Truck dispatch service or self-dispatch? How to choose

Hire an independent truck dispatch service or find my own loads?

As a trucking business owner, one of the most critical decisions you'll face every day is how to source and manage new freight customers and find loads. This choice can significantly impact the operational efficiency, profitability, and long-term success of a trucking business. In this comprehensive guide, we'll explore the key differences between hiring an independent truck dispatch service and finding loads and customers independently. We'll also delve into some advanced routing techniques for planning trips for your trucks and the importance of building strong customer relationships to secure lucrative freight contracts and drive sustainable long-term business growth.

What is the role of an independent truck dispatch service?

An independent truck dispatch service or independent dispatcher acts as an intermediary between trucking companies and shippers or freight brokers. They handle tasks such as finding and booking loads, negotiating rates, and managing paperwork and communication.  For many trucking companies, working with a reputable, high-performing independent dispatcher can offer several advantages:

However not all truck dispatch services are the same and the results of using an independent dispatcher to manage your trucks can vary widely.  Some potential disadvantages of this approach may include:

How is self-dispatch different from a truck dispatch service?

When a trucking business chooses to "self-dispatch" trucks, it means the business finds and chooses it's own customers, books it's own loads, negotiates it's own bids & contracts, and schedules it's own appointments. Owners and/or authorized employees of the trucking business sign rate sheets, rate contracts and broker-carrier agreements or any other business-related documents.  A 'self-dispatched' trucking business is a 'self-managed' trucking business.

For many trucking companies, choosing to self-dispatch offers several advantages:

However we must emphasize that becoming a high-performing truck dispatcher is not easy.  Being able to dispatch a truck effectively and turn a profit on every load is a skill that takes time and hard work to develop.  It is not a task for everyone and there can be some clear disadvantages to taking a "self-dispatch" approach:

Key factors to consider: Truck dispatch service or self-dispatch

The decision to hire an independent dispatcher or find loads independently is a foundational choice for any startup trucking business. While the best truck dispatch services can offer valuable expertise and time savings, finding loads independently and self-dispatching your trucks allows for better control, potentially higher profit margins and the largest number of long-term business opportunities.

For many carriers, deciding whether to self-dispatch or to use a truck dispatch service comes down to a few key factors to consider.  Determining the most cost-effective way to implement advanced routing techniques into your load booking and scheduling process is the key.  

To be successful, a trucking business owner needs to make sure that load planning, trip scheduling and truck dispatching activities are all integrating practices like trihaul routing, combining partial loads, and load stacking.  Ignoring any of these techniques can have a substantial negative affect on business revenues and profitability, especially in a slow or challenging market.  To explain why, let's explore some of these techniques in some additional detail.

Advanced routing techniques for maximizing profits

Advanced routing techniques can significantly boost your profitability, whether you use them in-house, or through use of a trucking dispatch service. Here are some popular strategies to consider:

Partial loads, also known as less-than-truckload shipments (LTL) or LTL freight, involve transporting relatively small shipments that don't require a full truck.

Typically, these shipments weigh between 150 and 15,000 pounds and occupy less than 12 linear feet of trailer space, making it possible for for multiple shipments to be combined by a carrier to create full truckloads. By combining multiple LTL loads into full truckloads, you can maximize your truck's capacity and substantially increase your earnings per mile. This strategy can be effective with virtually any size truck or trailer, but it can be especially effective with 26 foot box trucks, 53 foot dry vans, all refrigerated units and flatbeds.

Combining partial loads requires careful planning and coordination but can lead to higher profits, especially in urban markets and on shipments with flexible delivery time requirements.

Load stacking involves strategically planning a series of loads into a single, tightly-scheduled trip, to minimize empty miles and maximize efficiency. This very-popular and business-critical technique requires looking beyond just the next load to plan several loads in advance.

Here is an example of load stacking that demonstrates how a single truck can efficiently move through multiple cities over a two-week period, maximizing revenue by minimizing empty miles. The truck starts and ends in Chicago, completing a full circuit while delivering loads to various major cities across the Midwest and Northeast:

Trihaul routing is an effective concept developed by DAT that involves adding a third pickup or delivery point to what would typically be an out-and-back route. This technique can help increase your loaded miles and revenue by significant amounts, especially on backhauls returning from a delivery.

Take a look at the following example of strategic load planning that illustrates how a dispatcher could significantly increase truck revenue and reduce deadhead miles by adding a "trihaul" load to a standard route. 

In this scenario, the trihaul method is used to add an extra pickup in Kansas City.  The trihaul increases truck revenue by $1,370 (or roughly 30%), while adding just 61 miles to the trip:

Evaluate trucking dispatchers with these 10 questions

If your next step is to interview a potential truck dispatch service and compare their services with a self-dispatch option, try asking these 10 questions to evaluate how effective the dispatch service will be at keeping your trucks running profitably:

1.  What metrics do you use to measure revenue per truck?

Understanding how the dispatch service tracks and improves revenue per truck is essential. Ask about the key performance indicators (KPIs) they monitor and how they use this data to optimize route planning and load selection.

2.  What's your process for load planning?

Inquire about the dispatch service's techniques for trip scheduling and load planning, considering factors like average length of trips, geographic areas serviced, experience with urban vs. rural areas and types of freight handled. It is important to know if the dispatcher has experience with planning and managing profitable trips, or if it intends to simply pick loads for you one at a time. 

3.  How do you approach LTL consolidation and combining loads?

An effective dispatch service should have a robust strategy for consolidating less-than-truckload (LTL) shipments. Ask about their methods for combining multiple LTL shipments into full truckloads, which can significantly increase revenues per truck and overall profitability, but also require a high-level of communication and accuracy in scheduling to prevent late or missed deliveries.

4.  Explain the strategies you employ to reduce empty miles?

Minimizing empty miles is crucial for profitability.  Always ask the truck dispatch service about their techniques for finding backhauls or additional loads to fill empty legs of trips.  It should be an easy question for them and the answer can tell you a lot about their approach to dispatching trucks.

5.  How do your dispatchers optimize routes for speed and fuel efficiency?

Fuel costs significantly impact overall profitability. Ask about their route optimization strategies that consider factors like traffic patterns, terrain, and fuel prices to minimize fuel consumption and lost time.

6.  Give some examples of how you implement trihaul routing into your dispatch services?

Trihaul routing can substantially increase revenue per mile. Ask the dispatch service to explain their approach to identifying and coordinating trihaul opportunities, which involve adding a third delivery point to a round trip to boost profitability.

7.  What software & technologies do you use for load tracking, communication, check-ins, etc.?

Effective dispatching relies on up-to-date information. Ask about the GPS and communication tools they employ to maintain real-time visibility of your fleet and facilitate seamless communication with drivers.

8.  How do your dispatchers ensure that all trucks remain compliant with hours-of-service (HOS) regulations?

HOS compliance is critical for maintaining carrier safety ratings and avoiding harsh penalties. Inquire about the dispatch service's methods for tracking driver hours and planning routes that adhere to hours-of-service regulations, including electronic logging devices (ELD's).

9.  How do you handle unexpected disruptions or changes in transportation plans?

Flexibility and adaptability are everything in the trucking industry. Always ask for examples of how the truck dispatching service has successfully managed unexpected situations like road closures, weather events, driver issues, inspections, or last-minute schedule changes by shippers.

10.  What reporting and analytics do you provide to demonstrate ROI?

Being able to see and demonstrate the value a truck dispatcher brings to your operation is essential. Ask about the types of reports and analytics a dispatch service provides to help you manage your trucking business for improvements in efficiency, revenue, and overall profitability.

Ask again every 6 months

By asking these questions, you'll gain valuable insights into how a truck dispatch service operates, and whether or not their services can directly contribute to your trucking carrier's success.

As your business evolves, take a moment to review your dispatching service (or self-dispatch) operation every 6 months or so by asking the same 10 questions again. If the answers to any of the questions change, act accordingly.

Maintain focus on long-term relationships with freight customers

Whether you're working with a dispatcher or finding loads independently, building strong relationships with customers is the time-tested secret to long-term success in the trucking industry. Here's why these relationships matter and how to cultivate them:

Strong customer relationships often pave the way for long-term success for your trucking business, so when choosing whether to self-dispatch or to use a truck dispatch service, always keep in mind that using a third-party dispatcher should never get in the way of your ability to source and cultivate direct relationships with freight broker and shipper customers.  If you believe using a truck dispatcher is blocking your ability to communicate with existing or potential customers in any way, it could severely restrict your ability to grow your business over the long run.

Consider a hybrid solution to balance short & long-term business objectives

A growing number of growing trucking businesses are choosing a hybrid approach to using trucking dispatch services. Balancing use of both self-dispatch capabilities as well as third-party dispatch contractors can give a growing trucking company the flexibility to take full advantage of the services and immediate business benefits that a dispatch service provides, while freeing business owners to focus on achieving the long-term goal of building a core group of direct shipper and freight broker freight customers.

To implement a hybrid approach that balances self-dispatch with using a dispatcher service, use the criteria we've discussed in this article to find the best dispatch service for your business for at least the initial two years of your business, and use the service to help establish smooth and stable business operations that align with your business plan.

Over time, you can continue to evaluate the balance between your use of truck dispatch services and self-dispatch, and optimize the mix for profitability and business growth.  Many successful trucking companies will use dispatch services during the first 1-2 years of operation, at which point they are able to self-dispatch exclusively.

Tips for balancing truck dispatch services with self-dispatch

By employing this hybrid strategy, owner-operators can enjoy the immediate benefits of dispatch services while working towards the long-term stability of longer-term freight broker and direct shipper contracts.

Here are some things to keep in mind that can help your business manage both dispatch services and direct contracts and increase your independence over time:

Remember, the key to success lies in maintaining excellent service, building strong relationships, and continuously adapting your strategy to meet the evolving needs of your business and the market.  As a business owner, your mission is to keep all stakeholders in your business on track and moving in the right direction.

Conclusion

Trucking business owners face a difficult decision when choosing whether to hire a truck dispatch service to find loads for their trucks, or to find loads themselves and self-dispatch drivers.  Even when accounting for the benefits of advanced routing techniques, industry expertise and the business networking advantages that using an independent dispatcher can provide, more successful trucking companies are employing a hybrid strategy that simultaneously utilizes self-dispatching capabilities alongside a truck dispatch service as the best way to balance increased short-term income with the long-term benefits stemming from creating direct relationships with freight brokers and direct shippers.

Remember, success in the trucking industry is not just about chasing one load at a time and moving freight from point A to point B. It's about building a resilient, efficient, and customer-focused operation that can thrive in any market condition. Trucking business owners who are able to maximize efficiency, leverage technology, diversify their customer base, and focus on cost control, can navigate challenging times and position their businesses for long-term success. By implementing the strategies outlined in this guide to understand when and how to use truck dispatching services to plan loads for your trucks, you can be well-positioned to grow your startup trucking business into a successful and sustainable enterprise.