The Car and Truck Fleet and Leasing Management Magazine

Fuel Management Most Crucial Issue for U.S. Trucking

May 31, 2005

FORT LAUDERDALE, FL — Controlling escalating fuel costs for America's private truck fleets is the top trucking industry concern, according to industry leaders in a survey commissioned by First Fleet Corporation, a subsidiary of PHH Arval and a provider of asset management to private truck fleets. The industry leaders were polled on the Web and at First Fleet's recent Spring Fleet Managers' Conference attended by senior fleet operations managers for Fortune 500-level companies. To manage fuel costs, 48 percent of those polled said they are using on-site fueling stations, while 38 percent have issued credit or debit cards to their drivers to refuel at stations where they have negotiated rates with oil companies. In addition to fuel management, the survey addressed two other industry issues - maintenance service and collision management. Fleet managers said that maintaining their truck fleets at optimum operating condition is a major focus; the most important concern is how and where maintenance is performed. Thirty-four percent of those surveyed said they have on-site maintenance facilities, with 23 percent outsourcing maintenance and repair services to contractors' facilities. Forty-two percent of the respondents solved this challenge by using a balanced combination of company-run shops and outside facilities. Ninety percent of the fleets that use outside shops have been doing so for more than two years. Indications are that a large number of mechanics have been temporarily removed from the workforce to serve in the war in Iraq. In light of that, it is not surprising that 33 percent of the respondents reported difficulties in recruiting or retaining qualified service technicians. However, only 3 percent of the fleets have turned to outsourcing in the last two years. Associated Materials fleet executive Mike Hatfield observed, "Our biggest issue is downtime. It's almost impossible to get same-day service on the road. We have a lot of 24/7 shops that close at midnight. Why? Lack of techs." The survey posed a question about the reliability of new equipment purchased in the past two years compared to older equipment. This resulted in a dead heat: 38 percent of respondents believe newer trucks are more reliable, while 38 percent said new trucks are just as reliable as older trucks. Only 15 percent thought new trucks are less reliable than older ones. Most fleet trucks are driven on a daily basis, offering considerable exposure to the risk of accidents. On the topic of collision management, the survey asked fleet managers how their companies handle issues associated with truck accidents, including recovery costs, repairs, etc. Eighty-three percent of those surveyed said accident management is handled within their company. Of the 14 percent whose companies do not have this internal function, 56 percent reported outsourcing the task. When asked to rate their level of satisfaction with various aspects of collision management, the highest rating went to vehicle repairs. They were most dissatisfied with the availability of substitute equipment. First Fleet asked the fleet executives about the relevance of a variety of fleet services, ranking them on a five-point scale, from very relevant to least relevant. Fuel management attained the highest ranking (4.29), with flexible funding and leasing options coming in second (4.21), closely followed by coordination of manufacturers and suppliers (4.16). Survey respondents were very upfront with their written responses when asked about the most critical issues facing fleet management today. Maintenance and fuel conservation were top concerns of Dwight Hammond of ChemCentral Corp., who said, "Cost of fuel is virtually uncontrollable, but idle times and MPG can severely impact your bottom line." Blue Rhino's Bud Kiger noted that "company margin pressures, gaining and optimizing on efficiency fuel cost and alternative fuels" were critical to his company. New equipment quality was a concern of Randy Phulps of Tony's Fine Foods, who stated, "Today's workmanship is a big concern." In addition, the ongoing shortage of qualified drivers and the resulting rising cost of drivers' salaries, a topic on First Fleet's previous survey, was a concern that inspired written comments on many survey responses. The survey, which drew a 25 percent response compared to 16 percent who responded in fall 2004, was commissioned by First Fleet Corporation and conducted by Dr. Luiz Duarte, Vice President, Starmark Market Intelligence. "The strong response to this survey indicates the industry's growing concern over controlling spiraling fuel and maintenance costs," said Dr. Duarte. As one fleet executive remarked, "The most critical issue facing fleet management today is developing operational improvements that will help to keep service levels up without incurring a high cost percentage increase." For a full summary of the First Fleet National Survey of Fleet Managers, please visit the Web site:
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