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Originally Posted On: https://www.learndispatch.com/dedicated-lanes-in-truck-dispatching/
Introduction: The Role of Independent Dispatchers in Securing Dedicated Lanes Hello, everyone! Today’s topic is an essential one for independent truck dispatchers: dedicated lanes. We’re going to explore whether you, as an independent dispatcher, should be creating opportunities for carriers by seeking out these dedicated lanes for your clients.
Defining Dedicated Lanes First things first, let’s define what a dedicated lane is. Put simply, a dedicated lane (aka Dedicated Freight or Dedicated Route) involves regular freight transport from a specific origin point (Point A) to a designated destination (Point B). For instance, imagine a load leaving Atlanta every morning and arriving in Charlotte each afternoon – that’s a classic example of a dedicated lane. Shippers often prefer having a particular motor carrier handle such consistent freight.
Understanding the Contract Freight vs. Spot Freight Before we delve deeper, it’s crucial to differentiate between the contract market and the spot market. The spot market is where most independent truck dispatchers operate. This involves going to load boards to find freight that needs to be transported immediately. These loads lack regularity; for example, an auto parts manufacturer might need to ship something urgently and will list it on a load board for any carrier to pick up.
In contrast, contract freight represents shipments that occur on a regular basis. This consistency is vital, especially in production cycles, where products or parts must be delivered regularly to maintain production flow. Shippers seeking this regularity will often sign contracts with trucking companies or freight brokers, ensuring that trucks are available to transport their cargo on a set schedule.
Dedicated Lanes: A Subset of Contract Freight Dedicated lanes fall into the category of contract freight, as opposed to the more unpredictable spot market. But why is this topic important for you as an independent truck dispatcher? When potential clients start contacting you, a common question you’ll face is about securing dedicated lanes. They often ask, “Can you get me a dedicated lane? Do you have any dedicated opportunities?”
The Misconception About Dedicated Lanes The reason this question arises frequently is due to a misunderstanding among many motor carriers about what dedicated lanes entail and what is required to service them effectively.
The Attractive Illusion of Dedicated Lanes Many motor carriers are drawn to the idea of dedicated lanes, envisioning a convenient, stable, and profitable arrangement. Not to mention predictable home time. The concept of running regular routes from the same shipper to the same receiver, potentially returning home frequently, sounds ideal. They imagine a scenario where their earnings are predictable, their job is secure, and their valuable time is not wasted on waiting for loads.
The Reality of Securing Dedicated Lanes However, what often goes unrecognized is the level of commitment and competition involved in securing these dedicated lanes. To be considered, carriers must provide two key elements: sufficient truck and driver capacity and an ability to offer competitive, often low, rates.
Competition in the Contract Freight Market Unlike the spot market, where rates can be negotiated based on the truck-to-load ratio, dedicated lanes in the contract freight market involve intense bidding. Numerous successful carriers compete for these regular assignments, and often, the lowest bidder wins the lane. This reality is frequently overlooked by potential clients who mistakenly believe that contract freight inherently pays well and is readily accessible. They don’t realize that they may spend week after week bidding on contracts and not getting any dedicated customer freight.
Challenges for Small Fleet Owners When approached with requests for dedicated opportunities, I typically inquire about the number of trucks a potential client operates as well as how many company drivers they employ. Often, they only have a few, which poses a significant challenge. A small fleet might struggle to appeal to shippers who prefer network carriers with larger capacities for greater reliability. Moreover, competing against large trucking companies like J.B. Hunt or Schneider, which have advantages in equipment costs and insurance for their dedicated fleet, can be daunting for smaller carriers. This may seem unfair, but this is a reality of the trucking industry.
Why the Spot Market Might Be More Suitable I usually advise such clients that operating in the spot market might be more advantageous for them. In the spot market, we can strive to secure the highest possible rates, even though the loads for tomorrow remain unknown. We can, however, predict a certain level of gross revenue and average rate per mile, which is often more appealing to these smaller operators.
Regular Opportunities Beyond Contract Freight While dedicated lanes and contract freight might seem out of reach for many small motor carriers, there are still regular opportunities within the spot market. These opportunities aren’t contractual, meaning no one is officially committing to provide a truck regularly. However, they offer a semblance of regularity that can be beneficial.
Leveraging Location and Reliability for Regular Loads For instance, I had a client in Charleston who regularly left the area every Monday morning. We initially handled a load for a broker a couple of times, and noticing our consistency, the broker began to inquire about our availability every Friday for the upcoming Monday load. This wasn’t a dedicated lane or contracted freight, but it became a regular freight opportunity due to our client’s consistent presence in a particular location on specific days. We were no longer spending time looking for outbound loads for this client.
Educating Clients on Dedicated Lanes To sum up, the question isn’t necessarily whether you as an independent truck dispatcher can find dedicated lanes for your clients. It’s more about whether your clients are equipped to handle such lanes. In most cases, the answer is no. It’s crucial, then, to educate your clients about this reality.
Spot Market as a Viable Alternative Rather than simply stating the absence of dedicated opportunities and ending the conversation, inform your clients about the realities and requirements of dedicated lanes. Explain that they might find more lucrative and suitable load opportunities in the spot market. Your role is to guide them towards options that not only suit their capabilities but also maximize their earnings potential.
Conclusion: Guiding Clients Towards Practical Solutions In conclusion, as an independent truck dispatcher, your job is to navigate the intricacies of the freight market and guide your clients towards the most practical and profitable solutions. By educating them and exploring all available opportunities, you help them make informed decisions that best suit their business model.
We hope this post has shed light on the various aspects of truck dispatching and equipped you with the knowledge to make informed decisions for your clients. Until next time, keep exploring, keep educating, and I’ll see you in our next discussion!
Copyright by Roman Shmundyak January 2024
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