When it comes to cold chain logistics, one of the key decisions businesses face is whether to opt for On-Call (Adhoc) reefer contracts or Dedicated Monthly reefer contracts. Each option has its own benefits and limitations, and the choice depends on your business stage, sales velocity, and distribution needs.
What is an On-Call (Adhoc) Contract?
- One-time requirement: Vehicle is booked for a single trip.
- Can be a short day trip (e.g., 4–5 city supplies in a day) or a long intercity trip (e.g., Chennai to Hyderabad, 2–3 days).
- As the name suggests, you call the transporter whenever you need a vehicle.
- Usually preferred for occasional or unpredictable requirements.
What is a Dedicated Contract?
- A monthly agreement with the transporter for a reefer vehicle.
- You can utilize the vehicle as and when required during the contract period.
- Ensures availability, predictability, and flexibility for regular supply needs.
When to Use On-Call Contracts
On-call works best when:
- Your business is new or you are launching a new product.
- Market response to your product is uncertain.
- Initial sales are slow-moving and stocks remain longer in retail outlets.
Example:
- Month 1: Product takes 30 days to clear from the shelves → one trip required.
- Month 2: Product clears in 15 days → two trips required.
- Month 3: Product demand grows rapidly → 2–3 trips a week required.
Revised Financial Outlay
- Availability of vehicles is not guaranteed (most are tied up in dedicated contracts).
- If your product isn’t delivered on time, shelves go empty.
- Customers who don’t find your product buy competitors’ products instead → leading to lost sales.
When to Switch to a Dedicated Contract
Dedicated contracts are ideal once:
- Product demand is steady or growing fast
- You need regular replenishment in retail outlets.
- Stockouts can directly cause loss of customers and market share.
Advantages of Dedicated Contracts
Guaranteed Vehicle Availability
- Transporter is obliged to provide you with a vehicle whenever needed.
- No delays in distribution.
Flexibility in Kilometres
- Costs are calculated on a monthly basis, not per trip.
- Even if you run fewer trips on some days, you can balance it out within the month.
- Saves cost compared to daily on-call fixed charges.
Longer Credit Period
- On-call: Payment due immediately or within 1–2 days.
- Dedicated: Monthly billing + 15–30 days credit → effectively 40–45 days credit cycle.
Key Drawbacks of On-Call Contracts
- High risk of unavailability (especially in refrigerated transport).
- Rigid pricing: Daily fixed charge applies even if you use fewer kilometres.
- Immediate payments required after each trip.
Conclusion
- If your product is new and sales are still uncertain → start with On-Call contracts.
- As soon as your product gains traction and sales turnover becomes weekly or faster switch to a Dedicated Monthly contract.
This way, you balance cost efficiency, vehicle availability, and market continuity, ensuring that your products never miss the shelf when customers come looking.
Provide the total turnover and net profit of Coca Cola and Pepsi in India last year.
