To truly understand today’s dedicated transportation model, you need to look at it through four lenses.
The lens of cost stability
Too often companies evaluate dedicated transportation by asking whether it will be cheaper than their current transportation model. However, this question misses some of the key structural issues. Rather than being designed to reduce costs, DDC is designed to provide cost predictability. Consider what happens when capacity tightens. Companies are forced to rely on expedited freight in order to meet customer demands. The problem is that expedited shipments are more costly — sometimes two to three times more than standard contracts. Switching to a dedicated transportation model reduces this exposure because the dedicated provider can flex up fleet size to accommodate need and then reduce the size once the need has passed.
The lens of risk transfer
There is a great deal of risk associated with operating a fleet. This includes driver recruiting and retention, workers’ compensation exposure, safety compliance management, equipment lifecycle management, and labor scheduling and disruption coverage. The dedicated carrier assumes many of these risks while allowing a company to maintain strategic control over its operation.
The lens of operation control
Many companies erroneously believe that switching to dedicated contract carriage will reduce flexibility; the reality is that the opposite is often true. DDC typically brings a more disciplined approach to the transportation function through KPI-based performance management, visibility into service metrics, escalation protocols and continuous reviews to optimize performance. This often leads to improved service reliability, clear escalation channels in the event a problem occurs, and greater network visibility.
The lens of misunderstanding the model
While it is important to know what DDC is, it is equally important to know what it isn’t. Dedicated does NOT mean:
- Shared fleet services
- A fixed number of trucks which sometimes sit idle
- Infrastructure dependency
- Reduced flexibility
DDC is an engineered operating structure designed around the shipper’s freight network. Capacity is structured to match freight demand patterns. Reviewing DDC through these four lenses can lead to a better understanding of the benefits of the DDC model of transportation.
