What Is a 'Private Carrier'

Private carrier refers to a company that owns the vehicles used to transport its own goods. A private carrier does not transport goods as its primary business and, thus, does not seek to transport the goods of other companies like a common carrier does. In this sense, a private carrier is not a for-hire carrier and does not carry the goods of other companies as its primary business. Semi-trailer trucks are the most common method of transport associated with private carriers, though large businesses may also operate their own aircraft, railcars or ships as part of their supply chain management. The composition of a private carrier fleet depends on the types of goods the company deals in and the destinations that it ships to. 

Breaking Down 'Private Carrier'

Private carrier companies invest in their own transportation fleets for a variety of reasons, but some of the most common reasons have to do with cost and control. Companies may find the price of contracting out transportation to be too expensive compared to the cost of owning a fleet. This is particularly true for companies with a high volume of goods shipped or companies with less common final destinations for their products. On the control side, a company may reasonably worry about the reliability of transportation that it does not own. Not owning part of the process, and a possible interaction with the public and/or a customer, can go against some corporate cultures. Moreover, not owning the fleet opens up the risk that a company won’t have transportation options available when needed due to contract carriers being hit by high demand from competitors.

Common Carrier in Addition to Private Carrier

Some companies that own their own transportation fleets may use contract carriers in certain situations, such as when a large amount of goods needs to be shipped and all its fleet vehicles are in use. For example, a retail store may expect to make a large number of shipments during the holiday season and will use contracted truckers to add to its capacity so that deliveries are made on time. In this blended model, the company avoids building its private carrier fleet up to a peak level that only lasts for short time. Sunk costs in the form of transport capacity take away from the bottom line, so even the most control-oriented companies are not always opposed to using common carriers for surge capacity

Some companies go the opposite direction as well, moving from common carrier to private carrier. Amazon, for example, has been building up its private carrier capacity since 2014, decreasing its reliance on common carriers. 

Private Carrier Branding

Because private carriers primarily ship their own goods, they can use the livery of the vehicle for advertising purposes. For example, a beverage delivery truck transporting a company’s soft drinks may always be painted a bright color and show large pictures of its offerings, thereby serving as a mobile reminder to consumers that the company sells its product in their town.

  1. Common Carrier

    A common carrier is a commercial entity that gets paid to transport ...
  2. Free Carrier - FCA

    Free carrier is a trade term specifying a delivery location for ...
  3. Bureau Rate

    The bureau rate is a unit-based insurance pricing guideline that ...
  4. Currency Adjustment Factor - CAF

    A currency exchange factor is a type of charge applied on top ...
  5. Uniform Bill Of Lading

    A uniform bill of lading is an agreement between an exporter ...
  6. Carriage Paid To (CPT)

    Carriage Paid To (CPT) is an international trade term denoting ...
Related Articles
  1. Investing

    Airline Stocks Look Set To Soar

    This maligned sector is in better shape than most investors believe.
  2. Insights

    Apple Is Expanding Mobile-Carrier Billing

    Apple has launched its mobile-carrier billing services in Japan, Singapore and Taiwan, to facilitate purchases with just a tap.
  3. Insights

    Trump’s Illusion: Why Jobs Will Flow to Mexico

    Mexico City: President-Elect Trump's rescue of 1,100 Carrier jobs won't stop more U.S. work from moving to Mexico
  4. Investing

    T-Mobile Pushes to Win New Business Customers

    T-Mobile (NASDAQ: TMUS) has not been shy about its efforts to lure customers away from its rivals. The wireless carrier has pushed back against long-standing industry practices by aggressively ...
  5. Investing

    US Telecom Price War: T-Mobile Vs. Verizon Vs. AT&T (VZ, T)

    Find out how T-Mobile, Verizon and AT&T are waging an intense price war among mobile network providers and why investors are coming up short.
  6. Investing

    Is American Airlines Group's Debt Load Too High? (AAL, DAL)

    American Airlines Group (NASDAQ: AAL) has achieved two highly prized goals over the past two months. In March, the company was added to the S&P 500 index. Then, in April, American received its ...
  7. Insights

    Bulk Shipping Companies Struggle As Markets Soften

    The "soft" dry bulk shipping market that confronts shipping companies is a result of lower demand from China, and an excessive amount of bulk ships.
  8. Investing

    Verizon Scraps the Two-Year Service Contract

    The carrier told FierceWireless it is replacing them with equipment installment plans (EIPs).
  9. Investing

    Sprint Cuts Prices on Its Unlimited Plans Again

    Sprint (NYSE: S) has once again lowered its prices for unlimited data plans. As part of the overhaul, the telecom, which has been locked in a battle with T-Mobile (NASDAQ: TMUS) to be the top ...
  10. Managing Wealth

    How to invest in private companies

    It can be tough to analyze a company that doesn't trade publicly, but there are several advantages to investing in private companies.
  1. I have lost my original Bills of Lading. Can I obtain a new set?

    Find out why an original bill of lading cannot be replaced if it is lost or stolen and how a court order must be obtained ... Read Answer >>
  2. Investment Banking vs Private Equity

    Despite both shared similar characteristics, they are different in many ways. Check out how private equity and investment ... Read Answer >>
  3. What is the difference between Cost and Freight (CFR) and Free on Board (FOB)?

    Learn some international Incoterms, and find out about the difference between free on board shipping and cost and freight ... Read Answer >>
Trading Center