Cost Cutters

Avatar photo

Falcon Transportation ‘s Joe Fleming knows that managing a fleet “starts and ends with the numbers” – and he expects the focus on such numbers to intensify, thanks to the introduction of equipment designed to meet 2007 emission standards.

The new trucks will be accompanied by the higher prices associated with Ultra-Low Sulfur Diesel and CJ-4 oils, as well as the depreciation and interest charges on equipment that’s expected to cost an extra $10,000, he told a recent gathering of the Technology and Maintenance Council (TMC). Put another way, it could cost an extra $2,940 to run one of these trucks in its first year of operation.

So where will the money come from?

Speakers during the annual TMC conference suggested that some of these costs could be recouped through a variety of strategies.

1. Inspect new equipment on arrival

Spec’ing decisions will play a significant role in any cost controls, whether they promise extended equipment life or simply help to avoid unscheduled breakdowns, says Ron Szapacs, a maintenance specialist with the Air Products and Chemicals fleet. “You can clear up a lot of problems in an office before a truck is built.”

Instead of swallowing $400 in labor costs to replace problematic fuel tank sending units, his fleet switched to reliable solid-state models; air dryers were repositioned for quicker filter replacements; grounding studs were protected with an insulating paint to avoid corrosion issues.

But Szapacs also places an equal emphasis on inspections to ensure that he receives the equipment that was ordered in the first place. During one inspection, he compared the clutch number on 10 new vehicles only to find that none of them were equipped with the self-adjusting component that he ordered. His team has pulled off backing plates to discover different types of brake linings. And to prove a point, he once spent an hour checking the torque on fasteners up and down both sides of a new truck, just to show that a mere three of the fasteners met the required torque.

The steps are all designed to avoid future maintenance expenses.

It’s why he arrives for pilot inspections with protractors, an electrical multimeter, flashlight, heat gun, magnet and sound meter. His vehicle inspection sheet is used to cross reference everything from the wheelbase dimensions to requested part numbers, and photos are taken to back up future warranty claims.

2. Focus on the fuel

Glen Sokolis uses a simple figure to stress the importance of comparing fuel invoices to original quotes: “Major oil companies have to credit and re-bill 6% of their fuel invoices,” says the expert in fuel costs, referring to common errors involving overcharged taxes, prices and freight rates.

Fleets can realize further savings by consolidating the number of fuel cards or fuel vendors, he adds.

“The more volume you can give [a single] supplier, the better discount you’re going to get.”

When the 1,800-truck Performance Transportation Services decided to equip drivers with a single fuel card, rather than allowing employees to choose between a pair of cards, it saved $10,000 in monthly transaction costs, and the fleet now enjoys consolidated fuel reports that can be audited on a monthly basis.

“By knowing our monthly volume by supplier, we are able to improve negotiations with truck stop vendors, fuel suppliers and mobile fuelers,” Sokolis adds.

Further savings were realized by convincing drivers to visit selected truck stops.

“They’re making money on the fuel, but what they really want is the driver to come in,” Sokolis says, explaining the approach. The fleet has also negotiated deals with these truck stops to offer drivers free coffee, shower coupons, and programs that allow drivers to accumulate points toward future purchases.

3. Consider seasonal changes in PM schedules

“There is a fairly dramatic seasonal impact on road failures,” says FleetNetAmerica’s Oren Summer, a 38-year industry veteran. “You’ve got to prepare well in advance for winter. You got to prepare well in advance for summer.”

Swings in temperatures, for example, can lead to the inevitable expansion and contraction of hoses.

“A lot of this stuff is found on the road because it’s not caught before it goes out there,” he says of the related breakdowns that can easily be avoided through seasonal Preventive Maintenance (PM) measures.

4. Inspect maintenance vendors with care

While many fleets outsource maintenance activities in a bid to control costs, there are several factors that can add to the expenses outlined in an initial quote, warns Herman Miller of HJM Fleet Management.

He stresses the importance of on-site inspections for any vendors, looking for clean facilities that have enough room to conduct the work. Proximity to a fleet yard will be an important factor to reduce the dollar-a-mile costs associated with transporting equipment, he adds. And convenient access to service bays will help to avoid the damage of “lot rash” that is caused when trucks have to scrape into tight spaces.

Then there’s the question of whether the vendor has the resources to handle a fleet’s business.

“How big a piece of the action for the vendor am I going to be?” Miller likes to ask. “If I really had my choice, I think I like to stay below 15% of their total business.” In this case, the vendor would offer enough staff and stock adequate inventory, but still consider you to be a significant customer. That will help to ensure timely repairs that will limit expensive downtime.

Once it comes time to striking a deal, it will be important to consider whether services will be offered at a discounted rate, posted cost or flat rate. Some pricing structures can offer a combination of several of these options, complete with a pre-determined number of hours required for Preventive Maintenance visits.

Further savings can be discovered through an agreement concerning parts – perhaps requiring you to stock selected components that the vendor wouldn’t normally carry. “They may agree to it,” he says, “you’ll be surprised.”

Once the agreement is in place, meanwhile, it’s important to track the number of kilometres a truck travels per hour of maintenance.

“Listen to your drivers,” he adds. “If they’re complaining that the maintenance isn’t being done right, maybe there is some truth to that.”

5. Control your inventory of parts

One of the quickest ways to lose money can be found in your parts department. Stock too much in the way of inventories and you’re wasting cash; stock too little and mechanics won’t be able to address needed repairs in a timely manner.

Preventive maintenance supplies such as oils and filters should account for 25% of the budget for parts, says Stanley Kotas of Fleet Maintenance Services, noting that these high-volume supplies should be stored in vehicle bays so that technicians don’t need to run back and forth to the parts room. That will limit costs associated with labor. Routine parts such as brake components, belts, hoses, lighting, mirrors and exhaust systems should account for another 50%.

Another 5% should be invested in Predictive Maintenance supplies such as fan hubs and clutches, with fleets relying on agreements with dealers to stock related items, he adds. “You can’t have a transmission sitting around for six months, ‘just in case’.”

In addition to the 15% devoted to safety supplies, Kotas suggests that 5% of the parts budget should be set aside for “convenience” items including cigarette lighters, CB accessories, HVAC control and seat cushions. They may seem like trivial items, but they will play a role in driver retention at a fleet.

About 1% of the inventory should account for shrinkage and obsolescence, he adds. “If you have serious control over the issue, it might even be less.”

And the stocking and tracking of such inventory should be left to a specialist, he says.< /p>

“Staffing is always a consideration. You don’t want the lowest-paid guy making the most expensive purchasing decisions. Is he knowledgeable in parts inventory planning? Does he know the company philosophy? [And] design a user-friendly environment for them to work in.”

6. Track your treads

When Joe Stianch of Sanderson Farms is looking to address maintenance costs, one of the first places he looks is the pile of scrap tires – perhaps because his fleet spent US $1 million on new and recapped tires last year.

His teams turn to such piles every month.

You may discover that some of the failures may have as much to do with the ground around a terminal as the tires themselves. A load of cheap gravel for one of his fleet’s parking lots, for example, came complete with the shards of metal that punctured eight tires. Other failures were prevented by changing the approach to fuel islands, ensuring that drivers didn’t need to make sharp turns with freshly loaded equipment.

7. Maximize your warranty claims

The only way to maximize warranty dollars is to establish a system that will effectively track every claim, says Terry DiMascio, vice-president of Aim Nationalease, which operates 6,000 power units.

“It is the responsibility of every mechanic and supervisor to assess each repair for possible warranty,” he says. And his organization identifies every warranty associated with each power unit.

“Establish a process to review work orders and invoices,” he adds. “Who reviews the work orders? Who is going to save the parts and marks the work orders? Who files the claim? Who follows up on the payment? Who returns parts to the OEM?”

Then it’s a matter of tracking the results. His company tracks figures including warranty dollars per claim, warranty dollars collected per claim, and the number of rejected claims to help ensure that such problems are minimized.

8. Reward employees for training

Of course, maintenance teams need to be properly trained to make them as effective as possible, and that can begin with training materials.

Whenever Southeastern Freight Line posts a memo concerning a maintenance-related issue, it’s clearly labeled to recognize the individual who raised the issue, identifies where the information should be posted, and includes a VMRS code to help in any filing efforts. (The latter step ensures that any technician can easily find all memos relating to a specific component.)

But the fleet has also introduced a training program for technicians, largely by customizing 15 training booklets provided by an OEM. Employees who finish all the modules are eligible for an extra 50 cents per hour, while they are also given the exclusive opportunity to attend off-site training events. To ensure that the information remains fresh in their minds, meanwhile, the employees have to re-take the training modules after a predetermined period of time.

It’s all about ensuring effectiveness, and controlling expenses.

As Fleming says, “it starts and ends with the numbers.”

John G. Smith is a technical correspondent who provides coverage of equipment-related issues. As former editor of Truck news and Truck West, he shows a passion and deep understanding of industry issues.

Avatar photo

Truck News is Canada's leading trucking newspaper - news and information for trucking companies, owner/operators, truck drivers and logistics professionals working in the Canadian trucking industry.

Have your say

This is a moderated forum. Comments will no longer be published unless they are accompanied by a first and last name and a verifiable email address. (Today's Trucking will not publish or share the email address.) Profane language and content deemed to be libelous, racist, or threatening in nature will not be published under any circumstances.