July 9, 2015

Competing with Large Carriers — How Small Fleets Can Win

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Last month the Council of Supply Chain Management Professionals (CSCMP) issued their annual State of Logistics Report, and found that “over the course of the year, the transportation sector grew by 3.6%”. It was the “best year for the supply chain industry since the Great Recession,” yet despite high demand and strong macroeconomic health, small fleets were squeezed out by competition and regulation.

The CSCMP report found that 390 trucking companies (comprising 10,000+ drivers) went into bankruptcy in Q1 2014. These fleets averaged 27 vehicles, and many were driven out by the larger fleets.

Attacking Goliath’s Weakness

In Sun Tzu’s The Art of War, he explains that an army’s opportunities come from the relative weakness of an enemy, and how well an army responds to changes in the battlefield.

The largest fleets have tighter controls and more management layers — their weakness. These controls often manifest in legacy technologies that have “always” been used to measure and enforce driver activities.

Managing these controls are leadership layers, which creates a rift between leadership and frontline drivers. The drivers are unaware of leadership’s goals, and when disconnected to the company’s vision, morale and loyalty fades.

Winning Against Size — Learn Quickly Via Feedback

A smaller fleet’s advantage is that management can make faster business decisions and rollout changes to drivers more quickly. This advantage can be used to reduce overhead expenses, increase efficiency, and improve driver retention.

Feedback cycles enable this advantage.

Since there are fewer drivers in smaller fleets, leadership can ask firsthand for suggestions. When a fleet’s president checks in quarterly with drivers to ask for feedback, it lets drivers know they’re valued, and helps the business learn faster. This builds relationships and loyalty (advantage), and also helps drivers understand why future business decisions were made which improves compliance with said decisions (advantage).

When trust and a learning culture is established through feedback, fleets can more easily roll out new technologies, reaping business benefits like reduced overhead and lowered expenses.

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