by more than two hours a week from last year’s average of 53.3 hours a week. Of these hours, 32.4 are spent behind the wheel, while 20.9 hours are spent performing other non-driving tasks such as loading, unloading, inspections, paperwork and yard movements.
“With respect to driver job satisfaction, many in the industry believe that more time at home for the driver leads to lower turnover,” says Petty. By this measure, private fleets, as reported in this year’s survey, continue to get their drivers home more than the industry at large. In fact, the survey reports that 70% of their drivers are home every night.
In 2022, driver turnover, at 22.5%, eclipsed the 20% threshold for the first time in the history of the NPTC Benchmarking Survey Report. In 2023, driver turnover reached 19% which is elevated compared to historical average of 14.25% turnover over the 15-year history of the survey.
This reported level of turnover is consistent with the aging workforce and the increased number of drivers opting for retirement, according to the report. For-hire truckload fleets report about 90% annual turnover. Keep in mind that driver turnover carries a cost of $9,748 to hire a replacement, according to NPTC.
With the driver shortage easing somewhat, the average private fleet in this year’s survey has become more selective in the drivers they’re hiring. The average fleet reports that they review, screen, and interview 16 candidates to fill one driver’s position. This is up from the 10 candidates reported last year.
Another crucial element of driver retention, according to NPTC’s Moore, is driver compensation. This year, respondents report paying their drivers an average of $86,773.
“Of note, each of these reported average compensation levels were the highest in the history of the survey, coming in just shy of 10% year-over-year increases and backed by generous benefit packages,” says Petty. “Despite the number of older and higher paid drivers retiring and leaving the industry, the maximum average pay continues to increase over last year’s levels.”
Sustainability strategies
Aside from driver concerns, private fleets are under enormous pressure from state and federal governments and internal corporate pressures to reduce their carbon footprint. In fact, environmental sustainability efforts continue to be a top priority for the vast majority of private fleets, with nearly three-quarters of the respondents reporting investing in greening initiatives.
This is down from last year’s 88% of respondents reporting that they had implemented an environmental strategy. By way of comparison, 63% of private fleets indicate they were involved in green fleet technologies 12 years ago.
Typical “greening” initiatives and strategies most prominently mentioned were captured in the survey. Of note, each of the three leading tactics—trailer skirts, speed governance and anti-idling—maintain significant penetration, not to mention top billing for the past four years.
“Alternative power plants continue to comprise a small, but growing fraction of the overall market,” says Petty. “In fact, only 17% of the Class 8 respondents report that a portion of their fleet is powered by a fuel source other than diesel.”
Combining all Class 8 power units into one pool, 95.3% are diesel powered compared to 98.3% last year. This metric will change dramatically in the next few decades, many fleet managers say.
In fact, to help its members prepare for a net zero energy world, NPTC has joined the Clean Freight Coalition (cleanfreightcoalition.org), an advocacy alliance of truck transportation stakeholders, including national trade associations, committed to a clean energy future for the trucking industry.
In addition, NPTC has an affiliation agreement with the North American Council for Freight Efficiency (nacfe.com). Under this agreement, NACFE will serve as a resource to NPTC in navigating pathways to a net zero energy transition.
Article topics
Email Sign Up
Related Slideshow
