Dive Brief:
- Dollar General added around 250 tractors to its private fleet last quarter, as the company expanded with a goal of the fleet providing 40% of its outbound transportation by the end of FY2022, COO Jeff Owen said on a Q1 earnings call.
- The additional equipment is part of the low-cost retailer’s push to more than double the size of the private fleet this fiscal year. The fleet, launched in 2016, totaled more than 950 tractors at the end of Q1.
- “As a result of this planned growth, we believe our private fleet will become an increasingly significant competitive advantage as it gives us greater operational control within our own supply chain, while further optimizing our cost structure,” Owen said.
Dive Insight:
Dollar General saves about 20% in associated costs each time it replaces a third-party tractor with one from its private fleet, Owen told investors in March.
The company has augmented its private fleet expansion by locking in more third-party capacity to manage inventories at a time of changing customer demand, Owen said on the Q1 call. Sales in the consumable category grew 9.1% while all other categories, such as seasonal, home products and apparel, fell YoY.
“We feel we’re very well positioned,” Owen said.
Dollar General’s fleet is expanding despite supply chain constraints that have hindered companies’ ability to procure adequate equipment to meet soaring freight demand over the past year, according to the National Private Truck Council’s 2022 benchmarking survey report released this week.
But “equipment and maintenance” ranked second to “driver-related issues” in a list of the top problems facing private fleet owners, according to this year’s survey.
“Driver-related issues are cited by nearly every respondent, often more than once,” the NPTC survey said. “In fact, more than one-third of all challenges are driver related — an aging driver population, driver recruiting, driver turnover, driver hiring, driver retention, and the driver shortage — outdistancing its closest challenger by a factor of nearly 2:1.”
Dollar General’s investments in driver recruitment and retention include $90,000 starting salaries, fully paid driver training, and access to 100% employer-paid college degree programs. The company began offering $5,000 signing bonuses for drivers last fall.
Many store and distribution center employees have accepted Dollar General’s offer to take the wheel as a driver for its private fleet. An estimated 15% of the drivers in the private fleet had come from the retailer’s stores or distribution centers, Owen said.
The private fleet expansion will support Dollar General’s growing footprint as the retailer opens three new distribution centers in North Little Rock, Arkansas; Aurora, Colorado; and Salem, Oregon, the company said.
