Sitting trucks cost your business money, so why not look into dedicated freight?
Do you have times when your company’s trucks aren’t moving? Are you tired of working for different people, transporting different kinds of freight, and your drivers running different routes every day?
For carriers looking for consistency in their schedules and stable revenue, dedicated freight is the key to keeping your trucks moving, developing strong business relationships, and steady earnings.
What is Dedicated Freight?
Dedicated freight is a contracted arrangement between a carrier and a shipper or freight broker. This differs from spot freight because the carrier agrees to haul consistent truckload shipments in the same lane and at a fixed rate for a specified amount of time – often three to six months or a year. Contract or primary freight are other names for it.
In a dedicated contract, the carrier commits a certain amount of their driver capacity to the shipper and often must meet minimum service requirements, like on-time pickup or tender acceptance, to keep the lane. In turn, the shipper commits a certain amount of consistent freight to the carrier, with usually at least one load per week. Unlike fluctuating spot rates, contract rates stay the same, excluding any fuel changes.
Is Dedicated Freight Pay Better?
That depends on the market.
If it’s a “carrier’s market”, one in which there is more freight available than carriers, the spot market often pays a higher rate than dedicated.
If it’s a “shipper’s market”, one in which there are more carriers than freight available, then the spot market often pays a lower rate than dedicated since its pricing is locked in over the length of the contract.
The biggest takeaway with dedicated freight is its consistency. Dedicated freight is steady freight with a locked-in rate, so you’ll have stable revenue, no matter the market conditions. Because of this, most carrier businesses aim to have a mix of spot and dedicated freight to get the best of both worlds.
How Many Trucks Do I Need for Dedicated Freight?
Many carriers think that you need to have a large fleet, but that’s simply not true. There are many companies with 50 or fewer trucks hauling contracted freight.
While there’s no set limit to how many trucks you need to handle dedicated opportunities, most find that around 15 trailers or more is what’s needed to be able to manage a shipper’s needs.
Benefits of Moving Dedicated Freight
Consistent freight to haul and a stable payday aren’t the only benefits of running dedicated freight.
Improved Driver Safety and Satisfaction
Consistent freight in the same lanes means your drivers are going to get familiar with their routes, the facilities, and the staff. They will quickly learn how to better navigate their journey, reducing their risk of getting lost, and being less prone to accidents. On top of this, they’ll gain a more predictable schedule, meaning they know exactly when they should be getting home to their families. This also means it may be easier to keep current and recruit new drivers for your business.
Happier Dispatchers
Your dispatchers will be happier too! Having dedicated lanes frees up time for your dispatchers to focus on finding tougher backhauls, keeping your drivers happy, and getting reimbursed for any accessorials.
No More Fighting Over Available Loads
Have you ever seen a load that you were ready to book on a load board only to find another carrier snagged it first? With dedicated freight, there will be no more fighting over posted shipments since the tender goes right to you.
Build Strong Customer Relationships
Working with a consistent customer means you can build a strong relationship with them and possibly gain repeat business.
More Efficient Business
Since your drivers will become more familiar with their route and freight, your business will become more efficient in the process.
Budget and Forecast Easier
By having long-term agreements for steady shipments, you can budget and forecast your company finances more easily.
Opportunities for Growth
With dedicated freight, you don’t have to worry about the fluctuating freight market. You’ll have more time to manage the rest of your business and look into growing your fleet.
How to Move Dedicated Freight with Trinity Logistics
It can be difficult to find and win dedicated freight opportunities alone. That’s why it’s beneficial to work with a third-party logistics (3PL) company, like Trinity Logistics, to easily open the doors to them.
Currently, carriers in the Trinity Logistics network move over 1,400 shipments each day. While most of what gets moved is on an as-needed basis, we constantly encourage our shipper relationships with consistent freight to try dedicated contracts.
Now, you know your business best. That’s why we have a Carrier Development Team that works to better understand your company, your needs, and your business goals. This helps you out so that when we gain a dedicated freight opportunity or bidding opportunities on behalf of our shipper relationships, we know what carrier relationships to send them based on criteria such as location, equipment type, or visibility through tracking.
So, if you’re already a carrier with Trinity Logistics, make sure your carrier profile is up to date. If you’re not sure whether yours is, send our Carrier Development Team a message at [email protected].
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Check Our Our Carrier RequirementsHow do we get supply chains back on track after years of constant disruption and setbacks? The supply chain backlogs came largely from the shock at the start of the pandemic, but even before then, there have been many supply chain vulnerabilities.
Supply Chain Resiliency: Alleviating Backlogs and Strengthening Long-Term Security
Recently, Congress met to discuss our national and global supply chains, current supply chain issues that we need to focus on now, and how to build supply chain resiliency for the long term. Congress invited individuals and organizations to come to testify, to present their views for inclusion on the topic. U.S. Senator for Delaware, Tom Carper, asked Doug Potvin, Chief Financial Officer (CFO) of Trinity Logistics to testify.
With 16 years of service at Trinity and over 30 years of industry experience, Doug sees first-hand the problems plaguing supply chains. Doug’s testimony gave the Members of this panel valuable insight into the continued problems in supply chains and how members of the Transportation Intermediary Association (TIA), like Trinity Logistics, continue to serve the nation amidst these difficult times.
Doug’s Testimony Before Congress
“ I want to introduce myself as the CFO, Chief Fun Officer at Trinity Logistics because we like to have fun when we’re working hard. Thank you for the opportunity to speak with you today regarding how policymakers and business leaders are addressing the existing backlogs in the supply chain in the short term and building more resilient supply chains in the long term. My name is Doug Potvin. I’m the CFO of Trinity, a third-party logistics company (3PL) headquartered in Seaford. I’m privileged, honored, and humbled here today representing Trinity, our association, Transportation Intermediary Association, and the entire third-party logistics industry that we serve.
We serve as an intermediary in solving the logistical needs of our shipper customers by sourcing capacity from motor carriers and vendor partners. We are proud to report today that this past year we’ve generated over 1 billion dollars in revenue, arranged over half a million shipments, and offered 350 individuals full and part-time jobs. We truly are a proud Delaware company.
From Charles Dickens, the novel, The Tale of Two Cities; It was the best of times, it was the worst of times. Season of light is the season of darkness, a spring of hope is a winter of despair. Over the last two years, the same could be said of the international supply chain and from our perspective, closer to home, the domestic transportation industry.
In March of 2020 as both domestic and international countries shut our businesses including the shutting of the port cities and operations in China and the fact most consumers were at home facing an uncertain future, freight volumes plummeted. Motor carrier capacity increased dramatically due to the steep drop in goods moving and the transportation market saw prices for motor carriers fall. In fact, Trinity Logistics was mentioned on a Facebook post that we were earning an average gross margin of 60 percent, which was simply wrong.
In addition, a small number of motor carriers came to Washington D.C. and demanded rate transparency. Interesting after the businesses, ports, and countries opened up freight volumes began to skyrocket, available motor carrier capacity tightened up, and rates paid to motor carriers increased due to reflecting the change in market conditions. Demand for rate transparency went silent.
The pricing in our industry is driven by market conditions, supply and demand. Large scale, no entity on either side of the equation has enough market share to drive rates. In addition, each shipment has its own variable considerations to take into account including everything from available to capacity in various regional markets, lead time for products, dwell time at shippers and consignees, commodities needing move, and type of equipment needed. All this happens in real-time to ensure goods get to market, keeping our economy moving forward.
Now more than ever, the role of third-party logistics professionals has become more valuable. Companies like Trinity and the other 28,000 licensed property brokers are working overtime to ensure that essential goods continue to be delivered in an efficient manner to meet our customer and consumer needs. Our industry along with motor carriers are the main component as the why during the crisis and disruption, the supply chain bent but never broke.
Trinity Logistics applauds the U.S. Senate and House of Representatives’ Bipartisan passage of the Infrastructure Investment and Job Act, a historic investment into transportation and infrastructure. We’re very pleased to see how quickly the Federal Motor Carrier Safety Administration (FMSCA) established the Safe Driver Apprenticeship Pilot Program. Trinity hopes this three-year pilot program will be successful and made permanent so individuals ages 18 to 20 will explore interstate transport careers. Trinity also believes that as the spending on the Investment Act ramps up in the near future it will provide enough support to the economy to keep the motor carriers employed as we are starting to see freight volumes pull back over the last 30 to 60 days.
Trinity would also like to thank Chairman Carper, John Cornyn, Senator Menendez, and Senator Tim Scott for the support in offering legislation and getting the Senate to act unanimously in passing the Custom Trade Partnership Against Terrorism Act (CTPAT).
Currently, the vaccine mandate for truck drivers coming to the country to deliver freight from Canada and Mexico continues, these professional drivers spend most of their professional time alone in the truck cab, presenting a zero percent risk of spreading Covid-19. This should be lifted immediately to open up capacity and shorten the amount of time it takes to move goods across borders.
Another issue that greatly impacts not only the efficient movement of goods, but highway safety, is the lack of a federal motor carrier safety selection standard. Currently, because of broken safety rating systems from the FMCSA, almost 90 percent of trucking companies are considered unrated. There are no requirements in place before selecting a trucking company, that drastically impacts the overall safety of our nation’s highways. The latest report from the national highway traffic safety administration noted that the number of accidents involving commercial motor vehicles increased 13 percent in 2021. The status quo is not working, and highway safety needs to be improved. Trinity Logistics and our trade association, TIA, fully support legislation to create a motor carrier safety selection and mend the safety rating process.
The U.S. trucking spot market conditions have reflected towards weaker and more normal conditions, though we still will see what the future holds and how that trend continues. Hopefully as a result of this meeting and coordinated actions taken by the United States, our trading partners, manufacturers, supply chain vendors, our nations become resilient when facing similar conditions and uncertainty.”
Trinity Logistics would like to thank Chairman Tom Carper and the TIA for inviting Doug to testify before the Committee. He is a very valuable leader in the industry and Trinity Logistics appreciates all he does for our company, our industry, and our nation.
If you would like to watch the full hearing:
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