A consumer products manufacturer wanted to know if its private fleet was performing at its optimum level and whether the fleet was saving the company money. Business Logistics was contracted to conduct an evaluation of the fleet to make this determination and to consider any alternatives that might be more effective.
We began by collecting operating and cost information for the company’s fleet of trucks. Our consulting team provided the client with a checklist for the purpose of recording the various costs associated with operating a truck fleet, including often-overlooked items such as depreciation, maintenance, taxes and license fees, insurance, driver’s wages, overtime, and benefits. Detail pertaining to operations (geographic operating range, hours of service, miles driven, number of loads delivered and picked up daily, shipment weights, services performed, etc.) was captured from shipment logs that we provided in order to establish a view of the fleet’s ongoing business activities.
Our initial analytical segment compared each vehicle/driver combination against the others to identify variances in productivity and performance. This segment pointed out that certain units were “under achieving” when compared to other vehicles and to their realistic potential. We also found that the client’s shipping department was giving loads to common carriers that the private fleet could have handled, thus saving unnecessary freight charges paid to outside carriers.
The second segment of our evaluation compared the clients’ fleet costs to the costs that would have been incurred had the client not had a private fleet but used for-hire transportation services instead. Business Logistics presented this segment to the client in a customized mock “Profit and Loss” statement format on a truck-by-truck basis which highlighted the fact that only half of the client’s vehicles were contributing to the profitability of the company while the other trucks were draining profits.
Business Logistics’ recommendation in this case was to replace a portion of the private fleet with dedicated for-hire transportation services on a contractual basis and to re-structure delivery routes and shipment assignments for the remaining trucks so as to optimize their service value and financial contribution. The client was able to reduce annual freight expenses by 30% by doing so with no loss in service quality.