The Added Value of Dedicated Contract Carriage

Transporting goods is a complex process, and the trucking industry faces a wide range of operating challenges. Shifts in capacity, fluctuating rates, rising insurance and fuel costs, and the ongoing driver shortage create uncertainty for shippers. At the same time, customer service demands and regulatory requirements continue to increase, leaving many shippers looking for a solution that will provide secure capacity, steady rates, and high levels of service, all while mitigating the risks of operating a private fleet.

Dedicated contract carriage — a third-party service that dedicates equipment and drivers to a single customer for its exclusive use on a contractual basis — provides value beyond moving products from point A to point B. With dedicated contract carriage (DCC), shippers have more control and consistency and can utilize specialized services and committed capacity.

"It is designed as a private fleet but without the upfront capital costs, ongoing maintenance requirements, and driver recruiting and retention challenges," said Jeff Jackson, president of Penske Logistics. "We have dedicated, trained drivers who know the customer's business. They often handle high-touch freight, and we provide a level of service you can't get in a lane-based general commodity truckload agreement."

Specialized Services

Penske's DCC network drivers are highly trained on customers' unique needs. Value-added services sometimes include inside deliveries with drivers placing products directly on the shelves inside retail establishments, auto dealerships, or healthcare providers.

"One example of the wide array of specialized services we provide include Moffetts on the back of the trailer, where we deliver products to job sites directly," Jackson said. "We handle the delivery soup-to-nuts. That is a unique touch."

DCC also provides reverse logistics and multi-temperature deliveries, which are challenging in the spot market. "In many of our operations, we handle returnable containers and dunnage and basically run a closed-loop system versus a one-way truckload," Jackson said, adding that complicated operations lend themselves to DCC. "We embrace complexity. The more complex it is, the greater the value Penske's expertise can shine."

Dedicated Equipment

DCC ensures capacity with dedicated equipment and well-trained drivers, which enables shippers to meet short lead times and helps protect them when the market gets tight. Penske also provides dependable, predictable surge support for planned and unplanned needs. "To be a priority during a surge event is important," Jackson said.

Penske can leverage its elite driver group, managed centrally and sent anywhere in the U.S. to address surge capacity related to drivers. The equipment side is supported by Penske Truck Leasing's nationwide rental fleet.

"Grocery, for example, has predictable and unpredictable surges with holidays and weather events during the winter months. If you're in the general spot market, you're going to pay a super-premium and getting priority can be difficult," Jackson said, noting that service levels would also differ. "Having a broker or a spot carrier deliver is a different experience than having a dedicated Penske driver in a Penske uniform who has been trained on the customer and the industry."

In addition to offering dedicated capacity, DCC can equip customers with specialized equipment, including lift gates, Moffets, specialized trailers, and company-branded equipment. "Many of our customers want the private fleet look with the branding. We can deliver that with a dedicated solution," Jackson said.

DCC offers easy entry into zero-emission vehicle experiences. "We're running light, medium, and heavy-duty EVs, predominantly in California, and have several Class 8 EVs on order with several different shippers on multi-year agreements," Jackson said. "DCC provides the opportunity to leverage new technologies without needing the infrastructure."

Dedicated Management Team

Logistics is complicated in the best of times and even more so if the slightest disruption occurs. Penske's DCC services include a dedicated management team often on-site with the customer to manage day-to-day operations and drive long-term success. A strong relationship can provide even more value in unprecedented situations like COVID-19.

"We aspire to develop a relationship where you can't tell who works for Penske and who works for our customer because we are a committed team and very integrated into our customer's business," Jackson explained.

Penske works with its customers to optimize their entire network, including miles driven, drivers, and overall assets. This can create significant savings, mitigate carbon emissions, and provide static or dynamic route designs. "We focus on continuous improvement where we're always trying to optimize your business, not just the route," Jackson said.

Detailed Reporting

Data and analytics are essential in driving performance, and Penske provides DCC customers with detailed metrics on costs, on-time deliveries and quality. "We can provide a unique look and offer a higher level of reporting," Jackson said. "We can even help manage our customers' CRM or feed data into it."

Steady Cost Structure

DCC arrangements can insulate from the ebbs and flows in shipping costs. While the spot and contract market for common carriage may see dramatic swings, DCC rates remain much more stable.

It is essential to look at the overall value DCC can provide by improving customer service, ensuring capacity, optimizing the network, minimizing the risk of disruptions, and mitigating the liabilities of running a private fleet. "When you have on-site management with dedicated resources and sit shoulder to shoulder with the customer, you're positioned to bring value," Jackson said.

Penske Logistics is the second-largest dedicated contract carriage solutions provider in the United States, providing exceptional customer service and value. Contact us to learn more about Dedicated Contract solutions from Penske Logistics.