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The Roemer Report February 2016
 

 

Shorter Life Cycles Better Costs

Nobody’s crystal ball is 100% clear, but one thing is for sure, truck fleet owners are focused on getting the most out of their operations and fleet vehicles and 2016 will be no different. The latest quarterly Fleet Sentiment survey by CK Commercial Vehicle Research (CKCVR) said the study’s biggest take away is truck fleet operations are on solid ground entering 2016.

At the top line, when it comes to the 48 fleets participating in the survey, most indicated they are continuing to see good demand levels for their services along with high equipment utilization rates, above 90% for trucks and more than 85% for trailers. The driver shortage is another, familiar issue and according to CKCVR study, more than 50% of fleets reported that they need drivers now to either fill seats or grow.   
CK Commercial Vehicle Research’s survey revealed early year medium and heavy duty equipment buying plans were uneven compared to Q1 2015 and that most respondents indicated their annual 2016 purchases would be similar to 2015. According to the survey, a few larger fleets were planning added capacity with new trailer units but overall fleets are primarily buying equipment for replacement only. That may not be the best strategy over time, especially for larger fleets.

An outfit that offers a fleet lifecycle management IT platform, Fleet Advantage, recently conducted an online survey to take the pulse of truck fleet managers. Interestingly the survey revealed even though fuel economy and maintenance and repair expenses ranked highest as motivating factors for equipment replacement, most continue to operate trucks an average of seven years before replacing them with new, more fuel efficient models.
“Fleet operators realize they can improve fuel economy and lower operating costs with newer equipment since 80% responded that they are aware of federal regulations that require new models to increase their fuel efficiency. Fleet managers also know that maintenance and repair costs on new models are a fraction of the costs of a 4-7 year old truck, yet they continue to operate older less-efficient models.

Fleet Advantage thought this begged an obvious question “What is driving this contradiction?” Because certain concepts and beliefs are entrenched within every organization they surmised, some fleet managers are under the misconception that switching to a 3-4 year lifecycle will increase operating costs. Understanding the difference between a truck’s functional and economic obsolescence is the key they say.

Many fleets may be holding on to old operating paradigms and that may be a mistake. Traditionally, most fleet operators attempt to spread and amortize equipment costs over as long a period possible before the vehicle becomes obsolete functionally. According to Fleet Advantage by running shorter equipment lifecycles only to the point of economic obsolescence, fleets are realizing higher cost savings through improved fuel economy, minimal maintenance and repair costs and improved driver retention. Fleet Advantage said its results indicate new equipment is beneficial to retaining drivers.
Naturally, Fleet Advantage wants to sell software and consulting services, but there’s no getting around that cutting unnecessary costs by understanding the optimum operational lifecycle of fleet vehicles is worth doing. Keeping fleet equipment current and technically up-to-date is a winning strategy that puts reliability and safety out front—better results that have a positive impact across operations and costs; including insurance premiums.

 

Shipping orders reach second-lowest level since 2012
A recent report in the Wall Street Journal notes trucking companies remain wary of weak industrial shipping demand after a slow start to 2016.
Source >

Don’t Expect Fuel Prices to Stay this Low Forever
Oil Prices Could Jump 50% by the End of 2016, according to this Transportation Topics report.
Source >

Prominent shipper says fleets will adapt to new safety rules
Logistics provider C.H. Robinson Worldwide Inc. says the trucking industry should absorb new federal safety regulations with relative ease despite sharp divisions among trucking companies over the rules.
Source >

Department of Transportation: 50 never looked so good
The DOT is 50, join the birthday celebration here.
Source >

What Truckers are Ticked Off about Now
Smart-trucking.com wanted to find out and they got an ear full!
Source >

Ohio State Patrol and Truckers Launch Human Trafficking initiative
The Ohio Highway Patrol is publicizing a special enforcement campaign. The state patrol is partnering with Truckers Against Trafficking to ensure that trucking schools in the Buckeye State be required to provide one hour of awareness training in human trafficking for students obtaining a Commercial Driver’s License for the first time.
Source >



 

 

 

 

 

 

 

 

The ROEMER Report  

I'm Wellington Roemer. Publisher of the Roemer Report. Since 1978, The Roemer Report has been giving trucking executives the information you need to run your business. We research the industry's metrics, politics, developments, technological and operational trends so you don't have to. Our Report saves you time by digesting key industry news into short, clear stories. - Avoiding information overload. Thank you for giving the Roemer Report your attention today, we work hard to be worth your time.

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