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The Story On Utilization And Procurement for Trucking Companies

Despite an employment squeeze and an ongoing uptick in the economy, it’s no secret that today’s fleets are operating with the thinnest of margins. Should it be a surprise then that a recent survey of fleet executives shows a little pessimism?

A number of fleet earnings reports are pointing to a somewhat challenging business environment as we move from the third quarter into the fourth. Still, will we see an increase in overall GDP growth over the next few months? No doubt, there has been somewhat of a softening of fleet’s overall operating metrics.

What’s Up with Utilization?

While we aren’t looking at dark days ahead, we could be seeing a slight downturn in utilization, while seeing a slight uptick in the number of parked vehicles waiting to be used. Of course, we aren’t anywhere near where we were during the great recession.

The fact is, during this time last year, the percentage of parked tractors and trailers was below two percent. Today it is at around five percent. It’s likely that last year the driver shortage impacted the number of trucks on the road.

Now, the trucks are parked for a different reason. The attitude is more of a, “Well, why use it if I don’t need it.” While some fleets are continuing to add capacity overall the number doing so is down from this time last year.

For many large fleets, they simply need more freight in order to handle current capacity. This lack of product to fill capacity is sure to trickle down from the big guys to the smaller fleets. And as freight softens, don’t expect more trucks and trailers to be ordered.

So does this all spell doom and gloom for the trucking industry? Likely not, and there are a good number of reasons why, not the least of which including finding profit where there previously had been none.

Using Procurement to Generate Profit

Are you running at a thinner-than-normal profit margin? If so, you aren’t alone. Yet, you may also be missing out on a valuable profit-generating opportunity. What we’re talking about is procurement.

The fact is, if you manage your procurement process effectively, you can have a significant impact on your profitability. Do you know what is purchased, who purchases it and how it is purchased? If you don’t have a laser focus on your entire procurement process, you are missing out.

There are a number of reasons why procurement efforts generally fall short. The large majority of companies that meet these criteria do so simply because they don’t have a procurement process in place. Others don’t even know if their company has a process in place to begin with. Finally, you have a percentage who either outsource it or leave it as a back-office function.

The inability of a fleet to track where their purchases are coming and going from can have a big impact on their bottom line. In many cases, those responsible for purchases that support fleet operations don’t know the best way to make those purchases.

It’s About More than Office Supplies

While the majority of missing procurement spending falls in the area of items like office supplies and cleaning products, don’t think procurement mistakes can’t be made for big-ticket purchases like tractors and trailers. You need to do a comprehensive cost analysis to discover any hidden costs.

The key to ensuring you aren’t making procurement mistakes that negatively impact the bottom line is to include operations and the fleet shop in your purchasing decisions. Make sure you have a point person to handle purchasing and good policies in place to keep everyone accountable.

Whether you are making a large or small purchase, keep a close eye on your procurement spending and watch your profits expand.

Truck Drivers : How Much Do You Know About Power Inverters?

If you are a professional truck driver, you’ve likely used or at least heard of power inverters. They certainly have been around for a long time. And much like everything else, when it comes to using them you get what you pay for.

First, you need to know everything there is to know about power inverters before making your decision. There’s a lot to consider, from the type of inverter itself to the waveform, surge capacity and whether or not it meets compliance requirements. Let’s dig a little deeper.

Power inverters have not been without their fair share of controversy. While many a fleet manager knows how much their operators love inverters (for creature comfort, alone) they are also wary that the inverters could potentially damage their truck’s electrical system.

But could it be that this way of thinking is being relegated to the past? The fact is, if you purchase the right inverter for the job and install it properly, there shouldn’t be much to worry about. You just need to make sure you do your due diligence before going out and making a big purchase. Always remember that there isn’t one inverter for the job. In this case, one size does not fit all.

Size Matters

That being said, size does matter. Do you need the biggest inverter out there? Consider that power inverters range in size from 300 to 5,000 watts. You need to know that the inverter is right for your truck size and the amount of power that truck uses.

Furthermore, what will you be using the inverter to power? Here is an example. You have an operator running a television and laptop at the same time. If you take a look at both devices, you will see a wattage level listed on the label. You’ll want to combine those wattages and add 20 percent to get to a final wattage number. You’ll also want to round up a little in your selection. It won’t hurt to be left with a little extra power.

Another thing to keep in mind is our power inverter’s surge rating. When you are running continuous power, you need to make sure that your equipment can handle the initial load. You’ll want to double up on whatever the power requirement is. So if you are using a 1,600-watt inverter, you’ll want to make sure it can handle a surge up to 3,200-watts.

Also figure out how long the inverter can bear the burden of an ongoing surge. You’ll want an inverter that can handle a surge for as long as possible. In some cases, an inverter may shut down almost instantly. Other converters might give you up to five seconds or more before a shut down.

Finding the Right Inverter

When using a power inverter, you want to make sure you have one that is good and reliable. The last thing you need is it breaking down on the job when you need it most. First, you want to look for an inverter that has a “Regulatory Listed” approval. Call signs to look for include UL or TL. A good rating might be 458 or higher.

Try to avoid an inverter that does not have a listed regulatory number. You don’t want a cheap inverter shocking your driver or doing other kinds of damage to your vehicle’s electrical system.

Not all manufacturers test their products as rigorously as they should. You want to make sure the company you are getting your power inverter from tests it thoroughly. As long as you make sure to educate yourself on what type of inverter you need and where it’s coming from, both your truck drivers and your fleet technicians will be happy.

The Latest From The World Of Hybrid and Electric Drive Vehicles

With oil prices low, it’s no surprise that diesel and gasoline still rule the trucking roost. The fact is, they have for a long time. Still, today’s operators want to know that they have a hedge in the face of oil’s volatility. Additionally, making changes to help the environment is never bad.

Now, pushed by government regulations and consumer interest, hybrid and electric drivetrains may see themselves headed for huge growth. Have you heard that Tesla is working on a Class 8 electric truck? The world is changing and the future is now.

The Future is Electric

While low or pretty stable fuel prices have definitely shrunk the ROI question for many fleets, there is still a huge business case to be made for the use of hybrid and electric vehicles. Yet, there’s a certain direction this is going in.

In the beginning, businesses were interested in hybrid propulsion systems, but now fleets are looking towards specific electrical applications designed to decrease engine idling. Still, despite high upfront costs for electrical systems, government grants and voucher programs make purchasing them a little bit more palatable.

New models of advanced electric work truck systems offer the prospect of better fuel economy coupled with reduced exhaust emissions. The big buyers of these trucks are usually cities and other municipalities, areas where high profile carbon mitigation is part of a progressive regulatory practice.

How They Operate

While on the road, these vehicles operate much like hybrids. They can use either engine power or electricity to power the truck. When they brake, regenerative discs send power back to batteries that are used for a launch assist.

When on the job site, the vehicles operate almost entirely on electric power. They use electricity to do everything from operating on-board computer systems to buckets and drills. If additional power generation is required, the engine can be restarted.

These vehicles can even be used in the case of an emergency, as they can generate export power into a local grid area. Usually, stored electric power will last for a worker’s full shift on the vehicle.

Other systems utilize bolt-on electric-drive systems. These devices can be integrated into existing vehicles, a first for the industry. One such company, XL Hybrids, is modifying Ford E-series trucks and transit vans to turn them into hybrids.

The electric power systems attach to the rear of the engine and work to capture brake energy and store it in special batteries. This power is then sent back to the generator and is used when required to start the truck or complete other tasks. When the vehicles are traded or sold, these bolt-on systems can be easily removed.

Not Without Problems

Still, this transition has not been without bumps. New York City’s Department of Sanitation has been using electric trucks for many years, and in their application they aren’t getting as much out of the trucks as they had hoped.

The main problem lies in that their trucks are operating within short distances, curbside, doing pickups and drop offs and never reaching big speed. As a result, they don’t generate much kinetic energy to really provide that return on braking.

Even so, the industry is growing. Everyone from Daimler to Tesla to Nikola One are all working on advanced new designs that will move the work truck forward.  With the industry growing, government agencies, non-profits and the corporate sector are getting behind these changes.

Does your fleet need better fuel savings or are you just operating with sustainability in mind? If so, you may want to take a second look at hybrid or electric-drive technologies.

Trucking Companies – How to Use Mobile Maintenance To Your Advantage

In today’s hyperactive global supply chain, fleets are always looking for new ways to increase truck roll time. They want to do this while also complying with government regulations and keeping CSA violations as low as possible.

There are a number of ways to meet that goal, from improvements in recruiting, training and benefits to making maintenance work for you. But how do you do that? The fact is, if you haven’t heard of mobile maintenance, you may be missing out on a valuable tool for your fleet maintenance arsenal.

Why Mobile Maintenance Matters

There are a number of reasons why mobile maintenance is right for your fleet. Mobile maintenance provides your fleet with a way to get services without the logistical hassle of having to go back to the shop, get the fleet technician involved and go through the whole process.

When you are using a mobile maintenance truck, you can spend less on brick-and-mortar solutions. While some may not be able to buy their own mobile maintenance vehicles, there are outsourcing operations that will handle it for the fleet.

Using mobile service allows you to reduce your downtime for what would otherwise be normal maintenance and repair procedures. In essence, you are able to get your trucks back up and running a lot faster than you would otherwise.

Today, transportation has become a business relying on a just-in-time philosophy. When you are operating at the margins, trimming time where you can is very important. Mobile maintenance allows you to trim time from your maintenance logbook while saving money and boosting efficiency.

How Does It Work?

Mobile maintenance usually comes in a wide variety of types, whether you are talking about a preventative inspection or a comprehensive inspection. Depending on the application, you’ll want to focus on things like lights, tires, air leaks and other small repairs. Changing oil and filters might also be included.

There are a number of different types of mobile service trucks you may encounter. They include everything from someone operating out of the back of their pick-up truck to 24-foot straight trucks decked out with a liftgate and running lights.

Take a company like Ryder as an example. They utilize a number of different mobile maintenance vehicles. Their systems are designed to perform all routine maintenance services required, but they can also be adapted to suit specific needs, depending on the truck they are servicing.

These are essentially diagnostics and maintenance shops on wheels. They generally come equipped with computer diagnostics equipment, air and lube equipment, welding capabilities and some can even be equipped with fully functional cranes. Advanced mobile maintenance units should be able to support whatever type of repair is needed.

Who and How Much?

Generally, the fleet will have a certified technician performing any necessary warranty work, service calls, upgrades, warning lights and so on. They should be equipped to handle turbochargers, valves and other integrated electronic and mechanical components.

A good mobile maintenance technician will also need workable computer skills. They will need to ensure work orders are entered, photos are sent and invoicing is completed quickly and correctly.

It is also important to make sure your mobile maintenance unit is keeping the environment in mind. You’ll want to ensure your technicians and the vehicles they are using are well equipped to prevent spills or other mishaps.

To set up your own mobile maintenance truck, you are looking at around $100,000. This cost covers properly setting up a truck, say a 16-foot box van, ensuring it has all the equipment it needs to do the job. Not only will you need tools and outside lights, an awning to protect from weather is also important.

Are you wondering if a mobile maintenance unit is right for you? Evaluate the costs and weigh them against the size of your fleet and it won’t be hard to decide if this is a tool you should be utilizing.

The Return On Investment for Compressed Natural Gas

Welcome to Part II of our series where we take a look at how compressed natural gas (CNG) is doing in the age of low diesel prices. It’s no secret that oil prices have gone down, thus weakening the demand for alternative fuel vehicles.

As fleets across the country work to reduce their environmental footprint, alternative fuels are a great way to do it. The fact that alternative options don’t suffer the volatility of the oil market, the change can’t be brought on soon enough for some.

Recent technological advancements – whether you are talking about near-zero NOx engines or other forms – making the conversion just makes sense for many fleets… or does it? Some say, is there a return on my investment?

Cons to the Pro

While every advancement has its detractors, there are those that say a move to CNG simply doesn’t cut the ROI mustard. Not only is a move to natural gas easily justified in the short term, but the capital investment required to purchase Class 8 natural gas trucks can come in around 50 percent higher than a similar diesel-powered truck.

With the current diesel price hovering around $2.20 for the diesel gallon equivalent of CNG, it’s hard for some fleets to justify the capital investment. Generally, one would look for a differential of around $1.00 to justify making the switch.

Another problem lies in resale value. Typically, considering the lack of infrastructure, resale cost for such vehicles amounts to scrap. For this reason, those purchasing CNG vehicles need to ponder operating them on a longer than normal life cycle, say five to seven, rather than the three to five-year cycle.

Some say it has never been more difficult to calculate a positive ROI for CNG conversion in this age of cheap diesel. Yet, the future doesn’t look completely bleak for this alternative fuel.

There are upsides to converting your fleet to CNG. After all, there are more things at play here than a simple short-term return on investment calculation.

Making the Case

Take, for instance, how much a $1.50 per gallon differential may sway any potential doubters. While two or three years ago fleets were more concerned with whether there was really an economic benefit versus using diesel, many are now coming around, tossing away old ideas that fueling infrastructure and maintenance costs are problems.

In our last look at CNG, we examined how UPS is managing their expansion into CNG and alternative fuels. Today we will examine how another large truck operator is doing: Ryder. As one of the undisputed industry leaders in truck rentals, Ryder has been making a big push into CNG.

Ryder puts a specific emphasis on maintenance when evaluating its transition. As with any major decision, a move to natural gas must take all aspects into account.  Even though investments in training and infrastructure might cause some short term pain, will there be long term gain?

Perhaps not. Consider that fleets are better able to forecast fuel costs when they are working with a fuel option that doesn’t suffer the same market volatilities as oil.

Many states also offer incentives for switching to CNG. In some, a purchaser can get refunded up to 80 percent back on their initial purchase price for CNG vehicles. There’s also a federal credit that amounts to 50 cents for each diesel gallon equivalent the operator uses in the course of normal operations.

In the end, there are several factors at play when a fleet decides to make the switch to CNG. Whether or not the numbers pan out for your operation is up to your back office to figure out. In the meantime, expect CNG to continue its expansion as diesel prices continue to wildly fluctuate.

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