Challenges and Opportunities: Reflections on Corporate-Owned Fleets in Road Freight Transport

Should companies establish their own in-house fleet?

As a vital component of the logistics industry, road freight transport is characterized by its flexibility, diversity, and extensive coverage, making it an indispensable link in the multimodal transport system. In this sector, company‑owned fleets play a pivotal role. This article will analyze three key aspects: the advantages and disadvantages of an enterprise‑owned fleet, whether to adopt a self‑operated fleet model, and strategies for reducing costs while improving efficiency.

01 Analysis of the Pros and Cons of a Company’s In-House Fleet

In recent years, express delivery and freight‑forwarding companies have accelerated the expansion of their own‑operated trunk‑line fleets, with numerous fleets now exceeding 1,000 vehicles, and some even surpassing 10,000. According to data from the Capacity Research Center of the Yunlian Institute, there are 3,507 fleets with 50 or more vehicles, collectively operating 760,000 vehicles. Among these, 135 fleets have more than 1,000 vehicles, classified as ultra‑large fleets.

Taking the Tongda group as an example, as of the end of 2022, YTO operated 5,306 company-owned vehicles, while STO had 4,826. Meanwhile, ZTO boasted 11,000 company-owned vehicles—more than twice the combined total of YTO and STO. To cope with the pressures of price wars and rising transportation costs, an increasing number of express delivery companies are opting to deploy their own vehicles on routes with stable shipment volumes to cut costs. With vehicle utilization already assured, a company‑owned fleet can significantly reduce operating costs—and thereby lower transportation expenses—by modestly increasing management overhead. At the same time, such a fleet can flexibly adjust its size and scheduling to meet specific business needs, enabling tighter control over the transportation process, safeguarding cargo quality and safety, and delivering reliable logistics services to customers.

Although self-operated fleets offer numerous advantages, reality often falls short of expectations, leaving some companies grappling with the anxiety of rising rather than falling operating costs.
From an operational standpoint, a company‑owned fleet requires substantial capital to purchase and maintain vehicles, while also bearing the risks and liabilities inherent in the transportation process. Affected by the market economy, domestic and international economic conditions, and supply‑and‑demand dynamics, the business is highly volatile. As a result, the in‑house fleet often finds itself with no cargo to haul, leading to significant vehicle idle time, even as labor costs for drivers, depreciation expenses, and maintenance fees continue to accrue. Rather than reducing costs, such a fleet can become a financial burden for the enterprise.
In terms of management, a company‑owned fleet requires a robust operational management system—covering fleet administration, driver training, and transport monitoring—which can be quite challenging to implement. Recruiting and managing drivers is a persistent issue for businesses, as it is often difficult to find drivers who are hardworking, resilient, and adaptable. Frequent absences further exacerbate the problem, leaving companies with vehicles that remain idle while they rely on outsourced transportation capacity, incurring substantial freight costs.
From a fiscal and tax perspective, companies operating their own fleets face significant limitations in claiming input VAT credits. Specifically, with respect to labor costs, businesses cannot obtain input VAT invoices and must also bear the additional expense of paying drivers’ social insurance and housing fund contributions. For gasoline, vehicle maintenance, and spare parts, companies are required to pay a markup to acquire input VAT invoices. Moreover, for tolls and road‑use fees, only 3% of the input VAT is eligible for deduction. Under conditions of severe input‑VAT shortfalls, corporate tax burdens intensify, leading to higher tax‑related costs.

02 Should the fleet be operated in-house?

From the current perspective, not all logistics companies are well-suited to operating their own fleets. Such a decision requires firms to comprehensively assess both the external industry environment and their own specific circumstances. In practice, the key prerequisites for fleet‑owned operations include cargo volume, organizational and management capabilities, financial resources, and strategic alignment. Volume is the foundation of economies of scale. In particular, express‑delivery and freight‑forwarding companies that focus on logistics‑specific vehicle platforms face extremely high operating costs every day and must rely on shipment volumes to spread their fixed costs. From a route‑design perspective, stable, two‑way, long‑haul routes deliver the highest vehicle utilization and the lowest per‑vehicle costs—precisely the types of routes that these companies have been quickest to transition to in‑house operations. In-house fleet management is a test of a company’s ability to organize and manage its transport capacity. Capacity management primarily encompasses two cost components: driver management and vehicle management. For a company to establish its own capacity‑management system, it must devote substantial time and effort and accumulate experience, thereby developing an efficient capacity‑organization and operational framework.

A key characteristic of fleet‑owned operations is their capital‑intensive nature. Therefore, when companies invest heavily in their own vehicle fleets, they must maintain robust cash flow. Such investments encompass not only the cost of purchasing vehicles but also substantial expenditures on workforce training, systematic tools, and vehicle‑related equipment.

Moreover, deploying company-owned vehicles is intended to support the enterprise’s long-term objectives, which entails bearing fixed depreciation expenses over an extended period and entails a certain degree of risk. Accordingly, some companies adopt a phased approach to organizing their transport capacity—starting with outsourcing, then co‑building, and gradually transitioning to in‑house operations.

03 How can a self-operated fleet reduce costs and improve efficiency?

As the degree of capacity organization increases, the depth of fleet management will inevitably deepen. For owner‑operated fleets, achieving cost reduction and efficiency gains through internal management and cost control has become particularly critical. First is the management of costs associated with company-owned vehicles. From the perspective of a vehicle’s TCO (Total Cost of Ownership), the fleet’s core cost structure can be summarized as “33211”: 30% for fuel, 30% for tolls and road fees, 20% for driver costs, 8% for depreciation, and 5% for maintenance, repairs, and other expenses.
Fuel costs represent the largest expense, and fuel efficiency is a complex, system‑wide undertaking that involves numerous factors. From the selection of the truck to the loading and unloading processes, the weight and arrangement of the cargo, the driver’s driving habits, and routine vehicle maintenance—each of these elements can impact fuel consumption.

In addition to controlling fuel costs, many companies choose to establish their own maintenance facilities within distribution centers or partner with external providers to manage repair and tire expenses. Furthermore, they may explore options such as tire leasing. Secondly, there is the refined management of operational processes. Data collected through smart hardware and software systems is used to analyze fleet‑related issues, enabling end-to‑end vehicle lifecycle management, streamlining operational processes, and enhancing safety‑management efficiency.
For example, by installing GPS tracking devices and in-vehicle video surveillance systems on commercial vehicles, it is possible to collect comprehensive data on vehicle travel routes, fuel consumption, mileage, driver behavior, and other key metrics. By gathering and analyzing this operational data, route planning and delivery schedules can be optimized, thereby enhancing transportation efficiency.

Finally, there is driver safety education and management. According to incomplete statistics, 30% of traffic accidents in China are caused by speeding violations, and 10% result from drivers’ unsafe driving behaviors. Consequently, continuing education for professional drivers has become an essential measure for ensuring fleet safety. Companies should prioritize driver training and the establishment of incentive mechanisms to enhance drivers’ professional competence and work motivation.

In summary, company‑owned fleets play a crucial role in the road freight sector, with both distinct advantages and disadvantages. When opting for fleet ownership, companies must carefully weigh external market conditions against their own operational realities. To reduce costs and enhance efficiency, companies can improve fleet operational performance through measures such as refined management, streamlined operational processes, vehicle‑cost control, and enhanced driver training.