Dedicated Trucking Business Is Boosted by a Driver Shortage
Because there is a shortage of truck drivers right now, the retailers and supermarkets that depend on them have to turn to dedicated-fleet services instead.
Several carriers, among them J.B. Hunt Transport Services Inc. (JBHT) and Werner Enterprises Inc. (WERN), are benefitting from this trend. These dedicated-fleet services, which are offered by carriers that set aside a fleet for certain customers, are very popular right now because people who need to ship items are dissatisfied with the uncertainty associated with getting their hands on shipping vehicles.
The benefits of these services include cost control because shippers are charged the same amount regardless of how much is in the truck. They also do not have to deal with expenses associated with repairs or accidents that they would have to deal with if they owned their own fleet.
Increase in Driver Hiring
J.B. Hunt recently announced increased driver hiring because of increased demand for dedicated-fleet services.
Proof of an Expanding Business
Even though the dedicated-fleet service segment of J.B. Hunt is growing, the company experienced an overall growth slowing in the third quarter. A spokesman for the company says that the slowed growth is likely because of the still struggling economy. Although the country's GDP grew more than economists forecasted in the third quarter, it is still below the average recorded in the five years prior to the recession.
In J.B. Hunt's dedicated fleet, its number of trucks grew in the third quarter, which was as expected. Werner Enterprises expects that eventually, one-third of its money will come from its dedicated-fleet services.
Operations Can Be Burdensome
Shippers find that operating a fleet of their own can be a burden, according to industry insiders. The Federal Motor Carrier Safety Administration recently drafted new rules and is in the process of enacting still more that will be overseen by the Department of Transportation. Shippers are not thrilled about changing in order to adhere to these new regulations.
Qualified drivers are difficult to find for a number of reasons. There are rules that make it difficult for shippers to hire and drivers have had to find employment elsewhere. Many of them enter the construction field. This trend seems to be moving faster, which could exacerbate the problem. However, working for a dedicated-fleet service is attractive to many drivers because they will have a standard route that they will drive every day or every week. This helps ensure that they will be home more often.
Some shippers find using dedicated-fleet services to be cost-prohibitive. However, grocery stores and retailers like to have them available if they need to increase their shipping capacity quickly. There's also a growing sense of urgency in the industry to go this route, which is boosting the popularity of dedicated-fleet services.
Customers are beginning to research this option more and more, and many of them are deciding that the benefits far outweigh the negative aspects. A lot of companies believe that if they don't have to take on the headache of keeping up with their own fleet of trucks, they shouldn't.