{"id":9024,"date":"2020-12-30T16:45:56","date_gmt":"2020-12-30T15:45:56","guid":{"rendered":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/?p=9024"},"modified":"2020-12-30T16:45:56","modified_gmt":"2020-12-30T15:45:56","slug":"fleets-23","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2020\/12\/30\/fleets-23\/","title":{"rendered":"Fleets Face 7 Factors in a Challenging Year Ahead"},"content":{"rendered":"

Photo courtesy of\u00a0Wheelz Up.<\/em><\/i><\/span><\/p>\n

Jeb Lopez, founder and CEO of Wheelz Up, says new Ford Transits and Ram ProMasters are scarce during peak delivery season. There are few discounts, they\u2019re harder to spec, and service lanes are clogged with competitors\u2019 vans needing repairs.<\/b><\/span><\/p>\n

Increased order-to-delivery times. Supply and product availability issues. Rising equipment costs and the need for creative funding. These are some of the many concerns that smaller business fleets are facing on their paths to confront the challenges of the coronavirus pandemic.\u00a0<\/span><\/p>\n

Six fleet professionals \u2014 two from fleet management companies, a consultant, an automaker\u2019s fleet dealer rep, and a commercial and government fleet operator \u2014 share their perspectives on what to expect in the immediate future and how to prepare for another disruptive year for fleets.\u00a0<\/span><\/p>\n

Utilization varies by use case.\u00a0<\/span><\/h2>\n

Kevin Myose, fleet manager for San Joaquin County in California, is seeing severely decreased utilization for his pool vehicles because of to COVID-19 risks \u2014 though he\u2019s realizing the benefit of lower operating costs due to less miles driven. \u201cUnfortunately,\u00a0many of the underutilized cars are in our electric fleet, which will slow the exposure and integration of EV technology,\u201d he says.\u00a0<\/span><\/p>\n

Meanwhile, other internal customers are experiencing increased utilization and are adding more vehicles, mainly to provide adequate distancing. \u201cTo compensate for upticks in utilization, most notably our Public Works, we held off selling older units and made them available to our work crews,\u201d Myose says.\u00a0<\/span><\/p>\n

Jeff Perkins, vice president of operations for fleet management company Motorlease, has seen case-by-case vehicle usage patterns too. \u201cIn certain parts of the country things never really shut down, and in other places usage is up because people are driving more than they\u2019re flying right now,\u201d he says, adding that working remotely is a mitigating factor.\u00a0<\/span><\/p>\n

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Though he hasn\u2019t seen many drivers placed on furlough, Perkins says many of the ones who were \u2014 particularly in the retail sector \u2014 were allowed to hang onto their cars.<\/span><\/p>\n

OTD increases affect all sectors of fleet.<\/span><\/h2>\n

\u201cOverall, we\u2019re definitely seeing order-to-delivery times increase, and this will certainly be felt by small fleet operators,\u201d says Ted Davis, vice president, North American supply chain for ARI, a fleet management provider. \u201cWe\u2019re already seeing extended lead times for production across most OEMs.\u201d\u00a0<\/span><\/p>\n

Because of that, the industry might see order cutoff dates being pulled forward, he says. Factors influencing order-to-delivery time, such as licensing and delivery, are still recovering from the impacts of COVID-19, which will further extend the overall order-to-delivery timing.<\/span><\/p>\n

For Myose, OTD might only be an issue for specialized vehicles such as the county\u2019s patrol car fleet. \u201cThis is a niche market, with several municipalities competing for similar goods,\u201d he says.\u00a0<\/span><\/p>\n

\u201cWe had to cancel an order last year for 10 Dodge Chargers due to transmission supply shortages, and that was pre-COVID-19. I would expect prices to rise for these products as well.\u201d\u00a0<\/span><\/p>\n

Myose is also seeing prices rise, especially for heavy-duty trucks. \u201cA dump truck we bought last year was $135,000; the same truck now is $165,000.\u201d\u00a0\u00a0<\/span><\/p>\n

Inventory will be sparse.\u00a0<\/span><\/h2>\n

Manufacturer shutdowns in early 2020 severely limited product availability. This had a significant impact at the dealership level, where smaller fleets acquire most of their vehicles.\u00a0<\/span><\/p>\n

Traditional fleet-spec\u2019d vehicle inventory is sparse while most manufacturers focus on reestablishing an adequate supply of retail vehicles for their dealerships across the country. \u201cThis will undoubtedly have a negative impact on the availability of fleet units,\u201d Davis says.<\/span><\/p>\n

Perkins says that the mentality of the small fleet segment is, \u201cDrive it until it doesn\u2019t go anymore,\u201d though small fleets still want to be able to walk onto a dealer lot and buy another one. \u201cThey\u2019re going to find that\u2019s going to be very challenging for them.\u201d\u00a0<\/span><\/p>\n

Davis adds that as small fleet operators develop their cycling strategy for 2021 and beyond, they should carefully consider when they will need the vehicle to support their business. \u201cThe earlier an organization can determine its needs and place vehicle orders accordingly, the better off they\u2019ll be,\u201d he says.<\/span><\/p>\n

Large fleets traditionally develop \u201crobust\u201d cycling strategies early in the year to ensure orders are submitted in a timely fashion. \u201cAnd as larger fleets begin to adjust to the current economic environment and begin to place orders, there will be additional pressure on availability,\u201d Davis says.<\/span><\/p>\n

Often, however, budget approvals delay their ability to place orders. \u201cWith that in mind, small fleet operators should capitalize on their agility and place orders as soon as possible,\u201d Davis says.<\/span><\/p>\n

Perkins expects that with production delays, new vehicle orders would probably not arrive until late spring or early summer of 2021. \u201cAnything they\u2019re anticipating needing over the next six months, I really suggest that they start to cycle those fleet vehicles out today,\u201d he says.<\/span><\/p>\n

Some are forced to extend replacement cycles.<\/span><\/h2>\n

Rick Longobart, a principal for Longobart Ross Full Fleet Solutions, says that this economic downturn \u2014 a bigger financial hurdle than the Great Recession \u2014 will put even more strain on replacement needs this time around.\u00a0<\/span><\/p>\n

\u201cFleets will need to look at various ways of replacing equipment \u2014 from the conventional wisdom of debt allocation, to leasing, financing, and seeking grant funds to offset the financial cutbacks,\u201d he says.\u00a0<\/span><\/p>\n

Ivan Boykin, Ford general manager, Commercial Vehicle Centers North America, says Ford understands that fleets have extended their replacement cycles longer than under normal circumstances. However, \u201cFor those businesses that can afford to maintain their cycle times, we recommend not putting off replacement vehicle purchases as supplies tighten,\u201d he says.<\/span><\/p>\n

Perkins of Motorlease agrees, noting that some fleet clients are attempting to extend the leases on their fleet vehicles, and they have asked Motorlease for advice on how to handle the situation.<\/span><\/p>\n

\u201cWhat might work for one group might be different from another,\u201d Perkins says. \u201cFor the most part I tell our clients to get their orders in as early as possible.\u201d<\/span><\/p>\n

Fleets must manage the consequences of extended cycles.\u00a0<\/span><\/h2>\n

For fleet operators that need to delay replacement for budgetary reasons, Longobart cautions that deferment could result in additional maintenance cost, lack of technicians to maintain older vehicles, increased downtime, and lower resale values.<\/span><\/p>\n

Boykin notes that Ford\u2019s Commercial Vehicle Center dealer network is boosting its support for small businesses to improve vehicle uptime as their vehicles age. This includes the expansion of Ford dealers\u2019 mobile service offerings, which brings the technician to the vehicle instead of requiring the fleet to drive the vehicle to a dealership, Boykin says.<\/span><\/p>\n

Boykin encourages small fleets to take advantage of telematics, which can help reduce downtime and protect their drivers and vehicle assets. \u201cIt can show you in real time where every vehicle in your fleet is and provide insights into fuel consumption, driver behavior, and vehicle health,\u201d he says.<\/span><\/p>\n

The silver lining to extended replacement cycles? While the supply chain has suffered over the past six months, the downturn of replacing equipment will allow the supply chain and upfitters to keep up with demands, Longobart says.\u00a0<\/span><\/p>\n

\"Manufacturer<\/span>
Manufacturer shutdowns in early 2020 severely limited product availability, which had a significant impact at the dealership level as manufacturers focus on reestablishing an adequate supply of retail vehicles. With delays to new vehicle orders, small fleets need to plan their next cycle today.\u00a0<\/span>Photo courtesy of\u00a0Wheelz Up.<\/em><\/span><\/p>\n<\/figcaption><\/figure>\n

Commercial vans are scarce.<\/span><\/h2>\n

With \u201cunprecedented demand\u201d for home delivery of goods and services, according to Boykin, demand is strong for the trucks and vans used to make those deliveries.<\/span><\/p>\n

As of late October, GM was running three shifts a day to meet van demand, according to Perkins. Other manufacturers \u201care pretty much at capacity,\u201d he adds. \u201cManufacturers are doing everything they can to produce as many (vans and trucks) as they can.\u201d<\/span><\/p>\n

Jeb Lopez, founder and CEO for courier company Wheelz Up, agrees. Wheelz Up, which operates more than 200 Ford Transit, Ram ProMaster, and Nissan NV models, has contracts with both Amazon and FedEx.\u00a0<\/span><\/p>\n

Lopez says new Transits and ProMasters are hard to come by, while the Nissan NV and NV200 are due to be discontinued after the next model year. \u201cThere are hardly any discounts now for fleets because the units are scarce,\u201d he says. \u201cAnd it\u2019s harder to get the unit you want.\u201d<\/span><\/p>\n

Coming into peak delivery season, Lopez needs to rent vans to cover additional routes. At the truck rental agencies, it\u2019s a scrum to get vehicles. \u201cHey man, whoever comes here first in the morning gets it,\u201d Lopez says of the attitude between the rental operation and other delivery fleet customers.\u00a0<\/span><\/p>\n

Peak season also means vans needing repairs are facing crowded service lanes at dealers, which increases downtime. Lopez references warranty work that is needed on a Ram ProMaster. \u201cThey\u2019re so backlogged that my wait time for service is nine days,\u201d he says.<\/span><\/p>\n

Prices for parts such as tires and brakes are rising too. Lopez is looking to source some parts in cheaper bulk quantities to have on hand.\u00a0<\/span><\/p>\n

Electric commercial vehicles are (almost) here.<\/span><\/h2>\n

A consequence of this 100-year economic and business disruption, our fleet prognosticators say the wave of electric vehicles \u2014 specifically commercial electric vehicles \u2014 has almost arrived, with electric pickups, vans, and models in the Class 3 to 6 range coming to market in the next one to two years.\u00a0<\/span><\/p>\n

Boykin of Ford says all-electric vehicles are \u201cabsolutely\u201d an option for small fleets. \u201cElectric vehicles, including electric F-150 and E-Transit, require significantly less maintenance than a typical gas engine, creating more than 40% savings for their lifetime total cost of operation,\u201d he says.\u00a0<\/span><\/p>\n

Longobart says fleets should be aware of greatly fluctuating charging costs. \u201cFleets need to fully understand demand charges, as some fleets have been surprised by peak demand charges that have washed out all savings, making internal combustible engines seem cheaper,\u201d he says.<\/span><\/p>\n

To Longobart\u2019s point, \u201cPublic charging stations are typically not feasible for these larger vehicles, sometimes costing more than the price of gasoline and require downtime while parked at a location, which affects productivity,\u201d says Davis of ARI.\u00a0<\/span><\/p>\n

Charging larger commercial vehicles will require a depot-style charging network at a significant capital investment, though smart charging infrastructure can help to control charging rates.<\/span><\/p>\n

Davis adds that although electric vehicles will have higher initial costs, grants and state rebates for alternative fuel vehicles can significantly offset their higher acquisition costs. \u201cThese credits are not always easy to obtain but are worth looking into,\u201d he says.<\/span><\/p>\n

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by Daryl Lubinsky & Chris Brown<\/p>\n<\/div>\n

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Source: https:\/\/www.automotive-fleet.com<\/a><\/span><\/p>\n

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The audit is a key tool to know the overall status and provide the analysis, the assessment, the advice, the suggestions and the actions to take in order to cut costs and increase the efficiency and efficacy of the fleet. We propose the following fleet management audit.<\/p>\n

FLEET MANAGEMENT AUDIT<\/strong><\/a><\/h3>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Photo courtesy of\u00a0Wheelz Up. Jeb Lopez, founder and CEO of Wheelz Up, says new Ford Transits and Ram ProMasters are scarce during peak delivery season. There are few discounts, they\u2019re harder to spec, and service lanes are clogged with competitors\u2019 vans needing repairs. Increased order-to-delivery times. Supply and product availability issues. Rising equipment costs and…<\/p>\n","protected":false},"author":3,"featured_media":9025,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[18],"tags":[80],"_links":{"self":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/9024"}],"collection":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/comments?post=9024"}],"version-history":[{"count":1,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/9024\/revisions"}],"predecessor-version":[{"id":9026,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/9024\/revisions\/9026"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/media\/9025"}],"wp:attachment":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/media?parent=9024"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/categories?post=9024"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/tags?post=9024"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}