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.