Shipping companies oftentimes own and maintain a fleet of trucks and trailers that they use to transport cargo. However, they may not own enough tractors to pair up with all of the trailers they own. When the demand for tractors outweighs the number on hand, many rely upon power only trucking services provided by a trusted logistics company. There are three significant financial benefits to this type of arrangement. It eliminates the need to purchase new equipment, maintenance and repairs and driver compensation.
Equipment Investments
There’s no doubt about it, semi tractors are extremely expensive, even if they’re used. In fact, a used tractor can cost $40,000 or more, and new models carry a hefty price tag of $100,000, or more. For companies that operate on tight margins, that kind of investment can be a difficult pill to swallow. That said, they still need the equipment available to satisfy their shipping needs. The solution many choose is to outsource to a power only trucking service provider. Since the costs are generally only a fraction of the amount it would take to buy, it gives them more financial flexibility.
Maintenance & Repairs
In order to provide the best service possible to their customers, and protect their investment, fleet owners have to perform regular maintenance on their vehicles. Often, this means maintaining a garage facility and staffing it with mechanics and technicians. One of the benefits of outsourcing some, or all of their power only needs, fleet owners can decrease, or eliminate these maintenance costs. What’s more, unexpected repairs become the responsibility of the logistics provider, further reducing the amount of expenses the company incurs. At the same time, they realize the benefits of a well-maintained fleet, such as decreased down-time and improved customer service.
Driver Compensation
Whenever a company adds new trucks to their fleet, they also have to add more drivers to operate them. There are a plethora of expenses involved with that process. First of all, they have to recruit qualified drivers and train them in company procedures, which requires a human resources staff and trainers. Driver salaries, and benefits such as health insurance and workman’s compensation round out the expenses. Outsourced drivers, on the other hand, are recruited, trained and paid by the company they work for. The benefit for shippers is that they get highly qualified and trained drivers without putting out any extra cash.
No matter what type of company you operate, your objective is to increase your profit margin. Very often, this means reducing expenses. However, you certainly don’t want your cost saving techniques to have a negative impact on your ability to provide excellent customer service. When you need additional tractors, consider partnering with a power only solution provider and you’ll reap financial rewards without harming your company’s reputation, or negatively affecting your customers.
