The debate over whether or not to outsource a company’s private fleet operations to a third party has been going on for decades. The arguments in favour of outsourcing are fairly well known. In fact, they are so compelling that they make you wonder why any manufacturer or distributor in North America runs a private fleet.

The arguments are usually based on the following rationale.

• Companies should stick to their core competence and allow the professional truckers to run this non-core operation.
• Many manufacturers and distributors cannot run balanced operations. Due to inherent inefficiencies, they should outsource these functions to companies that can manage them much more efficiently.
• Companies that have small to medium sized fleets cannot achieve the economies of scale in terms of leasing costs, maintenance costs and fuel costs to run an efficient operation.
• Many private fleet operators lack professional trucking management expertise and effective information management systems to run an effective operation.
• The skyrocketing costs of fleet insurance make running a private fleet cost prohibitive.
• It is more difficult for private fleet operators to provide their drivers with the quality of training that one would find in a top tier trucking company.
• A highly qualified 3PL or full service trucker can provide a host of “value added” services in addition to trucking thereby making the outsourcing value proposition that much more appealing.

The fact is that there are still many private fleets operating in North America. Private fleets represent forty-five percent of the $700 billion motor carrier market, the largest segment of the industry.

Let’s look at the rationale for maintaining a private fleet. They typically follow this line of thinking.

• For many companies, their private fleet fills a niche in their portfolio of transportation services that include dedicated contract carriage and for hire trucking.
• A private fleet allows a company to provide its most important customers with a higher level of service than one can expect from a third party provider.
• It allows the company to control its inbound flow of raw materials and the outbound flow of finished products on its own assets.
• The company’s private fleet ensures that there is capacity available for its key customers.
• Savvy private fleet operators are moving “blended” operations that include their company’s products and products from sister companies and even competitors.
• Private fleet operations can be tailored to the precise delivery windows of its customers, a service that some LTL carriers are less able to provide.
• These operators are more flexible than for hire trucking companies and are in a better position to handle returns and redirected shipments.

It is clear from these two sets of statements that there is a good rationale for both positions. The ultimate decision has to be based on a combination of economic and service requirements. If a company can provide a superior value proposition and achieve differentiation, at a competitive cost, by maintaining a private fleet, it should do so. If it cannot and is challenged in terms of empty miles, inefficiencies, lack of professional management and higher than necessary costs, the outsourcing option is one that should be considered.