"When you're having these face-to-face meetings to discuss the details of a potential arrangement, it's important that the 3PL bring to the table a well-thought-out implementation plan. Don't just let them sell you on a concept. Make them come in with a detailed plan as to how they will handle the transition or start-up, as well as what resources they will make available. You need to take into account the start-up process as a separate element from the ongoing implementation," Cook points out.
Major Private Fleets Considering Dedicated Contact Carriage: Study
Creating or maintaining relationships with dedicated contract carriage (DCC) providers in today's highly uncertain business environment is a high priority for virtually all heavy private fleet operators, according to a study conducted for 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 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," says Bennett Hirsch, president of SB Hirsch.
"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."
Participants in the study conveyed a clear picture of what private fleet users believe constitutes a successful DCC alternative to private fleets. Carrier flexibility, commitment to high levels of service, low damage rates and cost effective services lead the list. Several respondents pointed out dissatisfaction in working with DCCs that required the client company to fit into their business model, not the other way around.
The industry executives surveyed articulated how DCCs utilizing owner-operators are often able to provide greater flexibility, while at the same time maintaining comparable levels of service and corporate identity standards as compared to asset-based DCCs.
Of equal importance is confidence in the DCC carrier's management, conducting quarterly or semi-annual business reviews involving the carrier and customer, carrier support for customer-directed changes and also continuous improvement through such practices as enhanced routing and increased backhaul, in addition to other cost savings achieved through broader transportation management.
According to Hirsch, these customers indicate that a substantial percentage of current private fleet shipping volume is in a position to migrate to DCC operators within the next three years. However, even in settings where no plans exist to increase utilization of outside fleet capabilities, virtually all participants want to maintain an open dialog with DCCs.
Through these ongoing conversations, shippers want to benchmark and learn from the experience of others, as well as to continue to assess whether DCC performance is superior to private fleet operations. Shippers have indictated that they also want to be prepared in the event corporate management should make a strategic decision that impacts shipping activities.