{"id":7511,"date":"2020-09-15T16:44:48","date_gmt":"2020-09-15T14:44:48","guid":{"rendered":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/?p=7511"},"modified":"2020-09-15T16:44:48","modified_gmt":"2020-09-15T14:44:48","slug":"trucking-fleets","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2020\/09\/15\/trucking-fleets\/","title":{"rendered":"How Trucking Fleets are Running Lean to Survive COVID"},"content":{"rendered":"

Fleets have found ways to cut costs while dealing with COVID-19 disruption. Image: Gettyimages.com\/maogg; ryasick<\/em><\/p>\n

\u201cThese truly are the times that try a man\u2019s soul!\u201d says Steve Rush, president of tanker fleet Carbon Express, saying the COVID-19 pandemic, resulting shutdowns, and damage to the economy have forced his team to \u201cwork smarter.\u201d<\/p>\n

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We\u2019ve asked fleet executives and managers in various parts of trucking operations to share some of the strategies they have used to conserve cash flow, operate more efficiently, and cut costs over the last six months as the novel coronavirus turned the world upside down.<\/p>\n

Operations<\/h2>\n

\u201cIn order to sustain business, our first focus, and really learning curve, was to make sure all employees had the ability to perform their daily functions remotely,\u201d says T.J. Hunt, senior director of operations at Colorado-based Navajo Express. \u201cIn order to run lean and keep costs down, we needed to make sure our team members were able to stay healthy and focused in a safe working environment.\u201d<\/p>\n

For many fleets, suspension or restriction of travel was not only a necessary tactic to slow the virus spread, it also kept expenditures down.<\/p>\n

Some fleets used the slowdown to take a detailed look at areas where they could cut costs or improve efficiency, not just for the current crisis, but also for the longer term.<\/p>\n

\u201cThe pandemic slowdown was severe for our company for a little while,\u201d says John Elliott, CEO of expedited fleet Load One. \u201cThis time gave us the chance to review all of our process and workflows from top to bottom.\u00a0We looked at job positions and responsibilities.\u00a0Amazing what you can find when you have that slower time to catch your breath and do it,\u201d he told HDT. \u201cAs well, we pushed our team to work with our technology team to identify more areas we could possibly automate and enhance.\u201d<\/p>\n

We heard from many fleets that they were accelerating planned technology investments to improve efficiency and reduce COVID-19 contact, such as implementing electronic bills of lading or signing up for weigh-station bypass or toll management. As lanes and networks have been scrambled by COVID-19, we\u2019re seeing carriers and shippers turn to cloud-based transportation management systems that allow them to increase collaboration and better match freight with available capacity.<\/p>\n

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\u201cThis time gave us the chance to review all of our process and workflows from top to bottom\u2026Amazing what you can find when you have that slower time to catch your breath and do it.\u201d
\n\u2013 John Elliott, Load One<\/h2>\n
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Ryder System used zero-based budgeting in the immediate aftermath of COVID-19 shutdowns to manage its monthly spending. According to an article in the Wall Street Journal, this means starting from a budget of zero, then justifying every expense, assessing spending patterns, and rethinking how to deploy resources.<\/p>\n

That led to moves such as furloughs in Ryder\u2019s back-office function and a reduction in its travel budget that were expected to lead to discretionary spending savings of $20 million in the second quarter. Ryder started using the budgeting technique in 2017 and repeats the process every month.<\/p>\n

Equipment<\/h2>\n

Capital expenditures such as purchasing trucks and trailers were postponed at many fleets, although truck and trailer orders have since picked back up nationally.<\/p>\n

At System Freight Inc., says owner Jim Lamarca, because of the uncertainty of the pandemic, it suspended its capital expenditures through the second quarter in an effort to preserve cash flow to run the business. \u201cWe have since resumed and have placed orders for tractors and trailers.\u201d<\/p>\n

Another major area where SFI was able to cut costs in March and April was trailer rentals. The New Jersey-based fleet, which provides dedicated services in the Northeast, keeps a group of rental trailers that it can terminate at any point in time that represents approximately 15% of the trailer fleet.\u00a0When COVID hit, Lamarca says, \u201cwe immediately returned 125 trailers that enabled us to avoid carrying the monthly cost of the trailers where volume had been soft.\u00a0The returns in rentals represented just under 5% of our trailer fleet, but that was a savings of about $42,000 per month.\u201d<\/p>\n

On the Road<\/h2>\n

Carbon Express trucks are spec\u2019ed as lightweight daycabs to maximize payload. In normal times, that means drivers are put up in hotels if they must be on the road overnight. Although the company already was running some of its routes as relays, \u201cwe have really had to practice relays in order to keep our drivers out of the motel and home and still make money,\u201d Rush says.<\/p>\n

For instance, if the company has a load from New York City to Chicago, it sends a truck from its New Jersey headquarters to take the NYC load to its location in Altoona, Pennsylvania, about four and a half hours away, and swaps the driver out there so he can come home to New Jersey. Then the Altoona truck takes it to Toledo, Ohio, and returns, while the Toledo driver goes to Chicago and back.\u00a0\u201cEveryone sleeps home and we save money.\u201d<\/p>\n

\"Carbon
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Carbon Express has added a flatbed division and is using relays rather than putting drivers in hotels. Photo: Carbon Express<\/em><\/p>\n<\/figcaption><\/figure>\n

In order to keep its trucks moving, Carbon Express also diversified and added a flatbed division, \u201cwhich has really helped fill some of the void from the lost revenue,\u201d Rush says, although it has not been without its challenges, especially having to rely more on brokers.<\/p>\n

\u201cWhen the pandemic hit, we knew the only way to stay lean was to be true to our roots as a long haul carrier,\u201d says Navajo\u2019s Hunt. \u201cWe have maintained a disciplined network by keeping drivers on our \u2018power lanes,\u2019 rather than sending trucks all over the 48 states to keep them moving.<\/p>\n

\u201cIt\u2019s never been more important to book the right freight, meaning loads that are driver friendly, create density\/velocity for our network, and are at the right rate. \u2026 With a focused network during challenging times, we have seen our deadhead reduce drastically and our week-over-week load count increase.\u201d<\/p>\n

System Freight Inc. tightened up its fuel purchase program. \u201cAs always, fuel price and economy is a key driver to our profitability,\u201d Lamarca says. \u201cSo we really focused our fuel program to only purchase where we receive the best pricing, where prior we may have been a little more relaxed and not have paid as close of attention on a day-to-day basis.\u201d<\/p>\n

Efficiency in the Shop<\/h2>\n

\u201cOur maintenance team is built to adjust for the flow of business levels,\u201d says Doug Lloyd, director of maintenance at Tennessee-based Averitt Express. \u201cDuring the pandemic,\u00a0 we maintained our KPIs to manage costs.\u201d<\/p>\n

Mike Palmer, vice president of fleet services for Virginia-based less-than-truckload carrier Estes Express Lines, took a back-to-the-basics approach.<\/p>\n

\u201cWe analyzed multiple areas within the department and narrowed the group down to only a few items that would give the most benefit of reducing costs, based on the time and labor involved in the project compared to the cost savings,\u201d he said, as follows:<\/p>\n