Internal vs. External Delivery Fleets: Which Should You Use in 2024
In-house or outsourcing? A 3PL delivery provider or a private delivery? An internal or external fleet? Here’s everything you need to know. According to Reuters Events, the last mile delivery market is expected to grow by about 16% between 2021 and 2025. This comes after we witnessed a growth of about 15% in 2020 alone due to the pandemic. Now that the world is slowly learning how to go back to “normal,” one thing is certain; last-mile delivery is not going back to what it used to be.
The rise of Delivery as a Service and Third-Party Logistics (3PL) companies has made it easier than ever before to outsource a delivery service. But with the benefits of low initial overhead, the choice to pay as you go, and fast implementation, come other challenges. The key is to find a balance between operational costs and efficiency, scalability and growth, and customer experience. But to arrive at a decision, you first need to understand the difference between an internal and an external delivery fleet, and how each solution will impact your company.
What Is an Internal Delivery Fleet?
Having an internal delivery fleet means operating a delivery service independently by using a dedicated in-house staff and a private fleet of vehicles to deliver all products or services to customers. An in-house driver fleet is a type of fleet management system that allows you to operate independently. It gives you complete control over how you operate and manage the delivery service. This can be very useful when you want the freedom and flexibility to build a deep relationship with customers and provide a quality of service that’s consistent with your brand.
At the same time, it places your company at a greater risk. You take on the full responsibility of delivering goods or services safely and securely to your customers. It also means that you cover the complete cost of running such a service, such as payroll expenses, the purchase, and maintenance of vehicles, and the implementation of route optimization software.
Key Comparison: Internal vs. External Fleets
The following table summarizes the primary differences based on the operational requirements and benefits discussed in the industry:
| Feature | Internal (In-House) Fleet | External (3PL) Fleet |
|---|---|---|
| Control | Complete control over the entire delivery process. | Reliance on a third party for operations. |
| Costs | Complete cost: payroll, vehicle maintenance, and software. | Pay as you go; low initial overhead. |
| Vehicles | Custom vehicles equipped for specific product needs. | Standardized vehicles; may have capacity limitations. |
| Branding | High; vehicles can bear company logos and colors. | Low; service provided by a third-party brand. |
Advantages of Owning and Operating Internal Delivery Fleets
1. Complete Control over Operations
Building a private delivery fleet in-house means you get complete control over the entire delivery process. It allows you to shape the system however you see fit and decide how you intend to move forward without many consultations and considerations. Being independent allows you to pick the drivers and vehicles you see fit your product delivery services. For instance, if you rely on a third-party delivery service, you will have to contend with the type of vehicles they have, even if they do not suit your needs.
2. Freedom and Flexibility
Owning a delivery fleet makes you self-sufficient. If a third-party fleet restricts the types of products they deliver or simply don’t have the capacity, like delivering frozen foods, alcohol, or pharmaceuticals, having an internal fleet can be a real game-changer. You can simply buy or lease vehicles in your fleet and equip them based on the product or service specifications. Furthermore, very few outside fleets can handle unexpected deliveries.
3. Brand Recognition and Awareness
With an in-house driver fleet, you can stick your company logo and paint the side of your delivery vehicles with your colors, which is extra advertisement. Today, over 66% of consumers prefer to have home deliveries. Imagine if all these people get used to seeing vehicles bearing your company brands every time they order a product. It will boost your brand recognition and awareness by far.
4. Reduced Downtime and Better Service
As compared to an external fleet management organization, an internal driver fleet understands the pulse of your business. This way, you can easily identify areas of concern, address the problems, and have alternative options in place for emergencies. As a result, there will be minimal vehicle downtime, and ultimately, reduced costs of operation. Because you decide who to hire into your team, you can easily train your staff to meet the expectations of your business. Instilling your staff with your company philosophy guarantees a customer-oriented service.
