Outsourcing private fleets is one of the most misunderstood elements inside the transportation market and one that can have numerous benefits for those who choose to engage it. Cost reduction, capital redistribution, added control with larger platforms and information improvements are just a few of the areas a business can expect positive returns when they trust a transportation specialist with managing their logistics and fleet activities.
Of the many questions we receive in this regard the most common question we get while discussing the last-mile transportation outsource option is:
“What’s in it for me?”
This article will explore the 6 most common questions we receive when it comes to delivery fleet conversion from private into an outsourced model and the views we share with those who are considering this misunderstood yet highly beneficial business partnership practice.
1. "Why should companies consider outsourcing last-mile logistics?"
Companies that focus on their core business and leave the management of transportation and last-mile logistics to specialists who perform in this space very well are more likely to attain service excellence for their clients while reducing costs and growing bottom-line factors.
There are many complexities to managing transportation logistics that contain lessons learned and involve expensive resources with large liabilities. Companies like FAST4WD avoid many of the mistakes that can be made and can reduce hidden costs in the process. Mistakes that can be very costly under the right circumstances.
2. “Well wait! If we outsource these fleet activities, we’re going to be losing some of our drivers?”
When you do go through a private fleet conversion, the company that is assuming responsibility for that fleet really should see it in their best interest to try and keep those drivers. Their knowledge is very precious and if they have track records that are positive and they meet the criteria of applying for a position with FAST4WD, clearly we would look to maintain those drivers and bring them along as part of the conversion.
3. "What specific advantages are we getting out of going through this conversion?"
The first factor to consider is the cost factor. Companies that outsource fleet activities remove restrictive capital allocations for so many costs associated with this segment of business such as vehicle procurement, insurance, fuel, technology, maintenance, repairs, wages, benefits, taxes, risk and other direct costs as well as hidden expenses such as human resources, compliance and administrative spend. Refreshing the fleet so that it is up to industry and safety standards along with the capital absorbed in that process is another area to consider.
All these reserved resources restrict businesses from allocating this spend into areas with better returns such as revenue generating areas.
What could an extra $1,000,000 in sales and marketing budget mean for your business?
4. "There must be some technology advantages that I can expect if I convert my fleet. Is there?"
Technology is the platform that enables us to do all that is required in the transportation world. Everything from creating visibility for receivers to follow their shipments, to track and trace, legal compliance and retention all the way to the optimization and knowledge around where our truck is at all times. All of this is a part of the technological requirements for an efficient fleet. Consumer and fleet managers requiring “real-time” information in all aspects of the shipping cycle is an additional requirement and transportation management companies are specifically designed to provide these technological abilities.
This element alone can often be cost prohibitive and many companies just do not have the resources or large enough service field to justify these technologies in their private fleet.
Outsourcing to a partner like FAST4WD provides this technology within the scope of the conversion.
5. "I’ve decided to outsource. What do I do with the assets I have?"
One of the many advantages to outsourcing your fleet is reduction in your corporate liabilities. The assets in your holding are no longer required to be on your company’s books. You no longer have to be liable for those assets or the many costs attached to them.
So what do I do with them?
There are options like lease takeovers, lease-back or purchase option, buyouts negotiated directly with the partner company that you are converting the private fleet with and of course disposal through fleet asset liquidation or private sale.
At the very least, companies that are converting will put a cap on any losses for those assets at the cost of disposal and never be faced with unexpected drains on company capital that is attached to those assets going forward and can also lift reserve funds set aside for them as a result.
6. “Is my company the right kind of company to even consider this sort of thing?”
Are there any characteristics of the best kind of company that should be considering outsourcing their private fleet as opposed to trying to manage it themselves?
Many things get in the way of companies optimally maintaining their own private fleets and in addition to this, quality transportation partners like F4 do have expertise and technologies to optimize how that fleet runs. Transportation professionals have a corporate foundation built on proven performance indicators to assess and continuously improve the performance of that fleet in order to provide more efficiency, lower cost and a faster time to market for that company’s customers.
Small and mid-sized companies should absolutely consider this as a top priority option.
Unless you really are a behemoth company and can really roll with the punches that daily life in transport can bring such as vehicle collisions and accidents, on-road breakdowns, replacement vehicles and drivers, and fuel costs which we all know spike and then cycle back down and spike back up again – many companies can’t absorb these types of cyclical increases or surprise events.
These aspects of the transportation business including non-direct expenses in human resources and other support departments require significant capital outlay, continuous improvement strategies and persistent planning in order to manage effectively.
In addition, the technology required to ensure excellent execution of the system you put in place while limiting exposure and risk, monitoring performance, the recovery and backup plans necessary while actively reducing environmental impact is quite the heavy workload.
So for these reasons any company that is mid or small sized, that has a private fleet should absolutely consider outsourcing to a last-mile transportation partner like FAST4WD and the many other excellent providers in the industry and make the private fleet conversion option a top priority.
