Inland Distribution

Special Report

US shippers expanding private truck fleets to haul more of their own freight

By William B . Cassidy

US shippers are shifting more freight from for-hire trucking companies to their own tractors and trailers despite a shipper-friendly freight market in terms of carrier pricing , a survey shows .

The survey , conducted by the National Private Truck Council ( NPTC ), indicates that continued pressure to keep for-hire truckload pricing flat heading into 2025 is likely and shows shippers more effectively using their own capacity in broader strategic and tactical lane-bylane levels .

The survey , released in late August , shows a growing number of the shippers surveyed are using private fleets — in-house trucking operations run by shippers — as leverage in contract talks with for-hire trucking companies . In its annual benchmarking survey , 62 % of shippers operating private fleets told the NPTC they expected to add equipment to their trucking operations in 2024 . Much of that equipment would replace older vehicles , but 14 % on average would be dedicated to expansion , shippers said .

“ This reflects not only favorable winds blowing through the economy , but the fact that companies are leaning on in-house transportation to strengthen control over their supply chains ,” NPTC Executive Vice President Tom Moore said during a press briefing .

In total , 65 % of the shippers surveyed said they used their private fleets as leverage in contract talks with forhire carriers , up from 50 % in 2023 .

The NPTC survey lends weight to other studies and data that show increasing use of private fleets . The NPTC ’ s data shows the volume of freight hauled by private fleets has been growing year over year for the past 10 years .

Businesses surveyed by the NPTC for this year ’ s report have increased the number of shipments moved by their private fleets by 8 % compared with a 4.6 % increase in 2023 , according to the report .

Valuable assets

In 2022 , at the height of pandemic disruption , shipments handled by private fleets were up 10.3 % year over year , the NPTC said . The COVID-19 pandemic was a tipping point , according to shippers that participated in the press conference .

“ During COVID , it was valuable to have the private fleet on our books ,” said Mike Schwersenska , general manager at Brakebush Transportation , a private fleet and frozen poultry company . “ Shipments that cost us $ 5,000 [ when moved by the in-house fleet ] were as high as $ 15,000 in the for-hire market .”

That type of cost difference catches the attention of CFOs and CEOs quickly , said Cassie Wood , transportation manager for Packaging Corporation of America ( PCA ).

“ The private fleet is saving us money ,” Wood said . Overall , PCA was able to keep its transportation costs steady during the pandemic , “ but that ’ s because the private fleet helped pull some of our costs down ” while forhire rates rose , she said .

Still , the leading reason shippers operate private fleets remains service , according to the NPTC survey .

Out of the 121 companies surveyed , 49 % said improving customer service was the key reason to have an in-house trucking operation , while 20 % cited controlling transportation costs and 13 % noted enhancing control of their supply chain .

Those secondary factors are becoming more important , however , Moore said , and that ’ s affecting how shippers use their in-house truck fleets . Private fleets are taking a growing share of inbound as well as outbound transportation , he added .

“ I think we ’ ve reached an inflection point ,” he said . “ In the past , private fleets flexed up and down based on the availability of for-hire capacity .” Now , they ’ re growing whether for-hire capacity is tight , as in 2021 and 2022 , or readily available , as in 2023 and 2024 .

PCA provided an example . “ We had to take control over some of our inbound transportation ” early in the pandemic , Wood said . “ We can ’ t make boxes without raw materials , so we found synergies with our private fleet .”

Prior to acquiring a location with a private fleet in 2013 , “ Packaging Corporation of America didn ’ t want to have anything to do with transportation ,” Wood said . “ Now , every plant across the PCA network wants its own [ fleet ].”

email : bill . cassidy @ spglobal . com

More than 60 % of shippers surveyed that operate private fleets expect to add equipment in 2024 . StandbildCA / Shutterstock . com

40 Journal of Commerce | September 23 , 2024 www . joc . com