Fleet Management News & Business Info | Commercial Carrier Journal
Issue link: http://read.dmtmag.com/i/378850
60 COMMERCIAL CARRIER JOURNAL | SEPTEMBER 2014 EQUIPMENT: LIFECYCLE COSTS As a result, the American Trucking Associations reports that the average age of a truck in a U.S. fleet today is an un- precedented seven years old. A lot of credit has to be given to the industry's maintenance professionals for keeping those aging trucks on the road. Under the gun, they re- sponded admirably by finding new ways to keep older trucks profitable and productive in an extremely trying economic downturn. The news is getting much better nowadays. Trucking is a leading economic indica- tor, and in 2007, it was one of the first major industries to predict the coming downturn that hit the economy at large the following year. In 2014, with reports last month that new Class 8 truck sales increased a dramatic 71 percent over the same period last year, it appears the industry is – at long last – previewing a strong economic recovery. But now that things seem to be getting better, what does that mean for the life and trade cycles fleets adopted during the hard times? Does the model of super-extended vehicle life still hold? Now that fleets have learned how to squeeze every possible mile from a new vehicle, is this the new reality in our industry? Or do good times mean new factors are in play that change the equation yet again, leading to more frequent equipment turnover? Perfect storm Consultant Darry Stuart, president of DWS Fleet Management Services, never was in favor of extending vehicle lifecycles beyond economic value – although he recognizes that many fleets felt they had no other good options a few years back. "Extending asset life was due to the cost of the vehicle es- sentially doubling since 2001," Stuart says. Fleets had to deal with rising upfront costs, low residual values and the overall state of the economy – on top of the push to meet emissions regulations. "For maintenance operations, it was horrible, and massive costs came along with that," he says. "The learning curve was harsh and expensive and took its toll on customer service." The result, Stuart says, was a nightmare that still haunts fleets today. "All of a sudden, there was a drive to outsource maintenance because the fleets weren't up to speed with staff and the new technol- ogy and had their hands full just trying to keep trucks operating," he says. "The deal- ers were supposed to be the experts, but even they couldn't handle the sudden workload. Then the technician shortage everyone was pondering about became a massive problem." Stuart says the industry ended up with a "perfect storm" where fleets were "being held hostage" by dealers because of outsourced maintenance, U.S. Environmental Protection Agency emissions requirements and other new technologies. "I firmly believe now that the rough seas are calmer, fleets have got to take more control of their destinies and return to doing more of their own maintenance in-house and manage asset uptime," he says. Stuart also believes that while the success story is that fleets learned to operate equipment for significantly longer life- cycles, the reality is that many fleets went broke trying to keep troublesome aging equipment on the road. "At the end of the day – no matter what's going on with the economy, technology or anything else – equipment life and trade cycles boil down to acquisition costs along with trade and sale dollars," he says. "If that book-value formula Now that fleets have learned how to squeeze every possible mile from a new vehicle, is this the new reality in our industry? Consultant Darry Stuart, president of DWS Fleet Management Services, says fleets need to do more of their own maintenance in-house. Since the turn of the century, fleets have extended vehicle life due to rising upfront costs, low residual values and the overall state of the economy – on top of the push to meet emissions regulations. Equipment life and trade cycles boil down to acquisition costs along with trade and sale dollars. – Darry Stuart, president, DWS Fleet Management Services