>Gary Petty, president and CEO of the National Private Truck Council (www.nptc.org), a trade association for private corporate trucking fleets, explains how private fleets are coping with the same problems as their common carrier brethren.
LT: Common carriers are having a difficult time finding and hiring drivers. Is that true for private companies as well?
Petty: Driver shortages are not affecting private fleets at the depth and breadth of those impacting trucking in general. There is a huge disparity in the annual driver turnover rate of for-hire companies as compared to private fleets. National statistics on for-hire annual turnover rates are in the 120-135% range. In the private fleet market, the range is 11-16%. Private fleets have more drivers in service for longer periods of time, which I attribute to the quality of the job life, higher level of pay, typically shorter runs, and more driver care and feeding programs. [Editor's note: Some private fleets reportedly pay their drivers $70,000 per year.]
Most private fleets have runs less than 250 miles. For many the typical run is 50-60 miles. They might have seven or eight stops a day to customers they know well, shippers that depend on the drivers for customized, just-in-time, expedited service who are really integrated into the customer's culture.
LT: Hours of Service regulations have been playing havoc, particularly with truckload carriers. How have private fleets reacted to them?
Petty: Private fleet managers have been able to identify more productivity as a result of the HOS rules. They are working with customers to get product in and out efficiently. Private fleets, unless they're affected by the sleeper berth rules, are fairly pleased with the results.
LT: Insurance rates seem to be climbing without stop. What have private fleets done to combat them?
Petty: The short answer is that the private fleet driver position is a premium position, attracting and retaining good people. They have tremendous safety records, part of which is the result of being in service year in and out with the same company and being subject to very high standards of safety and performance. The drivers get better every year and the payoff for the companies is the consistency of quality service.
Statistics show that drivers with less than two years of service are at greatest risk for an accident. The driver beyond two years in the service of the same company — doing the same route or familiar workday in and out — is statistically a safer driver.
LT: Is there a standard for return on investment that a company looks for in operating a private fleet?
Petty: One standard is profitability. A third of our private fleets operate as profit centers. The standard might be a well-managed cost center that focuses on service and builds its cost into pricing of the product. Too, the private fleet might function as a for-hire entity as well, that sells excess capacity to the market. At least 40% of our member companies are also in the for-hire business.
LT: Are private fleets adopting wireless on-board technology?
Petty: I have seen in the past five years a tremendous ramp up and interest in on-board technology. One of the challenges for trucking in general is that drivers don't like to be monitored. I think that's less the case for drivers who feel they have long-term security with the company. They tend to feel they have nothing to hide, that there's no incentive to mess with the logbooks or to compromise the integrity of the operation. They are paid well to do a good job and there's a lot of built-in incentive to run a truck in a safe and efficient manner.
I know a lot of private fleets that would not operate as private fleets if they weren't able to track on a per-run, per-day calculation of their costs, using all that captured data on every minute trucks are on the road.
The challenge — and it's one of the things we focus on as an association — is getting management to be aware of the entire range of available technology and to become at least conversant about these market offerings and how to use them.
LT: What about fuel costs?
Petty: Obviously private fleets are picking up the costs, so if there's a 50% increase in fuel prices there's not a lot that can be done about it. However, there is a lot more attention being paid to tire pressure and some monitoring of the operation of the engine — idling time, and so forth.
In any fleet 7-8 % of the drivers will be indifferent practitioners of fuel economy. You can single those folks out pretty quickly. But you're not going to bring down that dramatic cost in diesel fuel. You can winnow it down a little bit, but in addition to fuel price rises there are costs for problems in highway infrastructure, among other things. All of this leads to the obvious conclusion that the cost of goods and services continues to rise proportional to the cost of getting shipments from here to there.
Gary Petty, National Private Truck Council