Dive Brief:
- Dollar General has been working to expand its private fleet and expects to reach more than 2,000 tractors before the end of 2023.
- The discount retailer’s fleet, which currently consists of more than 1,800 tractors, handles nearly half of its own outbound transportation needs, CEO Jeff Owen said during an Aug. 31 earnings call. That’s a 5% improvement from the prior quarter.
- As Dollar General aims for greater transportation efficiencies, the company’s fleet efforts “have been and will continue to be an important driver in lowering our overall transportation costs,” Owen told analysts.
Dive Insight:
Growing its private fleet is part of Dollar General’s overall strategy to reduce costs and gain more operational control of its supply chain by expanding its distribution network and relying less on third-party carriers.
Owen told analysts that the company saves about 20% in associated costs each time it replaces a third-party tractor with one from its own fleet.
The company has steadily grown its private fleet since its launch in 2016. The company aimed to reach 2,000 or more tractors by early 2024, and was operating more than 1,700 tractors during Q1 — more than double what it was the prior year.
Dollar General reported that its Q2 operating profit was up 24.2% YoY to $692.3 million. In its Q2 securities filing, the company said that while its investments intended to improve its supply chain might negatively impact its operating profit, it would strengthen the retailer’s position to drive growth. In addition to growing its private fleet, the retailer also announced it was automating some distribution centers.
“We think we're well positioned on supply chain efficiencies with structural improvements on the horizon, as we talked about a little bit with the automation piece of that and certainly the private fleet continuation,” EVP and CEO Kelly Dilts said during the call.
