5 Ways Carriers Benefit From Contract Logistics
Estimated reading time: 4 minutes
Dedicated trucking—where a group of drivers and equipment are assigned exclusively to a chosen set of lanes or facilities—is likely the way of the future. We’re seeing an increasing number of truckload carriers adding dedicated options to their fleet capacity services as a way to ease volatility in the ever-changing freight transportation market.
It’s not hard to see why. Smart shippers, third party logistics companies (3PLs), and carriers recognize the long-term advantages of dedicated logistics, and many are establishing contracts now to set themselves up for future growth. For shippers and 3PLs, dedicated operations help guarantee available capacity at a fixed price throughout the year—even during peak seasons. For carriers, dedicated freight allows them to maintain consistent business year-round and avoid cyclical spikes.
While shippers have conducted RFPs for years, many 3PLs are increasingly offering dedicated freight in the same way by passing contract opportunities through to their carriers. Because of this, carriers are relying more and more on a blend of 3PLs to ensure access to year-round freight.
We’ve written in the past about how dedicated solutions benefit shippers; now, let’s take a look at five advantages for carriers.
1. Steady demand leads to better planning. Freight transportation is notoriously seasonal and cyclical, which creates high variability in demand for trucks. On top of that, unpredictable circumstances—such as extreme weather, labor union strikes, or sudden shifts in consumer trends—can lead to further volatility. Truckers have high fixed costs, so implementing contracted freight is a way to smooth out fluctuating demand and better forecast revenue. 3PLs that have access to a vast pool of shippers add value by providing flexible levels of dedicated opportunities based on capacity a carrier has at a given time. On dedicated runs, carriers know exactly what type of equipment they’ll need and how much money will be earned, which leads to better planning and more efficient asset utilization throughout the year (Logistics Management).
2. Fleets can focus on improving operations. Because pricing and asset procurement are essentially taken out of the equation, dedicated fleets can put a greater emphasis on perfecting their operations—things like minimizing delays, reducing empty miles, implementing drop trailer programs, maintaining equipment, etc. Built-in familiarity leads to operations that feel, in a sense, automated. In addition, a steady flow of income allows carriers to more confidently invest in business growth. For example, if they know money will be coming in, they may be more willing to take out a loan that allows them to increase their fleet size.
3. It helps with driver retention. Placing drivers on dedicated lanes is a great incentive, as regular runs provide a certain level of stability that’s hard to come by in the trucking industry today. With government regulations like the ELD Mandate on the horizon, keeping qualified drivers happy is especially important. Dedicated routes are consistent, predictable, and often shorter, allowing for more home time and work-life balance (Logistics Management).
4. Carriers can become experts in a particular niche. With repetition comes expertise. A dedicated fleet has a unique opportunity to focus on a single type of shipment and build credibility in that area of expertise—whether dry loads, poultry shipments, food safety, temperature-controlled trailers, flatbed equipment, or something else. Establishing a niche is a great way for carriers to set themselves apart from competition and earn business from customers in a particular industry segment.
5. Repeat business creates lasting relationships. Dedicated business tends to be longer term, without the typical 15-20 percent annual turnover rate that occurs with spot freight (Logistics Management). Because of this, carriers can make real connections with their customers. Receivers look forward to seeing the same drivers arriving at their facility week after week, and this ultimately leads to contract renewals and lasting relationships.
Carriers that make long-term investments in dedicated trucking can reap major benefits, and we can help you get started. Carriers in the Capstone network have access to freight opportunities from the largest shippers in North America, accelerated payment terms, and a team of experts committed to providing hyper-focused freight matches and continuous volume. Contracts are tailorable and dynamic, meaning we’ll work with you to set up a solution that makes sense for your business.
Whether you’re looking for a contract logistics provider to bring you long haul, short haul, dry, or temperature-controlled opportunities, signing up with us is quick and painless.
Contact our team of contract logistics experts to see how we can provide steady, year-round business, or request to be included in future RFPs.