Evaluating the Need for Dedicated Fleets in the Era of Digitalized Transportation

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By Mark Kunar, EVP, Strategy, Transportation and Automotive, Engineering and Manufacturing, Chemical and Energy, DHL Supply Chain, North America - 11/04/2020

Shippers may feel like they are being pulled in two different directions when it comes to dedicated fleet solutions. 

On one hand, they are seeing a technological revolution occurring in transportation management. More robust TMS platforms supported by business intelligence tools, tracking systems and online brokerage platforms are creating new opportunities to increase utilization, improve customer service and reduce costs. Seeing what’s now possible, they may wonder if dedicated fleets will be necessary in a digitalized transportation environment.

On the other hand, their customers continue to reduce physical inventories and prioritize the value of on-time performance and driver services many contract carriers can’t support. Can they really afford to abandon their dedicated fleets without jeopardizing valuable customer relationships? 

Plus, leveraging the full benefits of digitalization is a difficult proposition for shippers managing their own freight. It requires a huge investment in technology—no single platform delivers all of the necessary functionality—plus the ability to integrate platforms and the technical expertise to get the full value from those tools. 

At DHL Supply Chain, we’ve made the investment in people and technology required to deliver the benefits of digitalization and we continue to see an important role for dedicated capacity in many networks. 

But how that capacity is delivered and managed is changing. Dedicated fleets aren’t being made obsolete by digitalization, but they can be made better by it. Here’s how we are doing that.

Planning Holistically

The first step is finding the right role for dedicated capacity within a particular organization. This is best accomplished by taking a holistic view of transportation to align resources with customer needs. It should also include a thorough examination of the current network using advanced network design tools to ensure dedicated routes, when required, are optimized for efficiency. 

This can be delivered as a stand-alone service or as part of a Lead Logistics Partner (LLP) relationship. Working as an LLP, DHL Supply Chain can leverage our full suite of transportation solutions and engineering expertise to truly optimize network design and management. Supported by our global control towers, our LLP service provides the scale, flexibility and technology required to optimize the total transportation spend, including dedicated fleets.

Within this context, it becomes clear where dedicated fleet solutions are required and where customer needs can be met in other ways. High-value customers with inflexible delivery requirements or those requiring high-touch services naturally emerge as those where dedicated capacity delivers the best value. 

Prioritizing People

Traditionally, when shippers thought about dedicated fleets, they turned to asset-based carriers. It seemed obvious that if you needed dedicated capacity, you went to the people who owned the trucks. That’s no longer the case. In fact, it can create an incentive to look for opportunities for dedicated fleet services where they aren’t needed.

Today, the focus is on drivers. Within the current environment, where high-quality drivers capable of representing your brand are at a premium, driver quality is key to the success of a dedicated fleet. Any 3PL can lease trucks, but not all can recruit and retain the quality of drivers required to support dedicated fleets. 

DHL Supply Chain has a proven record for driver recruitment and retention. We have a disciplined and sophisticated approach to talent management that extends from drivers to technology specialists, ensuring you always have the capacity and expertise you need.

Eliminating Inefficiencies

There’s a perception that dedicated capacity comes at the expense of efficiency, but the efficiency gap between dedicated fleets and other transportation services is closing. 

The big opportunity, of course, is in capacity utilization. The combination of technology and capacity has allowed DHL Supply Chain to minimize the number of trucks returning empty after making deliveries, significantly enhancing the efficiency of dedicated routes. 

Optimization also extends beyond capacity utilization. Strategies like daily dynamic routing, driver utilization during non-peak periods and route optimization all contribute to greater productivity of a dedicated fleet and increase the cost competitiveness of the solution compared to other transportation services.

There is a clear role for dedicated capacity in many organizations and digitalization is improving how dedicated fleets are managed. Customers that demand the highest levels of predictability and service will continue to be best served by dedicated fleet solutions. With high-quality delivery services, proof-of-delivery technology and sophisticated tools for routing and capacity utilization, DHL Supply Chain Dedicated Fleet Solutions simplify transportation management and provide cost certainty and enhanced service.

 

For more information on DHL Transport Solutions and how we think beyond today’s shipment for our customers visit: http://app.supplychain.dhl.com/e/er?s=1897772577&lid=6255.

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