Commercial fleets have many opportunities for mishaps when they are procuring equipment. One of the biggest faux pas a carrier can make is having a standard spec across their entire fleet regardless of duty cycle and operating region. On the other hand, a proper spec can help fleets maximize fuel economy, lower their maintenance costs and total cost of ownership, and ultimately get the most out of their assets by reselling them in secondary markets.<\/p>\n
Spec\u2019ing the right truck for the right application is critical in today\u2019s climate, where the industry is experiencing a crescendo of supply and limitation on demand due to lingering effects from COVID-19 and raw material shortages.<\/p>\n
As vice president of maintenance for A. Duie Pyle<\/a>, Dan Carrano ensures Pyle\u2019s operation teams have the proper equipment to efficiently deliver freight. This entails procuring, purchasing, and maintaining all rolling assets.<\/p>\n Pyle is primarily a northeast less than truckload (LTL) and dedicated carrier, which in many areas operates on aging infrastructure that was not built for today\u2019s trucks, Carrano pointed out. That means equipment must be spec\u2019d accordingly. For example, the New York City metro area has smaller roadways compared to other parts of the country and is incredibly congested. According to Carrano, the focus points for the equipment operating in those areas are overall length and maneuverability as well as driver visibility. For the equipment that operates in the company\u2019s LTL and dedicated linehaul operations, the main areas that Carrano concentrates on are fuel economy, performance, and payload capacity.<\/p>\n In his 35 years of experience, the most common mistake Carrano has seen carriers make is the misconception that all trucks are the same.<\/p>\n \u201cYou need to know how the truck is going to be used,\u201d he advised. \u201cIf you are spec\u2019ing a tractor, you need to know what type of trailers are being pulled by the tractor. What is the payload? What is the duty cycle? Is it low mileage\/stop-and-go in an urban environment, or is it predominately used for a high mileage, linehaul application? This kind of information will help determine many aspects of the specifications of the vehicle.\u201d<\/p>\n When possible, however, Carrano did point out it is good practice to keep specifications similar to reduce inventory and prevent training technicians on too many different manufacturers\u2019 products.<\/p>\n \u201cAfter determining what non-proprietary components work best for our fleet, we spec those same components or brands across all vehicle makes,\u201d Carrano explained. \u201cThis helps with negotiating the cost of replacement parts, simplifies warranty processing, and facilitates partnerships for enhanced support from manufacturers.\u201d<\/p>\n Overall, procuring the right equipment starts with a proper needs assessment to fully understand a fleet\u2019s operations, requirements, and expectations, explained Nic Signorini, Ryder\u2019s senior director of strategic sourcing and supply management. And when it comes down to it, failure to develop long-term vehicle procurement strategies based on shortsighted perspectives of the marketplace could put commercial fleets at risk for added challenges down the road.<\/p>\n Brian Holland, president and CFO of Fleet Advantage, a truck fleet equipment financing firm, emphasized the importance of spec\u2019ing for the efficiency of the asset with duty cycle in mind. Rather than having a standard spec in place, Fleet Advantage works with commercial truck fleets to tailor that spec to not only meet specific duty cycles but to maximize fuel economy, lower maintenance costs, and make sure fleets have the appropriate safety and technology on their equipment. <\/b><\/p>\n \u201cFor many years sweating the assets was an acceptable strategy, but today with the improvements in fuel economy and the rising cost of maintenance, it\u2019s significantly more efficient and cost effective to run a shorter lifecycle,\u201d Holland told FleetOwner<\/i>. \u201cThose savings that you get from an operational side and maintenance outrun the cost of recapitalizing the asset.\u201d<\/p>\n Fleet Advantage will typically advise fleets to spec a truck to run about 450,000 miles depending on the duty cycle. That could also help them sell their retired equipment in the used truck market<\/a>, so keeping that equipment well maintained is key, Holland added.<\/p>\n Patrick Gaskins, senior vice president of Corcentric Fleet Solutions<\/a>, which offers fleet analytics services, also emphasized the importance of understanding the residual value of the asset. Seemingly trivial nuances, like paint color, for instance, could end up impacting residual value.<\/p>\n \u201cThere are a lot of things to consider when it comes to the right spec,\u201d Gaskins explained. \u201cIt\u2019s not just about hauling, but how do I attract drivers and what\u2019s the most efficient spec?\u201d<\/p>\n In addition to helping fleets procure tractors, trailers, tires, and other parts, Corcentric, like Fleet Advantage, helps trucking companies identify the optimum lifecycle for each asset<\/a> in their fleet. The company offers a cradle-to-grave remarketing program for trucks, trailers, and other heavy-duty fleet equipment.<\/p>\n Companies like Corcentric and Fleet Advantage work with fleets to determine a detailed total cost of operation analysis for each vehicle based on the natural aging of and use of assets.<\/p>\n \u201cIt\u2019s not a one-size-fits-all program,\u201d Gaskins explained. \u201cBut if you really do your homework, then you can set yourself up for a five-plus-year view of what assets you are going to need to replace over that period of time.\u201d<\/p>\n Replacing assets in today\u2019s market, however, has been quite the challenge. Order boards are full, while supply chain challenges are stifling OEM production. The result has been many companies holding onto equipment a little longer than they may have initially anticipated.<\/p>\n Today, anywhere from 20 to 40 components are being delivered late, or in insufficient quantities to truck and trailer OEMs, disrupting production-line rates and even prompting plant shutdowns, according to FTR Transportation Intelligence. FTR analysts have projected that supply chain issues could improve soon; however, that doesn\u2019t necessarily mean things will go back to a pre-pandemic normal.<\/p>\n In addition, analysts have projected that the semiconductor shortage<\/a> is expected to linger well into fall, and labor shortage issues likely won\u2019t be resolved until September when supplemental federal unemployment assistance runs out.<\/p>\n Material shortages are also accompanied by a spike in costs\u2014which are running at record highs\u2014for steel, lumber, aluminum, rubber, and plastic.<\/p>\n \u201cOver the course of 30 years, I think we\u2019ve seen this three times to this level,\u201d noted Paul Rosa, senior vice president of procurement and fleet planning at Penske Truck Leasing. \u201c2006 was the last really big one because that was a pre-buy year of the first greenhouse gas and engine mandates that were happening before the 2007 mandate.\u201d<\/p>\n The difference today is there is no mandate; truck demand is organic, which is actually a great problem to have for the overall health of the economy and the commercial vehicle industry.<\/p>\n \u201cBut it caught everyone by surprise because of the pandemic, and that\u2019s the overlying issue that has created this,\u201d Rosa said. \u201cIt is forcing people to make different decisions. If you were to have all the vehicles built that fleets wanted, you would have twice the amount OEMs are building in a 12-month period. That just can\u2019t happen.\u201d<\/p>\n Raw material demand is causing issues across the entire industry\u2014and it has begun impacting every fleet procurement department\u2019s decision making. Rosa advised that planning out at least a year in advance is a best practice as opposed to looking out a shorter window of time.<\/p>\n As manufacturers struggle to supply the demand, the industry, in turn, has learned just how vulnerable the global supply chain can be.<\/p>\n \u201cOver the years, we\u2019ve all become so reliant on this just-in-time delivery model. When we had a little hiccup\u2014COVID\u2014it really disrupted the world supply chain, and there are still people trying to figure this out,\u201d Corcentric\u2019s Gaskins explained. \u201cNot every country is moving at the same pace as the U.S.\u201d<\/p>\n Because of commodity costs and build slots filling up, there is pent-up demand, and many fleets won\u2019t be able to get the trucks that they need this year. As OEMs do what they can to increase build rates, any demand leftover from 2021 is expected to roll into 2022.<\/p>\n The pivot and the short-term fix here, according to Gaskins, is hanging onto a truck until a carrier can procure a new one. However, as fleets extend vehicle lifecycles, they end up increasing operating expenses. Gaskins advised implementing a five-year plan to work with suppliers and commit to a certain level of spend to obtain committed slots from OEMs.<\/p>\n \u201cThat\u2019s the big shift,\u201d Gaskins said. \u201cThere\u2019s no longer \u2018buy a truck and in 90 days from now you get it.\u2019 Honestly, that was a poor business practice in and of itself anyway because you\u2019re really just reacting to business expanding rather than planning ahead.\u201d<\/p>\n Logistics provider Transervice, which manages approximately 25,000 pieces of equipment in 120 regional facilities across North America, has been advising fleet partners that would normally be turning in equipment to make an assessment and determine if an asset can be utilized a little longer.<\/p>\n Gino Fontana, Transervice\u2019s chief operating officer and executive vice president, explained that the company also is advising customers with a \u201csurplus\u201d of equipment to consider selling those assets to other fleets in need.<\/p>\n \u201cTranservice as a whole may have 10 different customers in the mix that are in some form of trying to get equipment or offload equipment,\u201d Fontana said. \u201cWe are trying to put a matchmaker wherever that is possible.\u201d<\/p>\n He added that maintenance costs will also rise as vehicles operate across higher mileage bands than they were initially spec\u2019d for.<\/p>\n Stay tuned for part two, which will highlight asset utilization and maintenance and tips, as well as what fleets should consider when spec’ing new technologies.\u00a0\u00a0<\/i><\/p>\n<\/div>\n<\/section>\n<\/div>\n <\/p>\n By Cristina Commendatore<\/a><\/span><\/p>\n Source: https:\/\/www.fleetowner.com\/<\/a><\/span><\/p>\nAsset efficiency and lifecycle<\/h3>\n
Impact of material shortages<\/h3>\n
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