Guest Commentary: Dusting Off Dedicated

Just before the holidays, I received a letter from a very kind gentleman, a collector of replica trucks decaled by many of the well-known carriers and transportation providers in our industry. And yes, you guessed it, his Christmas was going to be ‘just perfect’ if he could get a replica Ryder truck to complete his extensive collection. I was much obliged to fulfill his request, and it got me thinking about all the ups and downs we’ve seen in our industry in the past two years. We’ve got capacity, we don’t have capacity. Customer service, seasonal flexibility, safety and the new CSA 2010 standards, card check legislation, carbon emissions and new engines, and…well, the list goes on. Simply said, trucks are not only important to this collector, they have come to mean a lot to our country, our livelihoods, and our economy.

Shippers have a wide range of transportation service options available to them from logistics companies, including transportation management, dedicated contract carriage, freight brokerage, load planning, order management, intermodal, and many others. We’ve evolved from “Which one is best?” to “What strategy for the transportation options is the best?” In fact, many companies are choosing something of a hybrid or an integrated services model – blending Dedicated Contract Carriage, to achieve optimal service and resource utilization, with Transportation Management and Brokerage for flexibility as demand shifts and changes, especially during seasonal times. Regardless of the mix, the case for outsourcing transportation services is more compelling today than ever before.

With the introduction of CSA 2010, the advantages and disadvantages of owning a private fleet have been pushed to center stage again. Companies are compelled to evaluate whether ownership really makes sense as safety and risk management have re-emerged as Boardroom priorities. While outsourced Dedicated Contract Carriage can feel like an ‘all in’ alternative, it really does address the often administrative and burdensome activities around vehicle maintenance, driver recruiting and training, insurance and security. And when it comes to the safety performance of drivers, many private fleet owners face a moral imperative, as accidents and other incidences create risk, danger and have steep penalties.

In the recent recession, if there’s one lesson that the financial press has preached, it’s that cash is king. With capital tied up in private, aging fleets and the unforeseen maintenance costs they incur, coupled with the rapidly rising driver salaries due to the driver shortage, companies should consider turnkey leasing or Dedicated Contract Carriage as an alternate strategy. The right network strategy can even improve the day-to-day cash flow and inventory turns by taking ‘whole days’ out of the order-to-delivery cycle, and also allow for more flexibility in production or manufacturing.

What’s perhaps most interesting across all of these topics, is that despite the incredible innovations in technology–from GPS tracking devices, driver and truck monitoring systems, and sophisticated route design software–one thing has endured, and that’s the pivotal, critical role that customer service plays in any transportation solution. Customer service, many of our clients would argue, is the single biggest legacy of our industry. In almost every setting where a truck is being used to transport goods to market, the driver is the “face to the customer.” Drivers are the ambassadors of a company’s brand, the brokers of the relationship. Your customers soon realize that the delivery service is dependable and predictable, and this allows them to focus their energy on other areas of their business.

Maintaining these types of customer experiences can be tricky, so let me share a few insights on the types of service and delivery models that lend themselves well to an outsourced transportation solution:

  • High or exacting service levels are present, such as tight delivery windows and short order-to-delivery commitments;
  • Goods that need to be transported in specialized equipment, such as large, expensive industrial equipment, booms and cranes that come with their own set of high safety requirements.
  • Products that need to be handled with extreme care (e.g., glass distribution or liquid gasses);
  • Product that requires specialized handing and unloading in a specific manner either at the point of origin or destination (e.g., stocking shelves at a retailer location).

These characteristics typically translate into a need for specialized, highly skilled and trained drivers to handle the product and related safety concerns very carefully. In addition, pre-trained back-up drivers can provide much needed coverage for Paid Time Off and seasonal periods. Without back-up driver options, private fleet owners are often forced to maintain a higher than needed driver count.

As we all look towards 2011 with high expectations for a prosperous new year, and just like the gentlemen who wrote to me with his Christmas wish of a Ryder replica truck, now may be a good time for business owners to take a new look at their transportation function and see what they really need to complete their collection.

Dan McHugh is Vice President of Business Development for Ryder’s Dedicated Contract Carriage (DCC) business segment. In this role, Mr. McHugh is responsible for supporting NAFTA-related sales efforts and developing the DCC division. Mr. McHugh most recently held the position of Group Director in Ryder’s DCC operations team, where he ensured the successful implementation of DCC services for key Ryder customers. In his 16 years of service with Ryder, he has demonstrated a proven track record of results.

Leave a Reply

Your email address will not be published. Required fields are marked *