The massive pandemic-induced supply chain disruption led countless organizations to rethink their transportation strategies. For many, this meant an increasing reliance on private fleet transportation to gain control and de-risk their supply chains.

While fleet transportation has traditionally been viewed as a cost center, it is now increasingly seen as a potential competitive weapon. Optimization, particularly in an inflationary period, can drive cost absorption and offer a strategic advantage.

This rise in private fleet transportation has been significant, contributing to a decline in for-hire volume and rates. Private fleet insourcing, along with the consolidation of less-than-truckload (LTL) shipments into truckload, have driven this trend. At the same time, thousands of private trucking firms have exited the market, prompting more companies to expand their private fleets.

Cost absorption in transportation management requires spreading expenses across operational activities, increasing efficiency and reducing costs. Private fleet transportation offers greater cost control through more efficient routing, scheduling and loading. Metrics such as cost per mile and delivery failure rates are key indicators of a company’s ability to realize transportation cost absorption. For example, optimizing routes to reduce delivery failure rates leads to substantial savings.

Inflation is driving up costs across the board: fuel, labor and fleet maintenance. But companies that efficiently absorb these costs will gain a competitive advantage. Strategies for cost absorption and optimization include revisiting “over-serviced” customer accounts, leveraging technology for optimal routing and reducing empty miles through better load management.

By leveraging data analytics and state-of-the-art routing software, companies can improve efficiency, reduce waste and increase internal and external backhaul opportunities.Transforming fleet transportation from a cost center to a strategic advantage requires innovative thinking and a data-driven approach that spots opportunities in “what if” scenarios.

Read on to see how forward-looking fleet operators can face inflationary challenges head-on while improving operational metrics.

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