Domestic and international freight services is a large, complex, and regulated industry. The industry moves 11 billion tons annually, accounting for roughly 80% of global trade.
To compete in such a complex global economy, you must seek ways to improve efficiency. And doing so without sacrificing value in all aspects of your business.
Dedicated Contract Carriage services are one of those immediate changes that can help you improve fleet operation at a low cost. They allow you to outsource fleet management to experts while focusing on your core competencies.
Read on to find out how a dedicated contract carriage can help your freight business.
What is a Dedicated Contract Carriage?
Dedicated Contract Carriage (DCC) allows shippers to use trucks for a while and pay a flat rate per truck based on their needs. That is, they are a third-party service that allows a company to use their trucks and drivers on a contract basis.
The contract is a legal agreement between the freight carrier and the shipper. It is a written record that the carrier agrees to transport the shipper’s goods for a fixed fee. It will also include details of the goods and the dates and times agreed upon by both parties.
The contract usually covers air and sea freight. In most cases, the terms may vary depending on the circumstances. Most standard contracts also include liabilities such as:
- Carrier agrees to take reasonable care of the cargo
- Shipper agrees to describe every cargo
- Shipper compensation for damaged, lost, or late cargo
A dedicated contract carriage benefits both parties. It is beneficial for businesses that need to supplement private fleet management services.
How Dedicated Contract Carriages Help Business Owners
The following are some essential benefits business owners may enjoy when they use DCCs.
1. Increased Capacity
The trucking industry is a populated market. As a result, shippers must ensure they have a working transportation strategy to deliver their products.
Whether you self-operate or buy trucking services, market capacity is limited. This is due to the tight labor market and economic growth.
With your trucks, you are only limited to a specific carriage capacity. As you scale your business, you have to buy more trucks which can be expensive.
But when you use a DCC, you can increase your capacity without raising the cost. That is the cost of buying and maintaining extra equipment.
Dedicated contract carriage provides you with a fleet. It allows you to enjoy the benefits of having a fleet without the operational headaches. The bill is presented monthly for all miles the trucks move.
You get the trucking solution as long as you pay for every mile the truck runs (including empty miles). This is usually subject to a weekly or monthly payment. You can even embellish your company name on the trailer’s side.
2. Driver Recruitment
Finding and retaining truck drivers in today’s labor market can be difficult. Many factors go into the selection process that makes it tiring and costly. Studies show that hiring a truck driver can cost between $2,000 and $15,000.
As a business owner, you would want to find drivers that have experience. Also, you need drivers that do not have too many infractions on their records. This is important as it will impact the fleet operation and running costs.
With DCC, you don’t need to invest in recruitment, hiring, and retaining drivers.
Instead, you can select from a pool of drivers in your DCC company who will work with you.
3. Driver Training
Extensive customer service and fleet optimization demand frequent and proper training for drivers. Since every business is unique, the content of this training has to be customized.
Customized training allows the drivers to get the needed skills to meet the needs of most of the customers they meet on the job. Yet, such custom training is usually expensive. The tutor has to design the lessons to suit individual companies.
With a dedicated contract carriage partner, you can have trained drivers for your business. Training can cover specific and vital areas like material handling, warehouse fulfillment, etc.
Some of the best carriers will offer their drivers extensive training on each customer’s needs. Usually, this comes at little or no cost.
4. Enhanced Efficiency
Another reason to use a dedicated contract carriage company is improved efficiency. Most companies do this by offering logistics analysis that can generate insights.
These companies can provide a high-level review of their clients’ shipments, detailed data, and specific insights to assist customers in fleet optimization.
With an array of insights, your company can develop better logistics strategies to help serve your customers better. You will also have better freight management as an add-on benefit.
Also, the insights help you see whether the company is helping you achieve your targets.
5. Extra Protection
Most expedited freight systems have fleet risk management plans. These plans help them prevent damage or lost cargo incidents. Unexpected events, such as extreme weather conditions, could damage or destroy the cargo.
A signed Dedicated Contract Carriage provides relief and peace of mind. It clarifies any factual misunderstandings and protects your liability. The contract clearly states who is liable for certain cargo damages. The agreement also has the potential compensation if such events occur.
You will have a significant financial investment in your cargo as a business owner. As a result, you should consider using a dedicated contract carriage to protect your goods.
6. Extra Profits
Furthermore, if you select the right DCC to manage your fleet, you may be able to get more profits.
You will have the ability to fill a part of your “empty” miles by sharing their backhaul loads’ profits.
In other words, the company will fill a large part of your empty miles and pay you for freight for other shippers. Many have access to cargo from in-house managed transportation services and external brokers.
DCCs achieve this by managing everything from the same IT platform. That way, they can ensure no empty trucks pass by.
Dedicated Contract Carriage is beneficial for most businesses. However, it only works if you can keep the trucks under contract for you busy.
Dedicated Contract Carriage providers will want a guaranteed amount of revenue per week. This helps them meet your operational needs and retain your drivers.
The key to making Dedicated Contract Carriage work for you is determining how many trucks you can consistently keep busy.